Research & Analysis

National Survey and Segmentation of Smallholder Households in Mozambique

Agriculture is the foundation of the economy in Mozambique. It contributes 40 percent of the Gross National Product and 60 percent of export revenues; 80 percent of the population is involved in agricultural activities. Agricultural production is largely organized in small, hand-cultivated units of land. Ninety-seven percent of production comes from 3.2 million subsistence farms, with an average size of 1.2 hectares. Smallholder farmers in Mozambique largely practice rain-fed agriculture and use traditional varieties of crops, low-intensity fertilizer, and minimal pesticides. Farming is largely done without mechanization and productivity of the land is typically low.

Mozambique is also a country that has invested in its financial sector, increasing access and use of more formal financial services to facilitate greater economic stability. Despite its ranking as one of the lowest per capita Gross Domestic Product countries in the world (180 out of 188 by the United Nations Development Programme’s index of human development) in 2014, Mozambique is also one of the fastest growing nations.

CGAP has been working to build an evidence base on the financial and agricultural lives of smallholder households and conducted Financial Diaries with 90 smallholder households in Nampula Province, Mozambique. Working closely with the Financial Sector Deepening Trust Mozambique (FSDMoç), CGAP also conducted a nationally representative household survey of smallholder households between June and August 2015. This survey sought to comprehensively map the many activities, interests, aspirations, barriers, and pressures facing smallholder households. The questionnaire also explored nonagricultural household activities, financial practices and interests, as well as challenges and aspirations.

This working paper shares the findings, observations, and insights from the national survey of smallholder households. It begins with an overview of the research approach, core program objectives, research questions, preliminary phases of development, and topics included in the questionnaire. It then profiles smallholder farmers in Mozambique, including their household demographics, farmographics, directions of decision-making, how farmers self-identify and characterize their identity, and what motivates them to do the work they do.

The report takes up how households manage their income and expenses, along with the issues they face that threaten income and often lead to financial instability. This paper then describes financial inclusion in the smallholder sector, exploring household tools that are essential for financial inclusion, including mobile phones and national identification documents, as well as adoption of financial products, awareness, barriers, and interests. The paper then outlines meaningful segments of the smallholder population in Mozambique, mapping out groups of smallholder farmers that matter for fostering greater product adoption, and delving into their demand for various financial mechanisms. A full explanation of the research methodology is included in Annex 1.

This Document Has Three Goals:

  1. Build the evidence base for those working in agricultural finance so that assumptions and/or isolated observations could be paired with known, reliable representative data about the population.
  2. Connect readers with the unique realities of smallholder farmers in Mozambique that could otherwise be overlooked, oversimplified, or erroneously generalized from other smallholder farmer markets.
  3. Catalyze conversations about “what next” for smallholder-farmer-centered strategies, products, and approaches that facilitate agriculture, as well as household finance.

The actual survey and full body of research will support a number of financial and agricultural inquiries that arise within communities of practice, for both the near and long term.

Key Findings

Smallholder farmers are passionate and committed to agriculture, navigating the many occupational realities that can threaten their daily life. They engage in agriculture, relying mostly on their own resources, with limited outside assistance. What little support they do solicit typically comes by way of family and friends, or other members of the community. More formal entities, such as financial institutions, agricultural inputs providers, resellers, buyers, or other entities often a part of an agricultural value chain, play only a small part in the Mozambican smallholder ecosystem.

These and other key findings emerged from the comprehensive exploration into the lives of smallholder farming households that sought to answer the following:

  • What does the community of practice need to know or do to support smallholder farmer households build resilient and productive livelihoods?
  • How can financial mechanisms respond to the relevant needs and desires of smallholder households?
  • What types of market strategies and approaches can cultivate uptake and use of financial mechanisms?

