Grant support for smallholder farmers: Boosting agricultural livelihoods in the Republic of Congo

Over 40% of Congolese earn their income from agriculture. However, many struggle to thrive due to traditional agricultural practices. Indeed, these traditional practices fail to improve productivity, generate sufficient income to meet household needs, and break the cycle of poverty. 

This poor performance is largely due to the lack of affordable financing options and the reluctance of financial institutions such as micro-finance institutions and commercial banks, to invest in the agricultural sector. These institutions perceive high operational and financial risks, due to the (i) low technical capacity of farmers, (ii) impacts of climate change, and (iii) poor governance mechanisms related to land tenure security. Hence, the absence of affordable financing mechanisms significantly affects the transformation of the agricultural value chain and the improvement of farmers’ livelihoods. As an alternative, the Commercial Agriculture Development Support Project (PDAC), financed by the World Bank in the Republic of Congo, initiated a “matching-grant” financing mechanism for agricultural micro-projects. This initiative, along with the rehabilitation of feeder roads, has significantly supported smallholder farmers. The “matching-grant” mechanism has acted as a “helping hand”, positively impacting the livelihoods of thousands of agriculture dependent households. 
 

A “Helping Hand” With Significant Impacts On Livelihoods

From 2019 to 2023, 1,130 groups of smallholder farmers – that is 13,180 beneficiaries – received approximately XAF 14,116 ($ 23.5) as “matching-grant” financing from the PDAC project, with a 5% counterpart contribution (e.g., XAF 705,80 or $ 1,174). Indigenous groups received a matching-grant with no counterpart requirement.

PDAC investments have provided numerous benefits such as: 

• Increasing farm sizes from a 3 ha average to 30 ha in savannah areas and from 0.5 ha to 5 ha in forest areas, due to the systematic use of tractors for ploughing, sowing, and phytosanitary treatments.
  
• Year-round availability of vegetables in markets, and significant yield increase for cassava and maize, thanks to the use of improved planting materials and fertilizers.
• Enhanced poultry farming, resulting in the production of 14.5 million eggs, contributing to the end of egg imports in the country.
• PDAC also rehabilitated and maintained 1,634 km of feeder roads (including waterways). This reduced travel time and transport costs, such as a 37.5% reduction in travel fees on the feeder road from Pamba to Odzaka Oko (Cuvette department) and a 38% reduction on waterways along the Libenga, Motaba (Likouala department), and Ndeko rivers (Cuvette department). These improvements also contributed to reducing post-harvest losses for many commodities. 

Refining the Eligibility Criteria of Micro-Projects for “Matching-Grant” Financing

The high demand for agricultural products has generated substantial financial income, enabling beneficiaries to diversify and sustain their investments. While more than 80% of the 1,130 beneficiary groups are now sustaining their business, some 10 to 15% of groups failed due to poor internal organization, lack of expertise, and poor financial management. PDAC also did some building capacities in several agencies to promote peer-to-peer learning for successful business management.

Therefore, ensuring sustainability and diversification of investments for smallholder farmers, requires increasing micro-finance institutions’ investments in the agriculture sector. It also requires using stringent eligibility criteria in selecting micro-projects for a high likelihood of success of matching-grants funding. These criteria include the group’s compliance with the Organization for the Harmonization of Business Law in Africa (OHADA) standards, proof of relevant experience, and the technical and managerial capacities of the group’s leader. Additionally, to ensure lasting benefits of the “helping hand”, the government should have the technical, financial, and institutional capacities to maintain the improved feeder roads and waterways after the project ends.