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Cilimba: "Farmers just want to have funds"

Farmer’s just want to have funds” well, I’m sure you’re all thinking 'well don’t we all? Every individual, every firm and every sector in the economy wants and needs finance to thrive, but what happens when funds are not accessible? It might sound absurd to some but this is the reality for most small-scale farmers in Zambia.

Image adapted from the iDE website

The agricultural sector is one sector that would make significant contributions to the economic development of a country. However, in Zambia most farmers are farming on a small scale. Small-scale farming is characterized by; low production, poor access to land and inputs, little or no access credit because most formal institutions such as banks are reluctant to extend finance to small-scale farmers.

Challenges and Prospects Small-Scale farmers have in Accessing Finance

‘Most small-scale farmers have little or no access to financing from formal financial institutions. Most formal institutions are reluctant to finance small-scale farmers because of the risky nature of the business’ (World Bank, 2015). Risks include; lack of adequate collateral, price volatility, little understanding of financial products and services, poor risk management techniques etc.

Findings from Interviews with Small-scale Farmers in Mpongwe

These are most common challenges small-scale farmers have in accessing finance, however, to identify more challenges and to highlight the major challenge that small-scale farmers in Zambia are facing, I conducted an in depth interview with 44 small-scale farmers in Mpongwe and also an interview with bank personnel.

Image of interview adapted from Natural Resources Institute's website

Interview Questions

During the interviews with the farmers, the following questions were raised;

  1. Why are they engaged in farming?

  2. How many of the farmers have had access to finance?

  3. What are the challenges they are facing in accessing agricultural finance?

  4. What type of financing are they seeking from formal institutions?

  5. What are they doing to mitigate the challenge they have in accessing finance?

Purpose of Farming

This interview allowed me to identify that approximately 68% of the small-scale farmers were engaged in farming not only to feed their families but to improve their communities through; increased income, increase access to education, increase nutrition, better housing and sanitation, reduced poverty and hunger.

High Cost of Inputs

In spite of the positive impact that agriculture has to the community, most small-scale farmers are not producing to their desired level or as efficiently as they would like to be. Most of the small-scale farmers, approximately 86%, complained about their lack of access to required inputs due to the high costs of these inputs. They stated the profit they were making at the end of the year was to cover cost of inputs.

Image of farm inputs is adapted from the Georgia Department of Agriculture website

Challenges of accessing Finance from Financial Institutions

When asked why they had not accessed financing to acquire the costly inputs such as fertilizer and machinery. It was identified that only 14% had requested for finance from formal financial institutions. 86% stated they had not requested for finance from financial institutions because assumed they did not meet the requirements and also;

  • High interest rates charged by banks

  • Repayments are expected to be made monthly which isn’t ideal for farmers because they expect income from their output once a year.

  • Banks favoured people in formal employment

  • They did not know products and services offered by banks

  • Banks were only focussed on business and did not want to focus on building a relationship with the farmers.

  • Lack of adequate collateral as most farmers did not own land as they were farming on ‘traditional land’ (land owned by their chieftainess and leased out to them for a specified period of time).

  • There is only one bank in the proximity (NATSAVE) which is offering finance at a very high interest rate.

  • Farmers stated they assumed banks were only offering accounts and credit to farmers, when 72% of the farmers were seeking to lease equipment to help them develop and manage their activities more efficiently

86% of the farmers interviewed had not applied for finance from financial institutions while the other 14% had requested financing from formal financial institutions BUT only 7% were successful. The successful farmers stated they had met various requirements set by Microfinance institutions such as maintaining an active savings account with the institution whereas the unsuccessful did not meet these requirements. Therefore it is evident that most small-scale farmers did not have access to agricultural financing from formal financial institutions.

Picture adapted from The Star, Kenya

Benefits of Extending Finance to Small-Scale Farmers

Let’s look at what would be the upside to extending finance to small-scale farmers. Financial inclusion of small-scale farmers would have a positive impact, it would allow farmers to have access to state of the art equipment which ultimately would lead to an increase in self sufficiency, reduce poverty levels, reduce unemployment levels and reduce dependency on imports (IFC, 2014).

Farmers together for A Good

Despite the challenges small-scale farmers have in accessing finance from formal financial institutions, small-scale farmers in Mpongwe, Zambia have come together for a good locally known as ‘Cilimba’.

Image is adapted from the Leadereconomics website

How does this Initiative Work

Cilimba is an initiative in which farmers agree to meet for a defined period in order to save and borrow from each other. Each member contributes the same amount at each meeting and one member is able to take the whole sum once for a specified period. For example 10 members of the group would each contribute ZMK 500.00, the total amount of funds contributed would amount to ZMK 5,000.00. At the conclusion of each meeting a member would carry lump sum of ZMK 5,000.00 to be invested in various activities but ZMK 500.00 is to be repaid in the next meeting in which another member will carry the lump sum.

This allows each member to access a larger sum of money and expand their business. This is done in rotation, allowing each member of the group to borrow the whole sum of funds saved for a given period of time. In addition to the money, farmers also lend equipment to fellow members in hopes of expanding their output.

Benefits of Cilimba to small-scale farmers

  • This initiative offers a personal source of income to the members.

  • This is initiative is efficient and allows farmers to distribute the money in a chosen way.

  • This initiative is flexible and can be tailored to the income of the group.

  • The savings of many can be transformed into a lump sum for one person. This lump sum is used to invest in their agribusiness, to improve their livelihoods or/and access other social amenities.

  • It protects an individual’s savings against immediate consumption.

  • Offers protection against theft as savings are not left within the houses and savings’ location is rotated to avoid theft.

  • It offers transparency due to group regulation

  • It offers a source of income for women to purchase goods for their families and improve household consumption.

  • In addition to this, Cilimba offers social capital, that is the members of this initiative get to know each other, gain information within the group and build a relationship which is sensitive to the needs of fellow members.

Adapting this Initiative

The Cilimba initiative may sound ideal but has several cons, one of them being the amount of money is fixed and may be inadequately matched to a person’s investment. However, I would encourage others, not only farmers, to employ this technique in their different occupations and different backgrounds.

  • The Cilimba technique can be practiced amongst people in the same work environment or people living within the same geographical area, it could be your neighbours or your colleagues.

  • Transactions can take place as often as daily or every specified period of time and the recipients of the lump sum are commonly chosen or at random, but ensuring each member has had access to the lump sum.

  • Cilimba has both social and financial functions but can also provide for opportunities to eat, drink and network.

Whatever the goal or the background, for this initiative to be adapted effectively, it requires discipline and each member ensures that the project is sustainable.


It is indisputable that access to credit by small-scale farmers remains a major problem that limits them from unlocking their full potential. Although it is expensive and risky, credit to these farmers should be prioritized. The small-scale farmers in Mpongwe have come up with an initiative that has increased their productivity but not to the desired level. For the farmers to reach ‘new heights’ it will require formal institutions to come on board and partner with these groups for a better Agricultural sector, a better Zambia and ultimately a better world.

Image adapted from Zarin Kimia Avar

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