Important Factors

Five fundamental characteristics of smallholder households can help the community of practice foster greater productivity and resiliency:

  • Common farming practices characterize this population: The Mozambican smallholder farming sector is fairly homogenous. Agriculture provides the main income stream into the household, and supports nearly all of the household activities, but just barely. Families consume what they grow, trade goods for other necessities, and sell their crops for income. One crop can be used in each of these ways, but even still, households often fall short of their monthly needs. Most of the households live at or below the poverty line, and many live in extreme poverty. They work hard, have big aspirations, and take pride in their accomplishments.
  • There is promise with a new generation of smallholder farmers: The smallholder farming community includes both tenured, seasoned, experienced farmers who have lived through both the pains and abundant yields that come with farming, as well as younger, newer farmers who bring with them more modern perspectives, vitality, and an ambitious mindset. Younger farmers are more educated, and some may consider leaving agriculture if a compelling alternative arises.
  • The smallholder farming ecosystem is extremely informal and lacks financial and agricultural infrastructure: Smallholders largely engage in agriculture without much connectivity to a value chain, or any formal suppliers. Involvement with buyers or resellers is often just as informal and in the context of loose value chains, meaning that the transactions happen without a contract in place. Farmers also have limited market access due to lack of transportation, and they know these constraints mean they might not get the best market price for their goods.
  • Exposure to any financial mechanism is limited: Not only do smallholder farmers operate without using formal financial services, such as bank accounts, mobile money, NBFIs, or microfinance institutions (MFIs), most are not even exposed to these institutions. The majority of smallholder farmers have never been in a bank and most are not aware of mobile money. They also lack the basic tools for digital financial services (DFS), such as mobile phones and identification documents. What’s more, smallholders often manage their household finances outside any informal channel. Very few rely on local, informal lending, savings circles, or similar mechanisms.
  • Risky practices run counter to financially sound desires: In practice, smallholder households do not have savings, do not have access to funds in the event of an emergency, and do not have insurance or any other way to mitigate risk. And their monthly expenses can outweigh their monthly income. Their aspirations, however, reflect a financially astute, responsible, and even prosperous mindset. They want to save, they want to insure their activities, and they want to have more options for mitigating risk. The appetite for financial security has not yet diminished due to lack of access and other realities.

Financial Mechanisms

Perhaps the most important finding for identifying financial mechanisms that respond to the relevant needs and desires of smallholders comes out of understanding where and how smallholder farmers prioritize. While they are farmers at heart, and their profession defines them, their focus is on their home. Smallholder farmers think about the homestead, home needs, and the family under their roof, and are driven by working toward a sustainable home.

To that end, they have the greatest appetite for two types of financial mechanisms: those that help them afford agricultural inputs, such as seed and fertilizer, so they can grow the crops to sustain the homestead, and those that help them directly sustain their home. The latter can include mechanisms that help them improve the structure of their homes, afford school fees, or save money for future home needs.


Four strategies emerge to cultivate uptake and use of relevant financial mechanisms:

  • Equip smallholder households with mobile phones and identification cards, basic tools for financial inclusion: Most smallholder households do not have their own mobile phone, a critical tool for digital finance. Digital finance is essential because brick-and-mortar institutions are too far from homes, and households lack adequate transportation. Phones are not only tools for transacting financially, they also are information channels for important agricultural communications. Individuals within households also need to have national registration cards required to open accounts.
  • Build meaningful awareness about financial mechanisms: Smallholder households generally do not know about mobile money, have not been inside a bank, and might not even be connected to an informal lending or savings circle. They need a basic introduction to financial mechanisms followed by a meaningful value proposition.
  • Pair immediate needs with long-term desires: The survey tested potential dual-mode products that combined both short- and long-term benefits to farmers. Loans that include insurance, loans that include banking or savings accounts, mobile money accounts that include savings, and similar bundled products can go a long way to appeal to the immediate needs and set the conditions for a desirable long-term practice. Further, farmers do not want to see their hard labor squandered due to bad weather or pests and, therefore, want access to insurance or even convenient and reliable information to avoid those risks.
  • Think “economies of scale”: The vast majority of smallholder farmers can be characterized as “farming for sustenance.” The economic value for investors and providers is in both the size of the population and the lack of competition for the target audience’s attention.

Smallholder farmer households’ circumstances and surrounding ecosystem might mean that they struggle day in and day out, live below the poverty line, and are tied into a rudimentary system. Their mindset, however, suggests commitment, diligence, and a desire for a prosperous future.

Related Resources


Despite their active financial and agricultural lives, smallholders in Mozambique have few tools to manage their irregular and volatile household cash flows, and thus it is difficult for them to plan and expand their livelihood activities.

Each short section in this summary complements CGAP data and insights for each country and addresses what the data tells us and what this means for FSPs and others.