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Innovations for Poverty Action (IPA) 2010

Agricultural Microfinance in Mali

Agricultural Microfinance Mali

Innovations for Poverty Action

Titre : Agricultural Microfinance in Mali

Région /Pays : Mali

Date : 2010-2012

Evidence suggests additional investments in agriculture could increase income for subsistence farmers, potentially improving the livelihoods of millions of people. In rural Mali, giving some farmers unrestricted cash grants led to significantly higher productivity and profits, suggesting farmers would invest more in their farms if they had more capital. Providing farmers with an innovative loan product also led to a significant increase in farm investments and expenditures, suggesting agricultural loans tailored to farmers’ seasonal cash flow may be an effective way to increase investments in agriculture. In addition, this research suggests farmers vary in the returns they are able to generate from inputs, and agricultural loans attract clients with a better-than-average ability to grow their farms.

In Mali, 80 percent of people work in agriculture, most of them in subsistence farming. The sector accounts for about 37 percent of Gross National Product.1 This study takes place in the region of Sikasso, within the areas of Bougouni and Yanfolila, in southern Mali. In these areas, farmers grow cash crops like cotton, maize, sorghum, millet, and groundnuts.
Soro Yiriwaso, is a microfinance institution in Mali whose mission is to increase economic opportunities for poor Malians, especially women, by offering financial services. Soro Yiriwaso offers a loan product called Prêt de Campagne, or “countryside loan,” to women who join local community associations. Unlike most microloan products, it is designed specifically for farmers. The loans are dispersed at the beginning of the agricultural cycle between May and July and clients must repay loans on one lump sum immediately after the harvest. Soro Yiriwaso issues the loan to groups of women organized into village associations. Each individual woman then establishes a contract with the association for her loan.

To evaluate the impact of the Prêt de Campagne loan product on agricultural productivity and farm profits, researchers partnered with Soro Yiriwaso to conduct a two-stage randomized evaluation in 198 villages in rural Mali.
In the first stage of the study, Soro Yiriwaso offered their standard agricultural loan in 88 randomly selected villages. In these villages, only women who joined a local community association were eligible to receive loans. In the remaining 110 villages, no loans were offered.
In a second stage of the study, researchers offered grants in the 88 loan villages to a random subset of the households who chose not to take out loans. The grants were worth 40,000 FCFA (US$140)— about the size of the average loan provided by Soro Yiriwaso and equivalent to around 70 percent of what average households spent on agricultural inputs. In the 110 villages where no loans were offered, households were also randomly selected to receive the grants. Similar to the loans, these grants were issued directly to a female household member.
Over a two-year period, researchers measured changes in farmers’ cultivated area, input use, and production output. They also collected data on food and non-food expenses of the household as well as on financial activities (formal and informal loans and savings) and livestock holdings.

Partenaires  : Save the Children ; Soro Yiriwaso

Innovation for Poverty Action (IPA)

Page publiée le 30 septembre 2015, mise à jour le 10 novembre 2017