In the largely agricultural east African country of Kenya, many small-holder farmers need a way to start generating income. An organization called Juhudi Kilimo has stepped in with a new approach to farming as a means to larger business.
About 75 percent of Kenya's workforce is involved in agriculture, which makes up about 20 percent of the country's gross domestic product, according to 2007 and 2009 estimates from the CIA World Factbook.
Most rural famers in Kenya have about 1 to 2 acres of land, and grow their own food to feed their families and maybe sell a little bit at markets, said Juhudi Kilimo CEO Nat Robinson. But they might not have thought of farming as a business venture and a way of supplying more than just food for their families, Robinson said.
"We like to come in at that stage, when they've had a fair amount of farming experience and maybe have had one cow, one local breed, and then we come in and help them get to that next level of being a farmer."
Working within the community, Juhudi Kilimo, which means "effort" and "agriculture" in Swahili, identifies and trains farmers on what the organization does and on agribusiness and financial practices. Their clients then receive a loan for a pig, a cow, chickens, or other animals, or small farm equipment. They then pay back the loan using the income generated by those assets.
One of Juhudi Kilimo's success stories is James Mashida, who started with one dairy cow and plans to have 20 cows by 2012.
"Before we were struggling, but now we are somehow going to be free," said another farmer, who received a loan to grow French beans.
Now in its second year as a for-profit organization, Juhudi Kilimo has about 3,500 active borrowers, nearly half of whom are women. The average loan amount is $276, and the repayment rate is about 95 percent, according to the group.
It's rare that farmers can't repay the loan because of the insurance measures that are in place, according to Robinson, an American and the only non-Kenyan in a staff of 38 full-time employees. "If there's disease or theft or fire, the insurance pays for the cost of the cow and then helps that farmer service the loan or any other asset," he said.
Before someone takes a loan, the group helps the person save 15 percent of the loan value as a cushion. And clients are clustered into groups of five to help guarantee the loan. If one person falls behind in payments, the others can cover him for a few months. In some cases, the cows are sold to another member of the community, such as the chief or someone else with status, who keeps the cow until the farmer can buy it back.
Working in rural areas poses unique challenges, including decrepit roads and infrastructure, and the lack of access to banking branches. One way to get around those problems is by using a mobile money transfer system, where people can pay and receive loans over mobile phones, and that helps lower costs, said Robinson.
Another potential hurdle is corruption, where someone posing as a microfinancer can charge large sums and deliver little in return.
To tackle the trust issue, Nelly Njoki, who works as a regional manager in central Kenya for Juhudi Kilimo, said she explains to prospective clients what the group does and the support it receives from other organizations, such as Swiss Contact. By working within the community and with the Ministry of Agriculture for training, the group gains residents' confidence. And the referral process is key. "The best way to be trusted is through their fellow community members," she said.
The organization hit a rough patch during the post-election violence in 2008 when tribes that aligned themselves with political candidates clashed with each other, resulting in the destruction of homes and lives.
At the time, Juhudi Kilimo was still in its pilot project phase and lost many of its clients in the violence-wracked Rift Valley area, unable to get to them because of the fighting. And the tension among tribes has lingered.
"It's still there, always under the surface, but I think Kenya has come a long way since then," said Robinson. Helping provide Kenyans, especially the youth, a source of income gives them the option to pursue a livelihood rather than life in a gang, he said.
Njoki says she views her job, rather than a business, as more of a lifting up of society. "What I really like is ... seeing that farmer develop from a small step. Maybe acquiring one pig that costs around 5,000 Kenyan shillings, or a small calf, a goat, some poultry. Seeing them develop from that, taking them through their training, as they follow up on the procedures that you tell them and they develop. It really encourages me."