Financial inclusion eases access to agricultural financing

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Extension of financial services to the previously unbanked farmers opened new spheres in their access to agricultural financing, a new report has indicated.

A new report released by Aceli Africa, a catalytic market facility offering concessional financing, and Dalberg, an advisory firm, indicates that previously unbanked farmers have been able to acquire tractors as a result of the partnership between Heifer International and Hello Tractor.

The partnership introduced a pay-as-you-go tractor financing for agri-preneurs, unlocking agricultural finance for underserved smallholder farmers across Africa.

The 2024 Aceli Financial Benchmarking Report analysed approximately 32,600 loans valued at $1.98b (about sh7.2 trillion) disbursed by 41 lenders in Kenya, Rwanda, Tanzania, Uganda, and Zambia between 2020 and 2023.

It identified Hello Tractor as a top performer in financing small and medium-scale enterprises in the agricultural sector.

Officials say the findings demonstrate how the strategic combination of blended capital, local innovation, and collaborative partnerships is driving profitable, scalable, and inclusive growth within rural economies.

The report indicates that 100% of Hello Tractor’s borrowers were previously unbanked, significantly higher than the 22% reported by commercial banks.

“This report validates our long-standing belief that rural communities offer significant investment potential. By strategically blending innovation, trust, and local expertise, we are demonstrating that smallholder farmers can be central to Africa’s agricultural transformation,” Adesuwa Ifedi, Heifer International’s senior vice president for Africa Programmes, said in a statement.

Key among the findings of the report was that Hello Tractor surpassed the average profitability of commercial banks, non-bank financial institutions (NBFIs), and social lenders included in the analysis.

“Hello Tractor demonstrated a strong portfolio health of 95%, considerably exceeding the 86% average for commercial banks. Despite serving higher-risk borrowers, Hello Tractor achieved a 7.2% profitability rate, outperforming the industry average, including commercial banks,” a statement issued by Heifer International stated.

It also indicated that the number of loans grew at an annual rate of 31% from 4,800 in 2020 to 10,900 in 2023, with the total value of loans growing from $295m in 2020 to $540m in 2023.

Auma Fatuma, a Ugandan mother of four children, two boys and two girls, in Dokolo district, is one of the beneficiaries of the financing programme. Before engaging in commercial farming, she founded a nursery school where she made a profit of sh500,000.

She then planted two acres of sunflower and sim-sim, earning an additional sh800,000. But since 2019, when she joined the Dokolo Young Oilseed Farmers Cooperative, she expanded her acreage using a tractor to plough the garden.

Her income has since tripled. She bought a plot of land on which she built a rental shop, paid school fees for her children and improved her standard of living.