Farmers will now benefit from a loan portfolio guarantee agreement between Musoni Microfinance Limited and United States Agency for International Development (USAID).
Musoni Microfinance, will through this risk mitigation agreement, develop and roll out innovative financial loan products, to increase access to credit within Kenya’s agricultural sector, especially within cereals, dairy, livestock and horticulture value chains.
The firm uses technology to bring financial inclusion to the rural population. This rural small holders finance venture, will assist marginalized women and youths, gain access to finance, improve their livelihoods and promote sustainable agriculture.
Speaking during the signing of Kshs940 million agreement at Musoni’s headquarters in Kilimani, Nairobi, the firm’s Chief Executive Officer Mr. Stanley Munyao said “Under its Kilimo Booster product, Musoni has been able to expand into rural areas and offer tailored products to smallholder farmers, through a lean operational set-up and an innovative credit scoring model. With this guarantee, Musoni intends to collaborate with partners along the agricultural value chain, in order to provide smallholder farmers, with quality inputs, market linkages, infrastructure and other auxiliary services.”
Musoni has 50,000 registered clients with 35,000 being active borrowers from the micro lender. Through this new agreement, the firm is targeting an additional 20,000 borrowers. It is now set to develop and roll out credit to farmers in three additional counties which are mainly Kitui, Makueni, Kwale or Kilifi from its current reach of 15 counties. The company is also the first Micro Finance Institution in Kenya to introduce Digital Field Applications (DFA) for client registration and credit underwriting.
American development Agency USAID Kenya and East Africa Investment Team Lead Brook Adam said, “The agreement we are launching today, is one of the many ways that the US government partners with the private sector, through agriculture, in order to assist Kenya on its journey to self-reliance.”
Musoni was the first micro lender to go 100% cashless and paperless, enabling clients to repay their loans and deposit their cash collateral using MPESA. This has helped farmers achieve self-reliance, and alienate poverty which has affected them in the recent years, due to poor and delayed payment for their agricultural produce.
The agreement will increase lending approaches for marginalized smallholder farmers and agricultural micro-enterprises. The guarantee will also help Musoni, scale up its digital lending to boost agriculture financing, improve smallholder farmers’ livelihoods and increase food security.