Blog ShambaShield: Delivering inclusive finance and climate-smart solutions to Kenyan farmers
Millions of resource-poor smallholder farmers feed and nourish the people of Kenya. Yet, they face an increasingly unpredictable and extreme climate. ShambaShield is developing solutions that will integrate financial protection, 'edutianment' and information services to equip half a million Kenyan farmers with the tools they need to thrive in a changing climate.
ShambaShield is a CGIAR project that seeks to bridge the gap between agro-advisories and financial services through design research, integrating existing innovations into a cohesive, user-centered framework. This initiative goes beyond addressing farmers’ needs—it examines the broader ecosystem of agricultural practices, financial systems, and climate resilience to uncover opportunities for effective collaboration and bundling of solutions. By applying design research principles, ShambaShield generates insights and design ideas on how different players in the ecosystem can collaborate, what a bundled tool should consider, and how to align innovations with real-world contexts. Through its research, ShambaShield provides critical insights into how agro-advisories and financial services can be combined to create meaningful, scalable solutions for climate resilience.
What is ShambaShield?
The ShambaShield project has an unusual ambition. It aims to address critical needs of small-scale farmers in east and southern Africa, including access to financial services and agricultural advice to increase farm productivity and resilience to climate change.
ShambaShield aims to leverage three innovations to create a resilient and inclusive financial ecosystem for farmers. It is not a quick fix, but a thoughtfully designed package of solutions that enhances farmers’ productivity and resilience to climate change. It will provide three integrated core innovations. These are (1) Climate-Credit Scoring Tool that assesses the creditworthiness of farmers by incorporating climate risk factors, making it possible for more farmers to access loans for the first time; (2) a Risk Contingent Credit financial product that integrates credit with weather risk insurance, which builds a safety net right into the loans, reducing risks for both farmers and lenders; and (3) Digital Agro-Advisory Services and Edutainment Shows that send farming and financial guidance straight to farmers’ phones. This integrated and comprehensive approach, which improves farmers’ financial literacy, adapted practices and access to credit, will makes it easier for farmers to get the services and information they need.
The idea behind ShambaShield is to bundle innovations together to cover a range of risks that farmers face. For example, we want to make credit more available to small-scale farmers; but, because farmers sometimes face catastrophic risks, which are not manageable, we link in the third component of our innovation package, which is insurance to cover the high risks that farmers face.
Climate-proofing smallholder farming
For many smallholder farmers, accessing credit has always been an uphill battle. Financial institutions often consider them high-risk due to their small-scale operations, lack of formal financial records, and high likelihood of non-performing loans. ShambaShield’s climate-smart credit assessments make these farmers more attractive to lenders. The Climate-Credit Scoring Tool, developed by multiple partners, not only helps farmers secure loans but also equips them with knowledge to improve their creditworthiness over time.
The old ways of assessing risk and providing financial services were not built for handling the extreme weather events that are increasingly common. That’s one reason that ShambaShield’s Climate Credit Rating Score is so innovative: It’s building in safeguards from the beginning.
Helping farmers meet their financial challenges
Risk Contingent Credit embeds insurance protection (a substitute for collateral) within a financial product. The loans farmers receive allow them to purchase improved farm inputs such as seeds, fertilizer, chemicals, and irrigation equipment. If the embedded insurance mechanism is triggered by, say, drought or flood, the farmers’ repayment obligation is reduced. If the insurance is not triggered, the farmers pay an extra premium making the contract actuarially fair for both parties. Risk Contingent Credit not only gives women and other marginalized smallholders access to credit but also helps to prevent them from falling into credit-driven poverty.
Shamba Shape Up
ShambaShield is delivering information on climate adaptation, financial literacy and best agricultural practices through platforms like the popular television show Shamba Shape Up and its iShamba mobile service, which reaches 1.2 million farmers annually. The Shamba Shape Up ‘edutainment’ TV show is an effective way to reach people. It engages with real farmers and their problems not in a TV studio but in farmers’ fields. Many Kenyans watch the show and make better decisions because of it. ShambaShield also employs radio programs, podcasts and mobile apps to meet people where they are, using those communication channels that are already part of their lives. And these digital platforms allow for two-way interactions. Farmers can ask questions, share their experiences, and learn from each other. Such agro-advisories play a big part in giving farmers the knowledge and tools they need to manage climate risks themselves. Giving farmers real-time information and advice helps them to adapt to changing conditions and adopt more climate-smart practices.
Many farmers we talk to have no idea about how to even begin a loan process. They’re unfamiliar with banking systems, with the importance of record keeping or even the importance of declaring assets. There is a huge gap between what exists in the market and what farmers know. We’re working to bridge that gap with the Shamba Shape Up TV show, which enhances farmers’ financial literacy in a fun and accessible way.
Achievements made possible by the Ukama Ustawi Scaling Fund
ShambaShield is supported by the first round of a Scaling Fund provided by the CGIAR Initiative on Diversification in East and Southern Africa (Ukama Ustawi) and by two other CGIAR Initiatives—Climate Resilience (ClimBer) and Livestock and Climate. As one of the winners of the 2024 Ukama Ustawi Scaling Fund, ShambaShield received $125,000 and invaluable support from CGIAR scaling experts. This Fund has been instrumental in expanding ShambaShield’s impact to reach more smallholder farmers across Kenya. It has supported the development and refinement of the key components—the Climate-Credit Scoring Tool, Risk-Contingent Credit, and Digital Agro-Advisory Services. These efforts have allowed ShambaShield to bridge the financing gap for smallholders, helping them access affordable credit and insurance products.
Through the Scaling Fund, ShambaShield has forged strategic partnerships with organizations such as Financial Access Consulting Services, Safaricom’s Digifarm, Family Bank, the Mediae Company, and the Kenya Meteorological Department. These partnerships are crucial in aligning efforts to strengthen ShambaShield’s offerings and extend its reach to farmers. They will contribute to further refining these products, as well as developing a strategic scaling plan to expand the use and impact across East and Southern Africa.
