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HomeWorld NewsAgro-herders and traders in Asals face credit access woes

Agro-herders and traders in Asals face credit access woes


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Agro-herders and traders in Asals face credit access woes


A member of the Turkana pastoralist community walks towards his house next to his cattle in the early morning in an arid dry area in Morungole, Turkana County. FILE PHOTO | AFP

Borderland agropastoralists, traders and people living in arid and semi-arid lands (Asals) are grappling with the risk of the high cost of credit due to infrastructure and conflict, pointing to economic marginalisation.

According to the United Nations Development Programme (UNDP), traders along Kenyan borderlands among other African regions are paying more than 30 percent interest on loans from traditional pooled funds and shylocks, curtailing their daily earnings.

“In borderlands, access to finance is very chronic. If any, the cost of it is very high,” said, Zeynu Ummer, team leader and senior technical advisor at UNDP Africa Borderlands Centre.

“In Turkana, for instance, loan givers are taking 30 percent. Traders are paying 30 percent cost of money, and at the same time trying to get profit out of it. If we lower the cost of financing, make it more accessible and less risky, traders will benefit a lot.”

Read: More still needs to be done to spur access to credit

A recent report by Africa Borderlands Centre shows that only nine percent of people living in those areas in Kenya and other African nations have access to capital for business, being the least service available in terms of accessibility.

This is after electricity which 13 percent of the population has access to.

About 71 percent of respondents said the main provider of this capital was the community.

The report says inaccessibility to affordable credit is because it ‘does not exist’ and the second reason is they ‘cannot afford’ whenever available.

Activities such as village saving schemes are common in economies of both East and West Africa, by both agricultural and pastoralist women, limiting their participation in commercial exchange

The survey was done on 1,042 agropastoralists interviewed in 55 sample points across eight countries – Burkina Faso, Ethiopia, Kenya, Mali, Niger, Nigeria, South Sudan and Uganda.

In Kenya, the survey was done in six points in West Pokot and Marsabit. The sample points were chosen due to their proximity to international borders, typically within 30 kilometres of a border.

The report coincides with a FinAccess 2022 survey by FSD Kenya, which showed that the percentage of the population who were formally financially included was lower in counties such as West Pokot, Turkana, Garissa, Narok, Samburu, Marsabit and Tana River.

The regions mostly relied on informal groups, mobile money and National Hospital Insurance Fund (NHIF) for financial services compared to other devolved units with wider choices of financial service providers and products.

“In its weakest form, access to finance is there. But how can we lower its cost and derisk it?” Ummer added.

“Access to finance in the borderland is very crucial and we need to invest in that. Farmers don’t have money to buy fertiliser or selected seeds. Agropastoralists would also improve animal husbandry.”

Most households in borderlands practise pastoralism, farming and trading in the agricultural value chain.

Agropastoral groups combine farming and herding for benefits including milk, meat, sales, animal traction and manure.

In most pastoralist societies, animals tend to be regarded as a source of social standing and as insurance against uncertainties.

The areas have been faced with conflict and climate change, and vulnerabilities resulting from the absence of basic services – a lack of electricity, difficulty accessing clean water or the absence of State security.

The report, however, notes that lack of investment in infrastructure, education, health and market activities has whipped-up anti-State sentiments and weakened national cohesion, facilitating the festering of extremist movements.

Pastoralists and farmers in the regions have been among the first to be affected by such developments, which lead to a decline in agricultural production and restructuring of trade routes due to violent insurgencies, affecting livelihoods.

This has worsened their social well-being even as a majority say they depend on their family as the main source of financial help.

One in four respondents said they received financial help from their spouse, and 47 percent get support from any family member.

Read: Why small traders are shunning State loan guarantee plan

This compares with just 11 percent who said the government provided financial assistance, and 19 percent getting support from other bodies such as non-governmental organisations.

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