Innovative financing revitalizes Senegalese farm cooperatives

Across vast onion fields in the north of Senegal, Bara Fall's silhouette can be seen from afar. He's busy with his furrow irrigation, where water flows through channels dug among his fields. That may seem ordinary, but this was life-changing for Bara. This irrigation scheme saved his farm, thanks to an innovative financing model through a local cooperative.

Three years ago, the 60-year-old had decided to stop farming due to a lack of financing. But in April 2023, the Agricultural Renaissance Cooperative Society of Walo (CRAW) was born.

The cooperative was created through the EU-funded West Africa Competitiveness Program - Senegal Component (PACAO-Senegal) at the International Trade Centre (ITC).

To support the cooperative, ITC mobilized one million euros (665 million CFA francs) to set up financial instruments dedicated to agricultural cooperatives, in partnership with La Banque Agricole.

From that fund, cooperatives receive a grant that functions as a revolving fund. Cooperative members borrow and repay to sustain the system. This financing mechanism saved cooperatives like CRAW.

Bara Fall remembers how tough things used to be in Dagana, a region along the Senegal River, where most farmers were ready to give up this decades-old activity.

'Here in Walo, we faced a financing problem,' he said. 'Our village groups did work with financial institutions. But they had liquidity problems, so they couldn't keep working together because they couldn't meet their commitments to those institutions. As a result, many had to stop producing. But with the creation of our cooperative society, activities have resumed.'

For CRAW, PACAO-Senegal provided a grant of 19 million CFA francs, which was paid into their account at La Banque Agricole. The cooperative also contributed to the fund, so members have a stake in its overall success.

'It should be noted that the cooperative society contributed 3.3 million CFA francs,' Oumar said. 'Thanks to this funding, CRAW members have access to inputs. The supplier is directly paid by the bank.'

CRAW has more than 3,900 members spread across 10 municipalities in Dagana. Among them is Aminata Diagne Niass. Although she has a university degree in transport and logistics, that wasn't enough to land her a job. So she returned to the village to try her luck farming. Before the fund was set up, she said financing was almost impossible to get.

'This innovative financing mechanism has created jobs, not only during the harvest but also downstream,' the chairman said. 'Remember, our priority is quality, which requires rigorous sorting as well as transporting the harvest to collection points. Without these funds, which let us get the necessary supplies, none of this progress would have been possible.'

Because the funding mechanisms is well-organized and monitored, businesses are willing to work with it.

'CRAW signed an agreement with a local factory to buy all the onions that its members produce. The factory sends its payment directly to the cooperative's account. After the loan is repaid, the remaining amount is returned to the producers,' Oumar said. 'It should be noted that the cooperative is paid for this service through a commission on sales. These funds enable us to finance other cooperative members for their farming seasons.'

Thanks to this innovative financing mechanism, producers from Dagana like Oumar, Bara, and Aminata have revived their farms while creating new jobs. It's an approach that allows the people of Dagana to remain rooted in their land.