Forest and Farm Facility

Investing in local producers: finance in the right hands


Smallholder producers in Tanzania join forces to access loans and expand enterprises.

Leokardia Audax has been working in agriculture in the Kagera region of north-western Tanzania since 1994. She is a mother of seven children and a producer of vanilla, honey and coffee. She and her husband began growing coffee in 2016 and later vanilla as cash crops.

While local communities, Indigenous Peoples, and forest and farm producers like Leokardia contribute the most to global food security and climate solutions, they also face the harshest obstacles to access climate finance.

Climate finance refers to funds raised locally, nationally, or internationally from public, corporate, or other sources. It is crucial to addressing climate change because it funds activities that reduce greenhouse gas emissions and support local populations to adapt to climate change effects. 

By joining the Network of Farmers' Groups in Kagera region (MAYAWA), Leokardia was able to diversify her farm’s production to include beekeeping and poultry, access loans to strengthen her family farm business, and boost her livelihood.

MAYAWA is one of the producer groups supported by the Forest and Farm Facility, a partnership between the Food and Agriculture Organization of the United Nations (FAO), the International Institute for Environment and Development (IIED), the International Union for Conservation of Nature (IUCN), and Agricord.

Collective efforts for collective benefits

To break down the barriers between small producers and finance, in May 2021, MAYAWA started facilitating links between its 5000 members and smallholder credit schemes offered by local banks, while strengthening its members’ financial and entrepreneurial capacities.

After being trained in business incubation and enterprise selection, in July 2021, MAYAWA members decided to collectively invest in beekeeping. Leokardia was able to establish six beehives, harvesting 10 litres of honey since September 2022, to be sold for 10 000 Tshs per liter. She is expecting another harvest in the next six months and plans to establish more beehives, given the success of her first harvest. In total, MAYAWA members established 230 beehives across 4.2 acres of communal land which are expected to produce nearly 3 tons of honey by October 2022. If sold at 12 000 Tshs per litre, the MAYAWA members could collectively earn nearly 36 million Tshs (about USD15.3K) in one month.

In addition, MAYAWA members who were already involved in poultry, vanilla and coffee value chains seized this collective opportunity to diversify their production and boost their income. As a pioneer vanilla producer, Leokardia attended multiple market analysis & development, entrepreneurship, and vanilla cultivation trainings to expand her production capacities. This season, she managed to produce 80 kilos of vanilla, earning 2 million Tshs. Leokardia also partnered with fellow vanilla producers in MAYAWA to meet with large-scale buyers. As a result, members were able to collectively sell 4 tons of vanilla at 130 USD/kg to a British company.

Since vanilla is considered a strategic business crop for Tanzania, in February 2022, MAYAWA also distributed 2 200 vanilla vines to over 100 members and trained them on the management of young vanilla plants.

A strong base to apply for loans

With strengthened business plans, MAYAWA set up meetings between members and local banks for consultation on credit schemes in June 2021. “Because we had attended financial capacity building sessions prior to the meeting, we were prepared to negotiate credit with the banks without feeling powerless or isolated”, said Hellen Binamungu, MAYAWA accountant and member of the financial committee.

After several interactions with the Tanzania Agricultural Development Bank (TADB), MAYAWA received a 1 billion Tshs (about USD427K ) loan in February 2022. MAYAWA used the loan to support small vanilla producers, and 20 million Tshs were distributed to the newly founded MAYAWA Farmer Saving and Credit Cooperative (Saccos) and Saving and Internal Lending Communities (SILC).

The SILC is an internal fundraising engine with the objective of supporting business ideas selected by MAYAWA’s members. So far, 820 members have joined the SILC and 12 million Tshs have been raised through registration fees. The members have been organised into 41 sub-groups which will be formalized as producer organisations. These producers will be able to take loans from the SILC to invest in their business ideas, such as beekeeping, at a manageable return rate, generating benefits for all the members.

Leokardia, for example, managed to purchase shares from the SILC and recently received a 150 000 Tshs loan. With the loan, she started growing tomatoes, field beans and maize. She has also been able to kick start her poultry business and expand her beekeeping and vanilla enterprises by joining one of the SILC’s sub-groups, Mshikamano. Once her maize production reaches scale, she will be able to use it for poultry feed and expand her poultry business even more.

This loan has also allowed her to cover the costs of schoolbooks, uniforms and shoes for her seven children, as well as improve her financial literacy. “Before joining the SILC, I used to take out loans as an individual for household cash and small income activities. With the SILC, it is different. We are able to operate as a collective, taking out higher loans with better interest rates which respond to the needs of the group. We have a strategy, long-term goals. We can think big and support other women producers” said Leokardia. Today, Leokardia is a female entrepreneurship champion in the region, supporting other women in joining the SILC and applying for small loans.

In addition to improving the social cohesion of the Kagera region, the SILC serves as an important learning centre for members who have never managed loans before, building their financial capacities and allowing them to venture into commercial banks and Local Government Loan Schemes with a strengthened knowledge base. MAYAWA intends to build bridges with external financing institutions once members feel ready and empowered to manage such financial relations independently. As a result of this experience, the MAYAWA Resource Centre has also published a simplified manual on accessing finance for its members.

A bright future for Kagera smallholder producers

Moving forward, MAYAWA members wish to invest in adding value to their products to nurture diversification, build resilience and increase their revenue. With the recently established internal networks, this aspiration is becoming a reality.

On the other hand, MAYAWA will improve the capacity of financial institutions to address the needs of forest and farm producers. To do so, a vanilla business model is being prepared to show how banks can support and profit from this sector. The model includes details of the vanilla value chain as well as a profit, loss and risk analysis. MAYAWA will also conduct workshops and field visits with the participation of financial institutions and decision-makers to promote the development of sustainable, accessible credit schemes for forest and farm producer organisations.

MAYAWA’s initiative is expected to inspire other producer organisations in the region to mobilize efforts for better access to finance. For instance, the Syndicat des Organisations Agricoles, a producer organization from Madagascar, has already expressed their interest in learning from MAYAWA’s experience as their world-famous vanilla value chain expands.

In Tanzania, the seven forest and farm producer organisations supported by the Forest and Farm Facility (FFF) manage 1,7 million ha of forest and farmland and represent 115 000 producers. With adequate financial support, they hold massive potential to deliver sustained improvements to rural livelihoods and build long-term resilience.

MAYAWA is a member-based organization of farmers in Bukoba district, in Kagera region, founded as a non-governmental organization in 1997 by farmers of Bukoba urban and rural districts, Muleba and Missenyi district. MAYAWA later developed into a farmers’ organisation to allow rural entrepreneurs to boost their income and founded an entreprise to process and export their products. In June 2021, MAYAWA kickstarted its collaboration with FFF Tanzania.

Additional resources:

Smallholders in Tanzania can now access loans to expand enterprises, The Guardian, 2 December 2022

Connecting forest and farm producer organisations to climate change finance, FAO publication, 2021