Leesa Shrader

COMPARATIVE ANALYSIS OF SMALLHOLDER FARMERS IN KENYA, ZAMBIA AND TANZANIA

Shapshot results from Tanzania, Kenya & Zambia

AFA Program Director

Washington DC, May 2018

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Background: AFA Program Objectives

Financial Inclusion and Climate Resilience Roundtable

3

Products & Services for SHF

Last Mile Distribution

Farmer Capability Tools

Technology Start Up Acceleration

Alternative Data & Credit Scoring

AFA Approach: Innovation PartnerFinancial Inclusion and Climate Resilience Roundtable

AFA Approach: Outcomes & ImpactFinancial Inclusion and Climate Resilience Roundtable

We expect to see 50% increases in income and productivity for farmers,

with 50% outreach to women

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Research Question 1: What is the profile of an average farmer in Tanzania, Kenya and Zambia?

Socio-economic profile:

• Kenya’s SHFs have the largest income gender gap both in total and relative terms.

• Zambia’s SHFs education income gap is most pronounced: the median SHF with tertiary education earns $121, while the median SHF with no formal education or primary education only earns $9 or $12 a month.

$40

$69

$121*

$22

$35

$22

$19

$22

$12

$15

$13

$9

Tanzania

Kenya

Zambia

Median Monthly total income by education and country

No Formal Education Primary

Secondary Tertiary

*Income levels might be skewed due to a small sample size in the tertiary category.

3.1 Profile of Smallholder Farmers

$22

$38

$18

$16

$20

$14

0 10 20 30 40

Tanzania

Kenya

Zambia

Median Monthly total income by gender and country

Female Male

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Research Question 1: What is the profile of an average (or median) farmer in Tanzania, Kenya and Zambia?

Economic Profile (2) – income distribution of SHFs:

• Income distributions in all three countries point towards a large share of SHFs living below $1/day.

• Zambia observes the most unequal distribution: while it has overall fewer SHFs living below $2 /day than Tanzania, 48% of Zambian farmers still live below $0.5/day.

43%

24%

12%

5%

4%

6%

2%

4%

Below $0.5/day

$0.5-1/day

$1-1.5/day

$1.5-2/day

$2-2.5/day

$2.5-4/day

$4-6/day

Above $6/day

Tanzania

37%

16%

9%

7%

4%

9%

7%

11%

Kenya

48%

16%

7%

4%

4%

7%

5%

11%

Zambia

84% < $2 / day 69% < $2 / day 75% < $2 / day

Disclaimer: Note that comparing SHF’s average income does not account for national differences in income levels. We can however interpret the income distribution for each country.

3.1 Profile of Smallholder Farmers

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Research Question 2: What is the uptake and usage of financial services by SHFs in Tanzania, Kenya and Zambia?

Nature of Financial Uptake:

• Kenya’s SHFs have the highest financial inclusion levels with only 9% who are excluded.

• Of those who are financially included in Kenya, 33% are banked as opposed to 16% in Zambia and 7% in Tanzania.

• Mobile money penetration is 56% in Kenya, while it is lowest in Zambia (16%) and 41% in Tanzania.

3.2 Uptake and Usage of Financial Services

7%

33%

16%

41%

56%

16%

7%

2%

2%

9%

4%

36%

9%

62%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Tanzania

Kenya

Zambia

% of Financial service uptake

Banked Mobile Money Other Formal Informal Excluded

Base: All SHFs

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Research Question 2: What is the uptake and usage of financial services by SHFs in Tanzania, Kenya and Zambia?

Nature of Financial Uptake:

• SHFs in Tanzania make most use of informal services and are catching-up with insurance and mobile money.

• 91% of Kenyan SHFs are formally included. Kenya has the highest take up across most types of financial services, except informal services and MFIs.

55%48%

30%

15%7%

2% 1%

91%87%

5%

27%33%

3%10%

34%

26%

6%2%

16%

6% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Formal Mobile Money Informal Insurance Banked MFI SACCO

Financial service uptake by type of service

Tanzania Kenya Zambia

3.2 Uptake and Usage of Financial Services

Base: All SHFs

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Mobile money services uptake by age:

• In Kenya, mobile money uptake is similar for SHFs between 16 and 54 but decreases in groups older than this.

• In Tanzania, mobile money uptake is bell-shaped with low values for the youngest and oldest SHF segments, peaking for SHFs between 45 and 54.

• In Zambia, SHFs of all age groups have similar mobile money uptake.

Research Question 2: What is the uptake and usage of financial services by SHFs in Tanzania, Kenya and Zambia?

3.2 Uptake and Usage of Financial Services

42%

91%

22%

50%

90%

30%

54%

88%

23%

56%

90%

29%

43%

85%

23%28%

74%

27%

0%

20%

40%

60%

80%

100%

Tanzania Kenya Zambia

Perc

en

tag

e

% of Population Using Mobie Money by Age Group

Age 16 to 24 Age 25 to 34 Age 35 to 44 Age 45 to 54 Age 55 to 65 Above 65

Base: All SHFs

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42%

58%

No

Yes

Saving behaviour - Kenya

Saving behaviour: Kenyan SHFs who save (58%) often do so by using mobile money (41% use KCB M-Pesa, 15% use MPesa and 12% use M-shwari). Savings groups are also used frequently (33%) and most SHFs have moved away from savings at home (‘savings in a hidden place’ = 1.2%).

