A STUDY conducted by Agova, on behalf of Good Nature Agro (GNA), a for-profit social enterprise working with rural farmers in the legume value chain, has found that rural farming households have up to 12 incomes to get through lean periods.

New findings from the recently completed study, the Financial Diaries project, revealed that contrary to common misconceptions, rural farming households have a diversified income base to help them get through lean periods after the traditional crop marketing season, which typically runs between June and August.

Agova carried out a Financial Diaries project on behalf of Good Nature Agro to better understand the financial behaviors and needs of smallholder farmers in Zambia.

We tracked all of the cash flows from 198 farming households in Eastern, Central, and Southern Provinces for 12 months.

Between September 2020 and August 2021, a team of 6 researchers visited 198 selected study households every two weeks to record the events and transactions of the preceding fortnight. In addition to this, Agova remotely delivered training to the enumerators and conducted a verification exercise to validate the initial farmer profiles collected in 2020 using an Agova-designed verification survey using KoBoToolBox.

An Enumerator in the field conducting Financial Diary interviews

Understanding this will help GNA to support GNA farmers in the company’s service offering, and to connect them to tailored financial products and services. Additionally, GNA is looking to develop a layaway payments product that will allow farmers to purchase GNA seed with an inputs package.

Financial diaries, when complemented by product design tools, are envisioned to be used to help design appropriate offerings to farmers. “From the treasure-trove of data created through this study, we learned that contrary to common misconceptions, the economic lives of rural farming households are multifaceted and they employ a broad range of strategies to cope with economic stress.

We found that:

1. The majority of income is earned during the main crop marketing season (June to August). Despite this seasonality, we found that households were able to cope during the lean season (January to April);

2. Households diversify their income base to cope with financial stress, and the median household had up to12 income sources,” results showed.

“3. Social networks are an important source of income for the poorest households with gifts, contributions, and remittances making up to 20% of the total household income; 4. Livestock and assets are an important ‘bank’ for rural households and are used to supplement household income in lean periods; 5. Mobile phone ownership is high, presenting an opportunity for financial inclusion for smallholder farmers through development of tailored digital finance products.”

In Zambia, GNA works with over 6,000 legume seed growers and commodity farmers across Eastern, Northern and Central provinces to improve their farming yields and facilitate access to relevant solutions. In trying to gain a clearer understanding of farmers’ cash flow patterns that are currently part of their grower network compared to those that are not, GNA, with financial support from Comic Relief, commissioned a year-long Financial Diaries study to provide insights into cash flow patterns of smallholder farmers.

GNA supplies high-quality legume seed and commodities while improving smallholder farmers’ income and lifting them out of poverty.

According to the 2015 FinScope Survey, there has been a positive trend in Zambia towards financial inclusion, with exclusion levels having dropped from 62.7% in 2009 to 40.7% in 2015, although farmers were considered financially excluded at a higher rate of 48.7% six years ago.