Ayani Works to Push the Frontier of Rural and Agricultural Finance

Rural and agricultural finance has long been an inclusive finance “frontier” in Africa and beyond. Progress is being made, especially with the benefit of mobile money and branchless banking. But aligning the stakeholders, resources, risks, incentives and capacity to successfully bank rural men, women and young entrepreneurs remains a challenge.

As a firm committed to overcoming persistent barriers to financial inclusion, Ayani has developed a substantial portfolio of projects aiming to enhance the financial options, market linkages, livelihoods and economic resilience of agricultural SMEs, smallholder farmers and other rural populations. For example, in Uganda and Kenya, Ayani (in partnership with International Projekt Consult, or IPC) provides technical support for KfW-funded rural and agricultural credit facilities executed by the East Africa Development Bank. In Mozambique, Ayani provides technical assistance to build investment instruments and capacity to identify high impact investment opportunities within the National Fund for Sustainable Development, while also enhancing demand and eligibility for transformative financial services among agribusinesses and rural MSMEs.

In these and other rural and agricultural finance projects, Ayani works at the level of central banks and governments, commercial banks, microfinance institutions, insurance companies, informal financial service providers (such as savings group promoters) and rural enterprises to address constraints and explore avenues for expanding the availability and usage of appropriate financial services.



Ayani has observed and continues to collaborate with local stakeholders to address barriers such as the following:

Managing government-level risk aversion:

Unconvinced that risks can be adequately managed in rural and agricultural finance, governments tend to minimize rural lending, thereby constraining the availability and the accessibility of apex funds. Government interest rate caps on agricultural loans constitute another common practice that results in decreased appetite for rural investment. When properly structured, guarantee funds and blended finance (bringing together public funds backed by private investors) can de-risk rural and agricultural portfolios, help cover the costs of infrastructure that facilitates rural lending (e.g., motor bikes), increase the volume of available funds for rural on-lending, and reduce eligibility restrictions for end borrowers.

Going beyond credit-led approaches:

Government stakeholders tend to focus on credit as the most important financial service for rural development, when in fact savings and transaction services often make a bigger difference and pave the way to credit-worthiness. Many rural populations have not been exposed to more basic services such as savings and remittances. Encouraging financial institutions to lead with credit can be counter-productive and undermine the sustainability of agricultural lending in the long term. Studies in Mozambique show that savings is in far greater demand by smallholder farmers and rural populations.

Integrating agri-finance into financial institutions’ business models:

Many financial institutions lack the operational capacity and infrastructure needed to design, deliver and monitor rural financial products. Without dedicated agri-lending staff, tools, products, operational and monitoring practices adapted to the unique context and risks of rural finance, financial institutions tend to direct their energies to lower-risk rural and ag lending, such as post-harvest loans. This leaves critical gaps that undermine agri-markets and rural business development. By incorporating rural and agri-finance into their business models and operations, and honing their capacity to serve this specialized market, financial institutions can position themselves to better meet the needs of this segment and enhance their market share and financial performance.

Building in agri-loan incentives:

One example of an operational adjustment that can make a difference is structuring staffing and incentives to favor agricultural lending. In many financial institutions, loan officers are hired with a general lending background and must cover an array of financial products. Frequently, loan officers lack a solid understanding of rural and agricultural lending, and their portfolio targets that do not favor agri-loans. Given the choice, they tend to focus on the less risky investments that are easier for them to manage and monitor. Ayani provides banks and MFIs with a range of training and support to build their operational capacity, monitoring and incentive structures to successfully expand their rural and agri-lending portfolios.

Designing for women’s inclusion:

If reaching smallholder farmers with relevant and accessible financing is a difficult task, banking female smallholders is even more challenging. Yet as urban flight leads increasingly to women-run farms, this is a growing market segment that can yield double bottom line benefits for financial institutions. Sociocultural norms, land ownership, educational level and division of labor are some of the factors that render women invisible to and ineligible for agricultural financing and other formal financial services. Ayani’s work with Alliance for a Green Revolution in Africa (AGRA) and partners underscored the finding that women smallholders value proximity, convenience, affordability and trust. Given the opportunity to access appropriately designed and delivered services, rural women are frequently excellent customers who respond well to bundled services and cross-selling. Ayani has seen positive traction when there is deliberate outreach to women participating in group activities in farming communities and when products and services are developed expressly with women’s needs and constraints in mind.

Leveraging technology to expand outreach (digital financial services):

Mobile technology opens up new horizons for reaching disparate clients efficiently. Ayani seeks to identify and adapt appropriate tools and innovations that can expand inclusion. In Mozambique, Ayani’s helped FARE connect women’s savings groups with mobile money accounts. And in Ghana, on behalf of FSD Africa, Ayani analyzed Fidelity Bank’s pioneering agency banking initiative that has enabled greater outreach to a range of previously unserved clients, including working through farmer-based organizations in rural areas to influence access, attitudes and behaviors in banking and financial management. Ayani is careful to use digital technology strategically and to continually assess the relevance of technological tools and adjust solutions to maximize impact. For example, when the mobile money solution for women’s savings groups proved to stall, due to suppliers’ insufficient levels of cash and float issues, Ayani sought to develop strategic linkages with super-agents to plan for solve shortages in remote areas. And in a project with Anadarko in Mozambique, when Ayani observed that neither a paper nor a mobile-based voucher was practical or viable for fishermen, a card-based voucher system was developed instead.

Building buy-in for agricultural insurance:

Still nascent in most countries, rural markets are not always familiar with insurance, and until they witness a pay out, people are often not easily convinced to invest in it. Agricultural insurance in early stages often covers only inputs, rather than full loss, which address part but far from all of the problem. Since insurance requires volumes to be profitable, its success depends on the ability of insurance companies to integrate their services into agricultural value chains, where large numbers of clients can be reached through trusted networks. In Mozambique, Ayani’s work with the National Fund for Sustainable Development will lead to agricultural insurance coverage for at least 11,510 clients by the end of 2020.


Ayani staff coaching small, emerging commercial farmers in Northern Mozambique in March 2020 on financial reporting and tracking expenses against budget


As a result of Ayani’s technical support to a combined portfolio of over 37 million Euros, apex institutions and retail financial institutions in sub-Saharan Africa have expanded rural and agricultural lending. Ayani has also helped these institutions improve their risk management mechanisms, adapt their operations to better serve rural populations, enhance their environmental and social management and increase their return on portfolio.