Base: SHFs who save

41%

33%

15%

12%

8%

6%

5%

5%

5%

4%

3%

3%

2%

1.3%

1.3%

1.2%

1.2%

1%

0% 10% 20% 30% 40% 50%

KCB M-Pesa Account

Farmers’ savings and loan group

M-pesa

M-shwari

Co-operative SACCO

M-Co-op Cash

Friend/family to guard against…

Co-operative Bank

Formal SACCO

Equitel

Others

Chama

Friends in rotating ROSCA

Church SACCO

Microfinance Bank

Equity Bank

Savings in a hidden place

Family bank pesa pap

Saving channels used by SHFs - Kenya

3.2 Uptake and Usage of Financial Services

Research Question 3: How do SHFs save and borrow in Tanzania, Kenya and Zambia?

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77%

23%

No

Yes

Borrowing behaviour -Kenya

Borrowing behaviour: SHFs in Kenya borrow are less likely to borrow than those in Tanzania (23% vs 45%). Those that do have mostly moved away from borrowing from friends or neighbour (5%) and are using informal groups, such as Chama (30%) or SACCOs (14%), or mobile money services such as Mshwari (20%).

30%

20%

16%

14%

8%

5%

2%

2%

1%

1%

1%

0.4%

0.5%

0.2%

0.2%

0% 5% 10% 15% 20% 25% 30% 35%

Chama

Mshwari

Bank

Sacco

Microfinance

Family/Friends/Neighbor

Agricultural Input Supplier

Kcb M –Pesa

Buyer Of Your Produce…

Money Lender

Local Trader

Government Institution

Mobile Phone Downloaded…

Employer

Hire Purchase

Borrowing channels used by SHFs - Kenya

3.2 Uptake and Usage of Financial Services

Base: SHFs who borrow

Research Question 3: How do SHFs save and borrow in Tanzania, Kenya and Zambia?

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57%

43%

No

Yes

Saving behaviour - Zambia

Saving behaviour: The most common way of saving for SHFs in Zambia is savings money in a hidden place, e.g. at home (40% of SHFs who save). Mobile money uptake for saving purposes is relatively high (12%), considering the overall low uptake of 26% across SHFs in Zambia.

40%

19%

12%

11%

12%

10%

4%

4%

2%

3%

2%

0% 10% 20% 30% 40% 50%

Savings in a hidden place

Others

Mobile money

Xapit account

Microfinance Bank

Ichilimba

Farmers’ savings and loan group

Co-operative SACCO

A group of friends in rotating…

A friend/family to guard…

Zoona Sunga

Saving channels used by SHFs - Zambia

3.2 Uptake and Usage of Financial Services

Base: SHFs who save

Research Question 3: How do SHFs save and borrow in Tanzania, Kenya and Zambia?

14

87%

13%

No

Yes

Borrowing behaviour -Zambia

Borrowing behaviour: Only a small proportion of SHFs in Zambia claim that they borrow money. Of those who do, 33% do not indicate a source and 32% borrow from family and friends.

33%

32%

11%

8%

4%

4%

4%

4%

0% 5% 10% 15% 20% 25% 30% 35%

None

Family/Friends/Neighbor

Bank

Microfinance

Government Institution

SACCO

Ichilimba

Money Lender

Borrowing channels used by SHFs - Zambia

3.2 Uptake and Usage of Financial Services

Base: SHFs who borrow

Research Question 3: How do SHFs save and borrow in Tanzania, Kenya and Zambia?

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Research Question 5: What is the uptake and usage of digital financial services in Tanzania, Kenya and Zambia?

3.3 Digital Services

55%

90%

30%39%

85%

21%

0%

20%

40%

60%

80%

100%

Tanzania Kenya Zambia

SHF using mobile money by gender

Male Female

Mobile money uptake:

• Mobile money uptake varies in in each country, underlining their different progress in terms of market evolution.

• Although the gender gap is closing in mobile money in Kenya, it remains significant in Tanzania and Zambia.

48%

87%

26%

0%

20%

40%

60%

80%

100%

Tanzania Kenya Zambia

SHFs using mobile money

16

98% 98%

78% 76%67%

57%

32% 30%20%

13% 13% 11% 10%8%

95% 96%

11%

69%

7%

31%

5% 5% 11% 7% 10% 7% 6% 6%0%

20%

40%

60%

80%

100%

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SHFs using mobile phone for different purposes

Kenya Zambia

5 Annex

17

25%

22%

14%

14%

11%

8%

3%

3%

1%

0%

0% 5% 10% 15% 20% 25% 30%

Nothing

Worked more

Sold agriproducts

Cut down on expenses

Used savings

Others

Borrowed money

Sold asset

Sold an asset

Claimed insurance

Remittance

Agricultural Events - Tanzania

• About half of all SHFs have experienced unexpected agricultural events in the past 12 months.

• For 75% of those the event has a significant effect on household income, urging to either use-up savings, reduce consumption or do additional work to make-up for the loss.

• No insurance is used and only few SHFs uptake cash savings.

47%

36%

Harvest/crop failure/loss oflivestock

Loss of income as a result ofan unexpected drop in the

price you get forproduce/harvest/ products

you sell

Percentage of SHFs that suffer from agricultural shocks (1)

Coping mechanisms for SHFs that experience crop failure (2)

Research Question 7: What do farmers perceive as the most serious threat to their livelihoods? What are the coping strategies?

Base for chart 1 is all SHFs in Tanzania. For chart 2, it is SHFs who experience crop failures.

3.5 Growth and Resilience

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Where We Are Today: Models to a Million

Six existing core partners can be linked to ADF program in Tanzania and Kenya: Safaricom, Equity Bank, WFP FtMA, NMB, CRDB and Halotel/FINCA Bank + 20 VAS partners

Financial Inclusion and Climate Resilience Roundtable

Thank You!