Managed by Connexus, this Pay-for-Results prize competition incentivizes private sector actors and producer groups in Senegal to upgrade warehouses and develop storage-based finance schemes for smallholder farmers. The five-year project employs monetary prizes to incentivize private sector warehouse owners and managers to engage with financial institutions (FIs) and producer organizations to offer storage-based financing services to small farmers. These financial services enable small farmers to use their crops as collateral for credit while also storing their crops in a secured warehouse while waiting for higher prices following harvest. Target value chains include cashew, rice, maize, millet, cowpeas, onions, and groundnuts.
In five years, the project is expected to increase smallholder profits by $9.7 million and enable them to access over $35 million in service. By safely storing crops, farmers will reduce post-harvest losses, increase revenues by selling to premium markets, and improve household incomes and food security.
The project is being implemented in two phases each year:
- Phase 1 awards competitors up to $6,000 per facility for upgrading their warehouses to achieve quality standards so that banks are willing to lend against commodities stored in warehouses. Competitor activities in this phase include investing in warehouse upgrades, engaging farmers and FIs, and securing a license to participate from the Government of Senegal. For the 2022 spring cashew season, the project awarded $38,000 of Phase 1 prizes to nine smallholder produce organizations/collateral manager teams to prepare warehouses for cashew storage.
- Phase 2 incentivizes competitors by awarding them up to 5% of the total value of the crops they market using participating warehouse receipts services.