TACKLING FOOD INSECURITY IN BURKINA FASO
Today, more than 3.5 million people in Burkina Faso -roughly 20 percent of the country’s population- are suffering from food insecurity. While agriculture employs some 80 percent of Burkina Faso’s population and generates approximately one third of its GDP, the sector is characterized by low crop productivity and is dominated by subsistence farming.
As part of the ABC Fund’s ambition to contribute towards ending food insecurity, in 2021 it approved a 450,000 EUR loan for Kaworo -one of five SMEs added to the Fund’s portfolio during the year. An agribusiness located in Dédougou, western Burkina Faso, Kaworo is dedicated to addressing agricultural
inefficiencies and food insecurity by producing and supplying key food crops for local sale. Grains and seeds, including maize, millet, sorghum, rice, sesame, and cowpea, are grown on its own 600-hectare farm as well as through an out-grower scheme, which currently employs 562 growers (25 percent of whom are women and 18 percent are youth) who cultivate an additional 1,510 hectares.
When demand exceeds supply, produce is also purchased from smallholder farmers outside its network. “Smallholders within its out-grower scheme are provided with farming inputs such as seeds, fertilizer, pesticides, and weedicides, as well as mechanization services on credit, helping to encourage increased productivity”, says Solène Prince-Agbodjan, Direct Investments Manager for the ABC Fund, Injaro.
The cost of these services is deducted from the farmers’ proceeds upon sale. Smallholder farmers in urgent need of finance before the harvest are also provided with microloans with zero interest rate.
Kaworo can sell up to 2,800 tons of grain and 1,115 tons of seeds, and -based on average yields- has an overall production capacity of 5,850 tons. During the 2020/2021 farming season, the company made payments totaling 384,000 EUR to its out-grower network. However, with credit provided by the ABC Fund, Kaworo expects to increase the number of out-growers it works with – providing income to an additional 120 smallholder farmers and sustaining revenues for its existing network for the 2021/2022 farming season. The company will also provide higher quality seeds to its out-growers with the aim of boosting productivity and increasing growers’ revenues.
In total, the ABC Fund’s credit is expected to generate an additional 407,000 EUR in payments to Kaworo’s out-growers during the 2021/2022 farming season. To effectively manage this growth, Kaworo has hired six new employees -all of whom are under the age of 35- and has constructed a storage facility with a 1000 metric ton (MT) capacity. Three additional storage units with similar capacities are also being built and will be available for use in 2023.
“Kaworo will also receive technical assistance to formalize and strengthen its governance structure and to develop a bankable business plan to support its longer-term goals” explains Agnes Janszen, Director of the ABC Fund Technical Assistance Facility, Business Partner at Agriterra. The organization will also be aided in developing, which will of increasing its value addition by entering the flour market; diversifying through the production of fertilizer; expanding into new markets and increasing margins.