Burkina Faso is one of the world’s least developed countries, where there are few natural resources and about 80 percent of the population is engaged in subsistence farming. Yet farmers seeking to expand production are often unable to obtain loans because they work on very small plots of land that cannot meet the collateral requirements of local banks.
Solution and Impact
A U.S. Government risk-sharing guaranty in partnership with Ecobank Burkina—one of Africa’s largest banks—covered half of the collateral so that farmers and other entrepreneurs could obtain loans to grow their businesses, increase their earnings, and invest in the long-term stability of their families.
Halidou Sawagogo is one of the farmers who benefited. He obtained an initial credit line of $1,800, which grew to $18,000 as he remained in good standing, and was able to expand from a subsistence farm to one that exports cattle to Ghana. With the additional income, he constructed four small rental properties, which will enable him to better withstand weather or market shocks that impact his agriculture earnings. Although Sawagogo never received a formal education, he has been able to enroll six of his children in school and is planning to send his oldest daughter, Zona, to medical school.
Sawagogo’s success has inspired others in his community to obtain loans to increase production. Through the risk-sharing program, Ecobank Burkina has financed more than $3 million to small businesses.