One area that one can invest in and get good returns is agriculture.
But making money in the sector means having knowledge and skills on crop production or livestock keeping.
Dr Annemarie Kamuyu, the co-founder of Kilimo Faida, knows this only too well.
She believes that improving agricultural productivity requires development and adoption of suitable agricultural technologies.
In 2008, with the help of a colleague, she founded Kilimo Faida, which aims to find markets for farmers and update them on market prices.
Dr Kamuyu, who implements and oversees the workings of the project, says it also helps farmers get access to seasonal credit and obtain farm inputs like seeds, agrochemicals, fertilisers, soil testing services and the expert advice of agronomists.
The organisation is also engaged in training farmers in agricultural best practices.
She explains how financing the farmer works and how one can get the most out of agriculture. She also gives us her thoughts on money.
What does Kilimo Faida do?
We support farmers throughout the long crop cycle, giving small and large scale farmers seasonal credit by helping them purchase farm inputs such as agro-chemicals, seeds, and access to soil testing services.
How does a farmer qualify for support?
To qualify, a farmer must be engaged in agricultural activities and have a feasible business model and guarantee on revenues from the goods being bought.
Why do you choose inputs instead of cash?
Because the credit risk is significantly lower for this programme compared to others as the loan is disbursed in the form of farming inputs rather than cash, which ensures that the loans are used for specified purposes.
Most deposit-taking microfinance firms are believed to experience high default rates. Why is that?
The perception of microfinance is that it is an “illusion of poverty reduction”.
Micro lenders not taking more responsibility for the working conditions of poor households, particularly when borrowers have menial jobs selling crafts or agricultural produce, make it difficult for borrowers to make consistent payments toward the loans.
How then do you mitigate your risks?
Kilimo Faida is the most innovative and sustainable in the region due to its focus on providing farm inputs on a seasonal basis to small- and large-scale farmers who have few alternative sources of credit.
It is also secured by the crop, further reducing the firm’s credit risk.
How will Kilimo Faida benefit farmers and impact on farming?
As a microfinance firm, Kilimo Faida is catering to small- and large-scale farmers for purchase of inputs like fertilizers, seeds, agro-chemicals, farming equipment, and to enable them to access soil testing services.
Kilimo Faida is also helping farmers increase their agricultural production and train them on best practices.
What challenges do you face?
We initially envisaged resistance from farmers and stockists because microfinance in regular financial institutions have made it very tough for borrowers.
Kilimo Faida is now coming of age and we have grown with farmers and stockists coming to us for loans.
Let us talk about money. Does it make you happy?
Yes it does. Earning money through Kilimo Faida is even sweeter because farmers benefit through our products, and everybody wins.
We get our money back, the farmer realises a crop that he or she would not have done without Kilimo Faida, while raising his farm’s portfolio.
What is the most expensive thing you have ever bought?
I felt at the time that it was a sound investment, and it gives me a lot of pride.
Do you use credit cards?
Yes, I do. They are important tools of business transactions. We will develop credit cards for Kilimo Faida farmers and stockists to use to purchase farm inputs and for other needs.
Do you invest in shares?
Yes, I do. Investing in local companies is healthy.
Do you prefer to invest in property or pension?
I prefer property. It is tangible and flexible and you can sell it when you wish, assuming you can find a buyer and taking into account the tax implications.
The money you raise can be spent on whatever you like, unlike a pension scheme where you have to buy an annuity.
It is also easier to pass wealth to family via property than with a pension scheme.
What are your business principles?
Always factor in the Pareto Principle for both internal and external customers: 20 per cent of my customers bring me 80 per cent of my business.
Customer satisfaction with world class quality assurance, company and product loyalty, and long-term strategies that maximise earning potential and add customer delight.