Senegal Crop Storage Finance Challenge Project

In Progress

Summary

The AgResults Senegal Crop Storage Finance Challenge Project is a five-year US$6.8 million prize competition that aims to drive adoption of Warehouse Receipts Systems (WRS) in Senegal. By encouraging warehouse owners and smallholder producer groups to upgrade existing warehouses and develop collateral-based storage finance schemes, the project hopes to tackle the dual barriers of unsuitable storage infrastructure and limited financing options for vulnerable populations. By using a WRS model, smallholder farmers will benefit from higher prices, increased liquidity, and improved resilience to external shocks. Connexus serves as the Project Manager.

The Challenge Project aims to encourage warehouse improvements and adoption of storage-based finance schemes.

The problem

Limited Access to Storage and Finance

In Senegal, smallholder farmers cannot maximize their harvest incomes due to limited ability to store crops and inability to access credit needed to finance activities during crop storage. Regarding storage challenges, pests and weather risks cause post-harvest loss among West African farmers. As a result, prices are often depressed immediately after harvest, causing general price volatility. Furthermore, smallholder farmers often run into harvest-time financial pressures as they sell during harvest to meet immediate financial obligations. Until recently, the lack of national regulations around collateral-based storage finance schemes in Senegal has limited their adoption.

Contest design

Theory of Change

The project is designed to build on new WRS laws and regulations in Senegal by encouraging warehouse operators, farmer cooperatives, and finance providers to coordinate to put in place storage-based finance schemes that benefit smallholder farmers. By incentivizing these actors to upgrade warehouses, obtain WRS licenses, and provide collateral-based financing for smallholder farmers, the competition will increase accessibility and availability of storage as well as boost participation in storage-based finance. Through use of WRS, farmers will increase their sales revenue and expand their options for marketing crops after harvest. Simultaneously, these smallholders will have greater access to finance through their ability to collateralize their crops to obtain loans. These efforts will contribute to the broader goals of improving incomes and resilience among smallholder farmers.

Prize Structure

The competition will be segmented into two phases: The first phase will focus on improving warehouse infrastructure and serve as a gateway to the second phase, which will focus on storage. In Phase 1, AgResults will provide payments to competitors for each warehouse that they upgrade to meet national WRS licensing standards. In Phase 2, competitors will receive an annual per-unit prize based on the value-at-sale of stored crops.

Expected impact

The project is expected to introduce key stakeholders to the benefits of storage-based finance schemes. These schemes are expected to grant farmers opportunities to safely store crops in warehouses, reducing post-harvest loss and allowing farmers to use stored crops as collateral to obtain loans. Using WRS, smallholder farmers will increase agency in market decision-making, and be positioned to seek out higher income opportunities in certain value chains. WRS schemes in priority value chains could also enable women-led cooperatives to gain new positions of power and influence in the market.

AgResults expects to achieve the following by the end of the project:

Actual results

Learning & Evaluation

What We’ve Learned through Implementation

This section shares our learning from the Senegal Crop Storage Finance project design and implementation. Further details can be found in the Learning Library.

Recent News and Learning

Below are recent news and learning products related to Senegal.
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Published: September 30, 2020

Request for Proposals for Project Management Services for the Senegal Storage Finance Challenge Project

The Secretariat of AgResults (“Secretariat”) invit...

Evaluation Design

The evaluation for the Senegal Crop Storage Finance prize competition is led by IDinsight. More details coming soon!

Evaluation Stage

Coming soon!

Project team