Innovating for Smallholders

Photo Credit: Muhammed Shaiful Islam

Smallholder finance has traditionally meant one product (loans) for one purpose (agricultural production). A more holistic approach is needed to address the much wider array of financial solutions relevant to smallholder families.

An estimated 500 million smallholder farming households (representing 2 billion people) rely to various degrees on agricultural production for their livelihoods. They represent the largest client segment by livelihood of those living on less than $2 a day.

Smallholder families are not just agricultural producers. They are also consumers who have diverse financial needs and who often earn income from a variety of nonagricultural sources, including labor and off-farm enterprises. The first step in successfully serving these clients is to better understand their needs, aspirations, and behaviors. An enhanced understanding of smallholder demand will help financial services providers and other stakeholders to develop and pilot more effective financial services and products tailored to smallholder families. This includes a focus on improving households’ ability to manage risk and smooth consumption, while also lowering provider delivery costs through the use of technology.

A mother and her two young sons sift beans. Photo taken by Hailey Tucker. Photo Credit: Hailey Tucker

Over the course of the past year, CGAP pursued three research projects aimed at identifying key smallholder segments, understanding their financial behaviors, and building stronger business cases for the financial tools they demand:

  1. Financial diaries with smallholder households in Mozambique, Tanzania, and Pakistan, which track the financial and in-kind transactions of approximately 90 families in each country.
  2. Nationally representative surveys of smallholder households in five countries that aim to both generate a clear picture of the smallholder sector at the national level and profile the four to six key segments of smallholder households.
  3. Human-centered design (HCD) projects in Zimbabwe, Senegal, Cambodia, and Rwanda that explore the potential of digital financial solutions to more effectively serve smallholder families.
Photo Credit: Andi Sucirta

Financial Diaries of Smallholder Families

There are an estimated 500 milllion smallholder farming households in the world, representing more than 2 billion people. To get a better understanding of how these families manage their finances, CGAP is conducting financial diaries research with 90 families in Tanzania, Mozambique, and Pakistan. The interviews capture information about cash flows in minute detail.

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FY2015 Highlights/Outputs

Completed data collection for Smallholder Diaries. Interim outputs include:

  • Early Insights from Financial Diaries of Smallholder Households” (March 2015), which details the methodology and shares early findings. Download Report
  • A blog series on the art and science of Financial Diaries. View Blog Series
  • Photo gallery of images taken by Smallholder Diaries participants in Mozambique (CGAP provided cameras to participants and asked them to take photos that represent challenges and successes they face in their daily lives). View Photo Gallery

Data collection completed for national surveys of smallholder households in Uganda and Mozambique, and planned for Bangladesh, Tanzania, and Côte d’Ivoire.

Completed four HCD projects, including development of a pilot product in Zimbabwe aimed at helping farmers digitally save for their children’s education. View Blog Series