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Nigeria, exempted from FAO’s farming financing scheme

By Naomi Uzor
Following a report by the Food and Agriculture Organization (FAO) on  ingenious financing scheme to allow African smallholder farmers to make more money, designed by FAO, Nigeria has been exempted from the ingenious financing scheme.

According to FAO, the financing scheme which is suppose to allow African smallholder farmers to make more money is to be scaled up in Niger, where it was pioneered, and extended to Burkina Faso, Mali and Senegal.

Following the report, FAO found a solution while working on a project designed to help small holders in Niger form farmers’ groups so they could get better deals when purchasing inputs like seeds and fertilizer and as though pests, weeds and weather weren’t problems enough, African farmers are also penalized by usually having to sell their produce immediately after harvest  when everyone else is selling and prices are lowest.

FAO Rural Finance expert, Ake Olofsson said the organisation’s solution was to introduce into the project a version of warrantage, or inventory credit system, used by European farmers in the 19th century. Under the warrantage system farmers, rather than selling their harvest at once, can use it as collateral to obtain credit from a bank.

In the Niger project, started in 1999, in return for a bank loan the farmers left their produce in a locked warehouse with keys held by both the bank and their group. The credit gave the smallholders the means to buy essential inputs for the next planting and also allowed them to hold on to the produce until the lean season when food stocks start to run low and prices climb.


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