SheCan

Poverty is a complex phenomenon with deeply embedded root causes in political and economic structures. Limited infrastructure, discrimination and inequality, environmental degradation, social dynamics, and poor economic and political policies all contribute to the persistence of poverty. Smallholder farmers and micro-entrepreneurs in lower-income countries, especially women, face systemic challenges in accessing financial tools and services, hindering their economic situation and resilience to climate and economic shocks. Financial exclusion, which prevents access to capital and other financial services, perpetuates poverty among these groups. To address poverty, systemic and structural changes that go beyond individual-level barriers are needed. Among the systemic challenges that need to be addressed, financial exclusion is a significant one, and some of the key challenges include:

The Gender Gap

Despite comprising 43 percent of the agricultural workforce and producing between 60 and 80 percent of the food in lower-income countries, women globally own only an average of 15 percent of the land.  Cultural barriers to land ownership, combined with limited access to financial education and a lack of financial products tailored to their needs, maintain gender disparities and leave women at a disadvantage when it comes to accessing capital and formal financial services.

The Cycle of Financial Exclusion

Smallholder farmers and micro-entrepreneurs in rural areas of lower-income countries often experience financial exclusion despite the presence of Microfinance Institutions (MFIs). Local MFIs are financial institutions that usually provide small loans to individuals who cannot access traditional banking services. However, smallholder farmers and rural micro-entrepreneurs are often considered high-risk borrowers by MFIs due to their reliance on seasonal crop harvests for income and their vulnerability to external factors such as climate change and pests. Moreover, smallholder farmers and micro-entrepreneurs often lack the financial literacy needed to navigate the financial system and the tools to securely and transparently deposit and track their savings. This results in a cycle of limited financial opportunities in rural areas, perpetuating the cycle of poverty and having a greater impact on women.

Demanding Loan Conditions

MFIs themselves face high loan servicing costs in rural areas, as they lack the necessary infrastructure and digitization of their processes, which leads to expensive terms for potential clients in rural areas. Besides high interest rates and commission fees, excessive collateral requirements often preclude smallholder farmers from accessing finance. This requirement disproportionately affects women, as women are significantly disadvantaged relative to men with regard to land rights.

The SheCan initiative is a multidimensional approach to promote financial inclusion for smallholder farmers and micro-entrepreneurs, with a particular focus on driving economic participation for women and their communities. The program seeks to overcome systemic obstacles faced by these groups, creating an enabling environment for their economic growth. SheCan implements the following strategies to achieve its objectives:

Blended Financing Model

SheCan combines investment capital from crowdfunding campaigns and impact investors with donor funds from WFP. By offering affordable capital at below market interest rates to selected MFIs, the initiative aims to incentivize them to provide affordable financing to women smallholder farmers and micro-entrepreneurs. In addition to financing, SheCan provides technical assistance to both MFIs and their target populations to improve operational efficiency and reduce risk.

Technical Assistance to Microfinance Institutions (MFIs)

SheCan reduces loan servicing costs in rural areas by providing MFIs with technical assistance in digitization and capacity building. Digital tools and services, such as mobile wallet technology, can help farmers and MFIs save time and costs in servicing the loans by enabling digital payments and savings. When designing and implementing these tools and services with the MFIs, SheCan takes into consideration the needs and perspectives of rural women and their communities. The program involves them in the process by gathering their input and feedback, which helps inform the design of future products. In addition, SheCan is offering capacity building programs to help MFIs streamline their processes, improve operations, and outreach to rural areas. By enhancing the capacity of MFIs, SheCan aims to provide better services to financially excluded populations and improve their access to credit.

Technical Assistance to Smallholder Farmers and Micro-entrepreneurs

SheCan aims to reduce the actual and perceived risk of default of smallholder farmers and micro-entrepreneurs through financial education, gender sensitization and digital skills training. SheCan also provides support in the usage of digitization tools, raises awareness of gender issues, and ensures that products and services are inclusive and accessible to all.

SheCan helps farmers sell their crops for better prices through digital marketplaces and partnerships with digital platforms. In addition, SheCan is exploring micro-insurance as a way to protect farmers against risks such as natural disasters and crop failure, which can improve their access to food and other necessities while meeting debt obligations.

SheCan launched field operations in Zambia, Rwanda, and Peru in July 2022, where it has been successful in providing affordable financing to smallholder farmers and micro-entrepreneurs, predominantly women.  Below are some highlights from the SheCan project in Rwanda.

SheCan Rwanda

The SheCan pilot in Rwanda has shown promising preliminary results. The initiative leveraged the PlusPlus crowdfunding platform to provide loan capital at below-market rates from individual lenders. This capital was then disbursed to a local Microfinance Institution in Rwanda, CleCam. With this additional capital, CleCam was able to expand its agri-finance loan portfolio for local farmers' savings groups, providing them with funds in a timely manner for the agricultural season.

By lending capital at a lower rate, CleCam was able to reduce certain charges for the farmers. Instead of the usual 2% disbursement fee, the savings groups only had to pay a 1% fee. Additionally, CleCam waived 10% of compulsory savings as collateral and did not apply the usual commission fee. These cost-saving measures have helped to improve access to finance for smallholder farmers in Rwanda, which is critical to promoting their economic opportunities and resilience.

Feedback from SheCan project participants in Rwanda

Nyampinga Delphine is a maize farmer member of the KOPAIM cooperative in Rwanda. Being part of SheCan enabled her to access credit and increase the loan amount over time, as she was able to successfully pay back the outstanding loan via the savings group. She used the additional capital to buy farm inputs to increase the plot of land she cultivated. This resulted in a nearly 30% higher harvest in the season, which in turn increased her income from selling the produce. The increased income helped Nyampinga to further invest in her farming activities as well as her home and family.

Another KOPAIM cooperative member, Nyiraminani Jose, also accessed a SheCan loan, which allowed her to purchase agricultural inputs in a timely manner, leading to an anticipated doubling of her harvest compared to previous years when she had no financial support. She plans to save for loan repayment through her savings group and estimates that half of the loan will be repaid by the time of harvesting.

The SheCan initiative in Rwanda also provided access and trained the cooperative and its members on digital tools to help them record savings data and bookkeeping within the savings groups. This has helped the cooperatives to become more efficient and secure in recording data, which was previously done in physical notebooks.

SheCan has a flexible structure that can be easily replicated and applied across a wide range of financial inclusion and gender transformative programmes at WFP, aligning with WFP’s Changing Lives agenda. 

Building on the success of the first pilots, SheCan is expanding to new markets and has recently launched a pilot program in Malawi. Additionally, the initiative plans to launch three new pilots in different locations, which will allow further testing and refining its approach.

Through its innovative finance model and training programs, SheCan empowers smallholder farmers and micro-entrepreneurs to build sustainable and resilient livelihoods and create a better future for themselves and their communities. Working with MFIs to offer flexible and affordable and gender-sensitive financing to excluded populations and providing training in digital and financial literacy, SheCan supports WFP's mission of eradicating hunger and malnutrition while promoting economic growth and sustainability.