Lending a hand – and finance – to young agricultural entrepreneurs in East Africa

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Lending a hand – and finance – to young agricultural entrepreneurs in East Africa

Young people in East Africa, especially those who would like to start an agricultural business of their own, face myriad social and economic challenges. Although access to inclusive financial services has been shown to reduce rural unemployment and create wealth – especially for women and youth – financial institutions remain hesitant to lend to small farms and agricultural enterprises, citing high risks.

In response to these challenges, a grant called “Scaling-up rural youth access to inclusive financial services for entrepreneurship and employment” (SYAF) is helping young agricultural entrepreneurs in rural areas of East Africa develop their business skills and engage in peer-to-peer learning so they can access grants and loans.

So what have we learned about connecting youth with financial services?

Sarah Wambui of Agrinovations displays some of the company’s products. © EAFF

 

Give young people the skills they need to succeed – and they will pass them on

Skills like business planning, proposal development, and pitching techniques help young people secure financing from banks. Through agribusiness development training, such as that provided by the African Agribusiness Academy (AAA), young people learn how to build and sell their business plans.

One of the project’s success stories is a Kenyan company, Agrinovations, which now trains young entrepreneurs on growing profitable horticultural crops, helps them establish their own farms, offers farm-level management services, and connects them with buyers.

The right match makes all the difference

Youth participating in SYAF developed business proposals, which were evaluated by a financial management consultant. Qualifying proposals were then matched to suitable financial institutions in order to secure finance and spur growth. This was done by identifying and profiling funding opportunities, assessing the readiness of youth enterprises for financial services, establishing partnership agreements, and mentoring applicants. Some youth enterprises were incubated through AAA business clubs, while others were connected to banks.

This kind of “matchmaking” turned out to be just right for Lugon Green, a company making fuel briquettes. When they were first starting out, they were paired with the Tony Elumelu Foundation for training and business mentorship. Thanks to their training, Lugon Green went on to receive a grant of 500,000 keniota (over US$4,000).

Two members of Aqua Fahari at work. Aqua Fahari is a youth-led Kenyan agribusiness practicing hydroponic farming. © EAFF

 

Learn from others – and pass those lessons on

Peer-to-peer learning was an important element of the project. Young entrepreneurs shared business tips, success stories, videos, and opportunities online via social media and platforms like the African Youth Agripreneurs marketplace. What’s more, a representative from each youth enterprise was trained in agribusiness management, and they then passed this learning on to other members of their groups.

This spirit of “learn, and then pass it on” can be used within IFAD to increase impacts. For example, the youth-focused PRODEFI project in Burundi connected with partners already established under the SYAF project. In Uganda, IFAD used a SYAF database of youth enterprises to offer financial support to young people. Meanwhile, clustering youths into various trading lines – such as horticulture, poultry, or beekeeping – helps transfer information across the region, trigger trade, and promote the rollout of youth cooperatives in the region.

But the main lesson learned? Well-structured support to youth-led businesses can enable young people to establish functional and profitable enterprises.

Read our lessons learned note to find out more.

Learn more about IFAD’s work in East and Southern Africa.

Guyo Roba is a Country Technical Analyst, and Zainab Semgalawe is the Lead Regional Technical Specialist for Institutions, for the East and Southern Africa region. Both authors support IFAD’s Sustainable Production, Markets and Institutions Division.