A sustainable agribusiness model in Africa

By financing Kickstart, IFC has helped 3,600 Tanzanian farmers to increase their annual revenue by $1,400 whilst establishing in Africa a sustainable business model to provide more farmers with a way of increasing yields in an environmentally friendly manner. This is turning subsistence farms into environmentally sustainable and commercially healthy small businesses.

Farmers in Tanzania were using traditional flooding practices that were exhausting their water resources and yet still providing poor yields. They could not access better technologies for lack of cash or credit.

Through its Cleaner Technologies program, IFC provided US$35,000 in assistance to Kickstart, a not-for-profit company that has developed environmentally friendly irrigation foot pumps and is working in Africa to develop a sustainable supply chain to effectively distribute the units to small farmers. To make the pumps affordable, Kickstart did two things. First, using IFC's technical assistance, they coached each participant in the distribution chain — manufacturer, wholesaler, and retailer — on extending and handling credit. Second, they used a reimbursable IFC grant as the necessary working capital to get the credit chain started. The result was that, with repayment periods of up to a whole growing cycle, farmers could borrow the initial $50 required to buy a pump.

During IFC's engagement, 3,600 small plot subsistence farmers have emerged to become profitable micro-enterprises. As a result, those farmers reduced their environmental impact and increased their revenues. They now just use the water from the shallow rain filled aquifer, which is naturally and sustainably refilled. This is possible because they only pump the exact amount needed, at the same time avoiding carbon-based fuels unsustainably harvested from the surrounding forests. Their farming output has dramatically increased and, according to Kickstart, farmers increased their revenues by $1,400.

This sustainable business model now works without subsidies because of Kickstart's targeted technical assistance with the local banking sector and its clients. IFC's reimbursable grant has been repaid with the proceeds of a working capital loan from a local bank. Kickstart has developed a self-perpetuating supply chain which is creating small, environmentally friendly agribusinesses. Each time a new pump is purchased, a farmer has the means to move beyond subsistence.