Although creative solutions and loan products are driving progress around the world, changing lives and lifting entire communities out of poverty, millions of smallholder farmers in Africa, as well as rural populations still lack access to the capital they need and vast numbers of problem solvers can’t find capital to scale their own ideas, Kiva, an organisation founded to help lift millions out of poverty has said.
Among the challenges facing African smallholder farmers, Kiva said, included “very rigid repayment schedules that do not match well with the irregular income streams of the poor, especially farmers,” which, studies have shown, leave millions without access to formal financial services.
In an effort to “push the boundaries of microcredit, accelerate the development of new loan products and services, encourage replication, and gather and transfer knowledge across the sector,” therefore, Kiva announced on Wednesday that it was partnering with the MasterCard Foundation to launch a five-year, $7.9 million project to test and scale financial services and loan products tailored to the unique needs of smallholder farmers and rural populations in Sub-Saharan Africa.
The partnership allows Kiva to introduce or scale new financial products and service innovations among selected social enterprises and microfinance institutions serving smallholder farmers and rural populations; improve the capacity of social enterprises and microcredit providers to design and distribute new products; evaluate the impact of these new products and services, and disseminate results across the microcredit and financial inclusion sector worldwide and change the industry’s perspective on what is deemed “too risky” or “unproven”.
Support from the foundation underscores its commitment to enable financial inclusion strategies with high-impact potential.
“This partnership enables Kiva to bring our crowd-funded, risk-tolerant, patient capital to microlenders and social enterprises willing to try new evidence-based loan products that would otherwise be deemed too risky or unproven to try,” Premal Shah, President and cofounder of Kiva, said in a written statement via email.
“Throughout the lifespan of the project we will test what works, experiment with scalability and replication, and share our results across the financial inclusion sector,” she added.
Speaking on behalf of the mastercard foundation, Ann Miles, Director of Financial Inclusion and Youth Livelihoods at the foundation, said: “Kiva has demonstrated ingenuity in developing new ways to enable smallholder farmers and others living in rural and remote areas of Africa to access the working capital they need and want.
“We’re proud to partner with Kiva and Kiva Labs to support innovation in this important sector, expand the range of possibilities and empower larger numbers of people to improve their livelihoods.”