Bridging the Credit Gap to Reduce Production Costs and Boost Economic Growth for Agricultural Sector Actors in Burkina Faso
Since 2020, the USAID CATALYZE Finance for Resilience (F4R) Activity has used blended finance to expand access to credit for underserved communities in Burkina Faso and Niger. F4R is an Activity under USAID CATALYZE, a $250 million contract designed to mobilize $2 billion in private capital toward underserved sectors, geographies, and populations.
CATALYZE F4R mobilizes private capital for agricultural sector entrepreneurs — particularly women and youth — whose livelihoods are threatened by food insecurity and ongoing political instability in the region. To achieve this goal, CATALYZE F4R leverages partnerships with financial institutions (FIs) and financial facilitators across Burkina Faso to expand access to credit for agricultural sector actors, including grants to local animal feed manufacturers. The capital from these grants is designed to enable agricultural sector entrepreneurs to increase feed orders by allowing customers to purchase on credit, rather than as an upfront cost.
To maximize the impact of capital mobilization, F4R employs a pay-for-results approach and incentivizes partners to focus their efforts on populations that are disproportionately impacted by conflict and crises, or those who serve as keystones in the sector and whose success can have widespread benefits.
SAPROCOM, an animal feed manufacturer focused on selling feed for poultry and small ruminants to local farmers and agro-retailers, received a grant of US $38,924 from CATALYZE F4R in July 2023 to subsidize the cost of accessing credit for working capital as well as to produce and distribute high quality and affordable animal feed to agro-retailers. Additionally, CATALYZE F4R provided technical assistance to SAPROCOM to strengthen its loan application submission to FIs and processed a capital injection of US $4,188.95 that allowed agro-retailers to purchase animal feed from SAPROCOM on credit. SAPROCOM aims to use the funding to sell 352 tons (US $154,341) of animal feed across Burkina Faso over by July 2024. As of April 2024, SAPROCOM has generated US $91,500 in sales and is on track to reach their target.
Initial feedback on the quality of SAPROCOM’s poultry feed has been overwhelmingly positive — customers reported weight gain, improved health, and reduced mortality among their flocks as a result of the high-quality feed. However, many SAPROCOM customers faced financial barriers to accessing the high-quality feed, as they lacked the capital to purchase quantities large enough to resell.
Abdoul Rasmané Bamogo, a poultry farmer and agro-retailer from Kaya in Burkina Faso’s Centre-Nord region, is one of SAPROCOM’s current customers. In 2020, he became the founder and sole proprietor of YAM Wekre Elevage Services. The enterprise raises chicks to resell to breeders and sells small ruminant feed to farmers.
Unfortunately, Mr. Bamogo’s customers were not satisfied with the high cost and poor quality of feed that he was selling at the time. In 2021, Mr. Bamogo met with Edouard Ouedraogo, the owner of SAPROCOM and purchased five 50kg bags of poultry feed to test the product on his own flock. After selecting the SAPROCOM product and reselling it to customers, he noticed improvements in their satisfaction.
Despite his experience as a farmer and business owner, Mr. Bamogo was financially limited by the amount of poultry feed he could purchase and sell. But when SAPROCOM joined CATALYZE F4R’s network of financial partners in July 2023, the additional funding provided SAPOCOM with financial security and incentives that allowed loyal customers, such as Mr. Bamogo, to purchase their products on credit.
Having already established a relationship with SAPROCOM, Mr. Bamogo was able to begin purchasing a portion of his order on credit, paying 50 percent upfront and the rest within two weeks of selling the feed to his clients.
The CATALYZE F4R grant allowed SAPROCOM to expand their client network by extending payment terms, as well as covering product transport costs. The extended payment terms enabled Mr Bamogo to purchase a portion of his feed on credit. He pays 50% up front when he initially buys the feed and pay the remaining 50 percent within two weeks of reselling the feed to his clients. Buying on credit has enabled Mr. Bamogo to reduce 50kg poultry feed bag prices from US $30 to $25, which has helped lead to an 88 percent increase in the volume of monthly orders.1
Thanks to CATALYZE F4R support, SAPROCOM has sold US $91,039 in animal feed on credit to seven agro-retailers in Burkina Faso. Through the animal feed grants program, F4R has facilitated the sales of US $340,090 amount in animal feed and distributed 719 tons in F4R focus zones, increasing the flow and supply of feed to at least 4,387 actors (such as breeders and agro-retailers) in the poultry and small ruminant value chains.
By reducing the credit gap between animal feed manufacturers and agro-dealers, CATALYZE F4R has decreased production costs on both ends of the supply chain, fostering economic empowerment among Burkina Faso’s agricultural actors.
