Rural

Increasing agricultural production and revenue are important goals in Haiti, where even though 65% of the population is employed in agriculture, food shortages are still common. A key element in expanding production is increasing the availability of agricultural credit from Haiti’s financial institutions. However, convincing financial institutions to expand agricultural lending can be difficult because they perceive it as high-risk for the institution. USAID/Haiti’s HIFIVE project, an Associate Award under the FIELD-Support LWA, is addressing these issues with new risk mitigation and incentive structures.

This success story explores recent developments at Le Levier, a federation of 20 credit unions with 200,000 member-clients, which is participating in an innovative USAID credit guarantee program that provides 50% risk coverage for a variety of agricultural credits.

On March 11, 2012, professors Pascaline Dupas and Jonathan Robinson published a study on "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya" which was conducted in 2006, 2007, and 2008 and funded by The Abdul Latif Jameel Poverty Action Lab (J-PAL) and Innovations for Poverty Action (IPA). Sampling was done in three waves with a total of 200 people. Dupas and Robinson worked with the Financial Services Association, a village bank in the market town of Bumala between Nairobi and Kampala, in order to offer savings accounts to randomly selected microenterpreneurs. These savings accounts did not pay interest, but clients were charged for withdrawals. The researchers analyzed savings account usage, which was recorded daily in logbooks over the period of several months. The researchers found that women benefited from these accounts and invested more in their businesses than men. Additionally, there was not a very high uptake of savings accounts, which could be attributed to people's mistrust of village banks. To learn more, please refer to the following post by David Roodman called “First Randomized Trial of Microsavings."

In October of 2011, economists Lasse Brune, Dean Yang, Xavier Giné and Jessica Goldberg published a new study on commitment savings. This study was conducted with the help from the formal bank Opportunity International Bank of Malawi. This study supports some of the earlier findings from a study by professors Pascaline Dupas and Jonathan Robinson and provides interesting additional information. This study focused on male tobacco farmers, who received loans from the Opportunity International Bank of Malawi as part of a 10-15 member group. As David Roodman pointed out in his blog post, “this study was designed to shed light on why commitment savings accounts help people, by measuring impacts on intermediate variables.”

The increasing penetration of mobile phones in Kenya has led to a rise in SMS-based information dissemination services. Such services have potential to reduce information asymmetry and empower farmers with weather, market, and other relevant information. However, a number of factors other than the sheer existence of the phone need to be in place for such potential to be realized. Data was gathered using 117 questionnaires administered in 6 Kenyan provinces, as well as 12 focus groups conducted in 4 locations around Kenya. Findings revealed that Kenyan cell phone users still prefer to call rather than SMS (short message service) due to the ease of calling and little practice using SMS. SMS-based information providers should, therefore, consider adding a voice-based product to their services in order to expand their market reach.