For many smallholder farmers across Africa, the realities of climate unpredictability, rising input costs, and volatile markets mean they are continually exposed to risk, often without access to formal financial tools or protection. Yet despite these challenges, farmers remain resilient, finding creative ways to stretch their limited incomes and prepare for the unexpected.
In Zambia, for example, the average smallholder farmer earns approximately 15,000 Zambian Kwacha (equivalent to KES 79,000). However, access to affordable finance remains limited in rural areas. As with many regions across Africa, smallholder farmers often perceive formal credit products as risky or inaccessible. Additionally, agricultural financial technology (AgriFinTech) solutions are not always designed to reflect the lived realities of these farmers.
Women face disproportionate financial burdens. According to Mercy Corps AgriFin’s 2020 research, rural women often join multiple savings groups to safeguard money for essential needs such as agricultural inputs, school fees, healthcare, and livestock purchases. They also store harvests for later sale when market conditions improve or purchase livestock as a savings mechanism; assets they can later sell when values rise. During periods of financial strain, women frequently borrow from informal lenders such as kaloba or saving groups to meet urgent expenses. (These groups are modeled on the savings and loans methodology of various INGOs comprising of twenty to thirty women that meet and save regularly, while lending out from their savings)
The Savings for Change Model: Insights from Zambia
Despite these obstacles, smallholder farmers in Zambia continue to save between 10 and 100 Kwacha and borrow at monthly interest rates of 10 to 20 percent. These practices are supported by innovative models such as the Savings for Change (SfC) programme led by the World Food Programme (WFP). Unlike traditional microfinance approaches that begin with credit, SfC starts with savings and embeds financial literacy at its core, emphasizing community ownership, sustainability, and long-term impact.
In 2024, WFP profiled 75,053 smallholder farmers within 3,656 savings groups. Despite the country experiencing a severe drought, these groups collectively saved over USD 2.17 million and issued loans totaling USD 2.46 million.
At its foundation, the model encourages farmers to diversify their livelihoods, invest in small enterprises, and access broader financial services. Participants are trained in financial literacy, entrepreneurship, and rural business development. They also engage in peer learning and gain exposure to formal financing channels.
The Power of Savings Groups
Across rural Africa, savings groups serve as more than financial tools; they are social networks, knowledge-sharing platforms, and informal safety nets. It is common to find groups meeting beneath trees or in open spaces, where laughter, advice, and accountability blend seamlessly. Members gently remind each other about missed contributions or celebrate small victories such as year-end payouts.
This deep sense of trust and ownership raises a compelling question:
Are savings groups the gateway to building resilience for small scale producers?
The idea holds relevance in Zambia – perhaps most of Africa -, where smallholder farmers contribute approximately 20 percent to national GDP and make up nearly 70 percent of the workforce. Farming in these contexts is not merely an occupation—it is a livelihood that sustains households and communities. There is the need for an integrated risk management strategy that addresses disaster risk reduction (through advisory and conservation agriculture), risk reserves (building savings), risk transfer (develop insurance), and prudent risk taking (access to credit) towards comprehensive solutions for small scale producers. Exploring the potential of savings groups, that offer more than financial tools to their members, presents an exciting opportunity, which Mercy Corps AgriFin is embracing in Zambia and the region with partners like WFP.
That said, while savings groups can advance financial inclusion, they often struggle to fully meet the needs of members when emergencies or shocks occur. That’s why AgriFin and WFP are applying a human-centered design approach to explore how these funds can be strengthened to better support risk mitigation for members.
We look forward to sharing our learnings as we continue to test and refine these solutions!
