Scaling-up farmer investment in Kenyan trees.
RuralInvest is being used in Kenya to analyse hundreds of small-scale investments in forestry, crop production and livestock that help farmers diversify and increase their incomes.
“For the Kenya Forest Service, RuralInvest came just at the right time” emphasises Ms. Jane Ndeti, who works as a forest investment manager in the Kenya Forest Service (KFS). Ms Ndeti needed a tool to help prepare and evaluate investment proposals needed by the thousands of farmers that she works in Kenya. RuralInvest or RIV was designed to help with just such a challenge. She emphasises that “RuralInvest has really been a great thing for us as an organization.”
Ms. Jane Ndeti (Kenya Forest Service) explaining how RuralInvest is being used in Kenya during an FAO RuralInvest workshop in Rome, December 2017.
In 2009, Ms Ndeti was one of the first Kenyans to be trained in RuralInvest by the Food and Agricultural Organization of the United Nations (FAO). RuralInvest was first developed in the 1990s by the FAO Investment Centre as a simplified approach to identifying and preparing rural investments. A year after Ms Ndeti training, the KFS was using the tool to prepare investment proposals. Now the Service has a large team of 44 staff who have been trained to use the Toolkit. Of these 30 are trained in developing project profiles (RIV Module 2) and 14 in more detailed project formulation (RIV Module 3).
As Ms Ndeti explains, “The KFS field workers know what data is needed when they go to the field to speak with farmers. They spend 3 days with the farmers to collect the data, and sit with them to develop investment profiles.” This is very much inline with the RuralInvest approach, which emphasises a participatory, interactive and bottom-up to designing investments. With this information Ms Ndeti and other KFS employees trained in RIV then can analyse up to a hundred proposals in a week. The emphasis is on using RIV as efficiently as possible. Since 2010, Ms Ndeti and her team have also trained 709 farmer groups, or approximately 11,000 farmers, in how to use the tool. “So we have done quite a lot” she modestly admits.
Kenyan farmers who have invested in tree crops with the support from KFS and investment appraisal using RuralInvest.
The impact has been considerable. In total 950 project proposals have been prepared using RuralInvest, and from these 560 proposals have been funded. Whilst the funding is typically small, ranging from USD 100 to USD 1000, over 2000 small-scale farmers have benefited. In all cases the projects have been funded through loans. Ms Ndeti emphasises that “we decided from the beginning that we would be giving the money out as loans. Whilst the amounts are small, we have to lend money that the farmers will be able to pay back. To date we have had a 99.9% recovery rate”.
RuralInvest Impact
- 44 Kenya Forest Service staff trained
- 709 Kenyan farmer groups trained
- 950 Project proposals developed
- 560 Project proposals funded
- 99.9% of loans recovered
The many projects which have been funded are diverse. They include forestry enterprises (woodlots for timber and fuelwood, fruit orchards, fodder banks and tree nurseries); livestock rearing (poultry, dairy cows, goats, pigs, goat, bee keeping); and agricultural crop production (potatoes, peas, maize, cow peas etc.). The FSC are involved, explains Ms Ndeti as “we are a forestry organization so we fund projects that help us achieve our mandate as an institution, which is forestry. Because forestry is a long term investment, apart from tree nurseries, we support these farmers so they can invest in these other projects at the same time to generate income in the short term”.
KFS is now expanding this work through a new model with the Equity Bank, a financial service provider. The Bank will provide loans to small-scale farmers, and to cover any risk of non payment, KFS has created a risk fund and will cover any losses on a 50:50 basis with the Bank. RuralInvest will be used to prepare the proposals submitted to the Bank. Loans fall into three categories, namely USD 1 to USD 3000; USD 3000 to USD 10,000; and above USD 10,000. Once the Bank has carried out their appraisal of the farmer, the loan will either be disbursed or not. As Ms Ndeti concludes “so the impact of RuralInvest has been to make project proposal development easy, and now these proposals are even being accepted by financial Institutions as the basis for providing loans”.
Investing in agriculture can transform lives, reduce hunger and malnutrition, and eliminate poverty. Working with international partners, FAO has contributed to thousands of agricultural and rural investment strategies, policies and programmes in more than 170 countries. The majority of this work is carried out by the FAO Investment Centre.