Writing Assignment #8: Food Innovation

In researching food innovations, something that caught my interest had to do with micro-financing rural farmers in Africa. Part of Africa's agriculture problems has to do with farm financing. Looking at the North American farming system, it is very intertwined with financial institutions. Loans to purchase land, openly-traded forward-contracts to purchase crops at fixed prices, and various other channels to access capital mean that farmers can distribute their risk and returns evenly among more people. These various advancements have yet to reach Africa for a few reasons. Firstly, rural farmers in Africa tend to not have easy access to banks. This means that finding an institution to provide a loan can be quite challenging, forcing farmers to get creative in funding their farm. Secondly, many farmers in rural Africa are financially illiterate, meaning that they are vulnerable to financial exploitation from those who provide informal high interest loans. One possible solution to these problems comes from European investment bank. By using Africa's easy access to mobile phones, EIB plans to provide microloan services to rural farmers as well as financial literacy courses and other various farming educational services (such as tips to increase crop yields and ways in which to protect against crops from climate change). EIB has several obstacles to overcome in implementing their idea however they have a few clever ideas that might help. Collateral is a big one. Most farmers tend to not have liquid capital to guarantee loans but EIB plans to use household assets like chairs, cattle or firewood instead. This project of EIB is clearly taking the initiative to solve Africa's financial farming problems, and could potentially help lift millions out of poverty.

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