MazaoPlus Loan: A Unique Innovation for Small-Scale Dairy Farmers in Kenya

March 16, 2015

By Caroline Mwende

Dorcas Wanjiru

Dorcas Wanjiru is a small-scale farmer from Banana, an area in central Kenya that is rich in agricultural production. When we arrive at her home, she is in the farm but quickly comes over and gladly welcomes us into her home.

It is a small piece of land; less than an acre. She lives here with her husband and four children and also carries out her farming activities here.

Central Kenya, like most highland regions of the country, has high population densities, which means the majority of the population lives on small pieces of land. There is not much land for farming and this has resulted in declining yields. In spite of this, the majority of the people still practice agriculture.

However, there is now a considerable shift from crop to livestock farming and more specifically to dairy farming.

"I mainly focus on dairy," Dorcas told us. "My two cows don’t require a lot of space and unlike my crops, with dairy, I am also assured of getting a little income every month from my cooperative." 

The dairy sector in Kenya is well organized. Farmers register as members of dairy cooperatives, giving them ready access to market. The cooperatives collect, chill and market milk for their members. They then pay the farmers, usually at the end of every month. The problem, however, is that the majority of small-scale farmers like Dorcas do not own high quality cows and do not care for their animals as required. The result has been poor milk yields and consequently low incomes.

"When I bought these cows from my neighbor, he told me that they were producing fifteen liters daily. However, they have never produced more than five liters a day. I think he was lying to me so that I would buy from him," she explained.

Accessing good quality cows is becoming a problem for many Kenyan farmers. The majority of well-known breeders deal only with pure breeds and the cost of the animals is way beyond what small-scale farmers can afford. Additionally, most of these breeders are now opting to export their animals to neighboring countries like Rwanda and Uganda, where they fetch higher prices. This has caused shortages in Kenya.

The good news, however, is that Dorcas and other small-scale farmers can now access affordable high quality dairy cows using a MazaoPlus loan (Mazao means “yield”). The loan product was developed following rigorous research and design work by Grameen Foundation and Jamii Bora Bank. Farmers can borrow a minimum of 50,000 Kenyan shillings (roughly $548) for up to 24 months. The cow itself is the collateral. In addition, there is credit life insurance to cover the bank if the farmer does not repay; livestock insurance covers the famer in case the cow dies.

Dorcas is pleased about the prospects of finally earning more from her livestock.

"With this loan, I am now assured of obtaining a good quality cow which means higher yields and more income for me and my family," said Dorcas. "MazaoPlus is exactly what I needed!"

Grameen Foundation and Jamii Bora are also finalizing a partnership with a technology company that will enable farmers to search for highly productive animals through their mobile phones. Based on demand, periodic trainings are also being organized for farmers who take the loan so that they can take care of the cows correctly. This will be done in collaboration with various experts within the dairy industry.

Caroline Mwende is a Research Specialist at Grameen Foundation.