Farmer's Life Environmental Credit and Loan-Scoring Kenya

2016 Finalist

Providing agricultural loans to smallholder farmers, which specifically incorporate soil and water management requirements into loan terms.

What is the social and/or ecological challenge?

F3 Life seeks to improve watershed service provision by smallholder farmers in upland, developing country watersheds. Due to soil erosion, upland smallholder farmers are significant sources of non-point source pollution by sediment, Nitrogen and Phosphorous. This pollution can (1) lead to death of downstream aquatic fauna and flora, through a process called eutrophication which starves water of oxygen, and (2) adds significantly to the cost of downstream urban water treatment. This challenge arises because: 1. Smallholder farmers are reluctant to adopt new farming practices, even where the practices benefit themselves and the environment. Rates of adoption of new technology or farming methodologies are lower than 1%/annum (Thornton and Herrero, 2010). 2. Smallholder farmers lack sufficient incentive to change their farming practices to improve watershed service provision from their land. Traditional forms of watershed management have failed to address the incentive problem, through governance, enforcement or targeting of economic incentives for improved natural resource management. 3. Natural resource managers have struggled to find sustainable financing tools, meaning that efforts to improve watershed protection are constrained by finite funds.


The social entrepreneurial approach

F3 Life provides flexible credit and technical farming advice to smallholder farmers. We incorporate requirements in our loan terms and credit-scoring system for soil and water conservation which improve watershed services. This incentivises smallholder farmers to move to more sustainable forms of land management.

The company estimates the financial value proposition to its clients at USD 1,800 over 6 years in terms of increased productivity and avoided costs associated with soil erosion. The target client is a smallholder farmer, farming 0.5-2 acres of land within an important watershed. He or she is farming partially for subsistence purposes and partially for market. Household income will be in the range of USD350 to USD 1,730 per year. They will likely belong to one or more informal farmers’ groups which will be their principal source of information about farming. F3 Life recruits clients from existing farmers' groups and enters into loan agreements with clients, which contain requirements for the client to adopt soil and water conservation practices. Where the client adopts these practices, the client will qualify for higher credit limits at lower rates of interest. Because clients take out and repay loans on an ongoing basis, the company is able to develop a deep relationship with its clients which is the basis for improved client wellbeing and contribution to watershed management.


Goals and expected impact

F3 Life's objectives or goals are to: (i) improve smallholder farmer wellbeing through increased farm productivity and income (ii) improve on-farm soil and water conservation by smallholder farmers, which in turn reinforces farmer wellbeing as increased farm productivity can be sustained into the future, and (iii) improve watershed management, whereby improved on-farm soil and water conservation reduces non-point source pollution by sediment, Nitrogen and Phosphorous. Our specific targets are based on GIIRS metrics and are: By end of the trial (i) 1,500 clients, with (ii) 3,000 acres of land under sustainable management, and (iii) crop yield increased by 10% over baseline and 30% over comparator farms. Within 10 years, F3 Life aims to have (i) 100,000 clients, with (ii) 200,000 acres of land under sustainable management, and (iii) crop yield increased by 10% over baseline and 60% over comparator farms.

Submitted by: 
F3 Life
Project legal form: 
Private company
Nyandarua County
Last update: 
Award year: 

F3 Life
8th Floor, Lonrho House, Standard Street
PO Box 40034
00100 Nairobi

Mark Ellis-Jones, CEO