Declining development funding is forcing organisations that provide digital agricultural services to smallholder farmers to rethink how they finance their operations and business models that can survive beyond donor support.

This shift is coming at a time when farmers continue to face barriers to affordable credit, reliable weather information, agricultural advice and market access, services that can help them improve productivity and manage climate-related risks.

During the 10th AgriFin Learning Event in Nairobi on October 27, Prosper Global AgriFin, Jasmina Lipovic, the organisation’s Global Finance Operations and Compliance Director, said they are adapting its operations, strengthening partnerships and diversifying its sources of funding to sustain its work.

“In response to a more constrained funding environment, we've been adapting our operations and structures to ensure that we remain agile and fit for delivery of quality and impactful programming,” she said.

She said the organisation was exploring different funding opportunities to build on its achievements and continue delivering services beyond the initial programme funding period.

The financing challenge extends beyond digital agriculture. According to the International Finance Corporation, the financing gap for agricultural small and medium-sized enterprises and smallholder farmers in sub-Saharan Africa is estimated at Sh15.2 trillion (US$117 billion).

What Kenyans spend on agricultural loans

The gap limits farmers’ and agricultural businesses’ ability to invest in inputs, technology and other services needed to improve productivity and withstand shocks.

To respond to the funding squeeze, Prosper Global AgriFin is looking to strengthen collaboration between governments, technology providers, financial institutions and development partners.

Elias Nure, the organisation’s Global Digital Climate Smart Agriculture Director, said public-private partnerships could help make agricultural information and other resources more accessible to farmers.

“There is a tremendous amount of work that still needs to be done in terms of supporting these partnerships, leveraging the relationships that some of these partnerships have with their respective farmers,” he said.

He added that public resources needed to be made more accessible and presented in formats that farming communities could understand and use.

The organisation is also seeing a shift away from reliance on grants towards financing arrangements that expect investments to generate income. These include repayable grants, debt and equity financing.

Nure said development finance institutions were also changing how they deployed capital, with some providing smaller amounts rather than the larger investments previously available to individual agricultural businesses.

Sieka Gatabaki, the organisation’s programme director, said they have been working to expand access to digital financial and agricultural information services, including mobile-based solutions that connect farmers to information and other support.

He said an initiative launched in 2015 with about Sh3.25 billion (US$25 million) in funding from the Mastercard Foundation sought to accelerate agricultural digital innovation in Kenya, Tanzania and Zambia.The programme initially targeted five million smallholder farmers.

“We had over 8.5 million smallholder farmers, with 41 per cent being women, that are actually receiving different services from digital information solutions,” Gatabaki said.

He said the organisation was now working with the Gates Foundation, Bayer Foundation and other partners to test additional areas of innovation.

Gatabaki said digital technology could help reduce some of the risks associated with agriculture by improving access to weather information and other tools that support decision-making.

He, however, warned that climate change was making it harder for farmers to plan, invest and recover from extreme weather events, particularly in hard-to-reach communities.

Without reliable forecasts, disaster preparedness and risk-mitigation measures, he said, affected farmers could struggle to restore their livelihoods after climate-related shocks.

“Artificial intelligence is emerging as another potential tool for sustaining and expanding agricultural advisory services. Across the more than 20 million farmers reached through the organisation’s wider programmes and partnerships, it is estimated that fewer than 10 per cent were directly using AI solutions. Adoption remains at an early stage, particularly among farmers with access to smartphones who are already comfortable using digital services,” Gatabaki said.

But AI services can be expensive to develop and operate, raising questions about how they will be financed over the long term. He said the organisation was working with funders to explore business models that would allow these services to continue without transferring the cost burden to smallholder farmers.