Too Big for Microfinance, Too Small for Banks

Published 10 June 2022

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Aceli’s 2023 Financial Benchmarking Report covers data gathered for an additional 13.2k loans totaling $749M issued by 31 lenders to agri-SMEs in East Africa during the period 2019-21.

Key takeaways:

  • Aceli’s partner lenders increased their lending (largely independent of our incentives, which took effect towards the end of this period) despite the challenging macro environment.
  • Nevertheless, recent growth in agri-SME lending is from a low base and still represents <5% of the overall portfolios for commercial banks in the region.
  • Lending data and interview responses underscore the need to address the top two barriers identified by lenders: i) high risk and ii) high transaction costs of agri-SME lending.
  • Aceli’s incentives reduce the return gap of agri-SME lending relative to other sectors and are beginning to shift lender practices in promising directions: smaller ticket sizes, new value chains (see impact profile of loans to cassava SMEs in Tanzania), more remote geographies, and businesses that meet Aceli’s impact criteria, particularly for women and the environment. 

Read our Year 2 Learning Report for reflections on Aceli’s engagement with lenders in support of loans to agri-SMEs across Kenya, Rwanda, Tanzania, and Uganda.

Download the Report

Our Year 2 Learning Report reflects on Aceli’s engagement with lenders in support of 713 loans totaling $85M to agri-SMEs across Kenya, Rwanda, Tanzania, and Uganda.

Key takeaways:

  • Relative to Aceli’s pre-launch projections, we have shifted our approach to smaller loan sizes – this translates into lower capital mobilized on the one hand, but higher capital additionality and, we believe, higher impact than envisioned.
  • There is a need for increased evidence across the sector about what works in terms of both mobilizing finance for agricultural SMEs and how to steer capital to where it can have the greatest impact. Aceli and our learning partners are undertaking several studies to fill these knowledge gaps.
  • Our initial experience suggests that shifting lending behavior among commercial banks (which collectively are the highest volume lenders to agri-SMEs but by no means the only ones) requires: i) senior-level commitment; ii) defined agriculture strategy; iii) empowered middle manager; iv) awareness and internal alignment across departments; and v) dissemination of the model and engagement at the branch level as well as headquarters.
  • The response from lenders is palpable. In the words of Sabasaba Moshingi, CEO for Tanzania Commercial Bank, “Your vision helped us develop the appetite for ag. Previously, we would have been thinking twice before doing agri-lending. You guys are giving us courage.”

See our 2023 Financial Benchmarking Report to review data gathered for 13.2k loans totaling $749M issued by 31 lenders to agri-SMEs in East Africa during the period 2019-21.

Cassava is one of the most important food crops in Tanzania and across East Africa. It is also an important source of food and income for an estimated 1.9M smallholder farmer households in Tanzania, including roughly half of farm households in the Kigoma region.

We profiled a cluster of 9 small and medium enterprises (SMEs) in Northwestern Tanzania that are accessing their first loans to purchase cassava from 1,980 smallholder farmers. These SMEs received loans from Tanzania Commercial Bank (TCB), who were originally deterred from lending to cassava enterprises in this region due to the far proximity from its closest branch and limited fixed assets for collateral. Aceli’s financial incentives helped TCB overcome these barriers to lending to this market segment, and the bank is now preparing for a second round of loans in June 2023.

Read the impact profile to learn more

The Swiss Agency for Development and Cooperation (SDC) profiles Aceli approach to incentivizing lending to agricultural small and medium enterprises in East Africa, key insights and results to date, and opportunities for the model to be applied to other markets.

Read the SDC case study here.


Women form a majority of the agricultural workforce in East Africa as farmers and employees in agricultural value chains, but there is a vast gender gap in economic opportunities across the sector. Similar gaps persist at the level of senior management, board, and business ownership, where women entrepreneurs struggle to access capital relative to their male counterparts.

Overcoming these disparities will require a range of interventions from policy changes to shifts in cultural norms around gender roles. While no single actor can tackle these alone, it is essential that every actor aiming to build a more prosperous African agriculture sector – or a thriving economy more broadly – integrate gender inclusion into their strategy.

Our new Learning Brief highlights:

  • Aceli’s Approach to Gender Inclusion: Our experience adapting the 2X Criteria to lending for agri-SMEs in East Africa
  • Our Data: Learning from our first 22 months of offering impact-linked financial incentives for lenders
  • The Opportunity Ahead: Actions that Aceli and our partners are taking to close the economic opportunity gap for women, and outstanding questions for further exploration

Read it here

In 2021, a woman-owned coffee enterprise in Rwanda received its first formal loan of $100,000 from a lender that was supported by Aceli’s financial incentives.[1] The loan enabled the entrepreneur to improve production on her own coffee farm, purchase from 1,425 farmers (including 537 women) and employ nine workers (six women). Within a year, the business increased revenues by 60%, more than doubled its coffee purchases from farmers, repaid its loan, and accessed a new loan of $150,000. 

Meanwhile, a maize aggregator in Rwanda also received its first formal loan in 2021 of $30,000. While this business is owned by a male entrepreneur, it creates economic opportunities for numerous women employees (six of its 15 full-time workers are women) and farmer suppliers (101 of the 123 smallholder farmers selling to the enterprise are women).

Much of the dialogue related to “gender inclusive” or “gender smart” investing is focused on facilitating access to finance for women entrepreneurs. Aceli’s experience mobilizing lending for small- and medium-enterprises (SMEs) in the agriculture sector points to the need for a “both / and” strategy both increasing the number of women-owned agricultural SMEs that are able to access finance and recognizing that male-owned enterprises have an important role to play in women’s economic empowerment. As Aceli enters our third year of operations, we are drawing upon recent analysis of the loans supported by our incentives to understand the various ways in which women benefit from access to finance for agri-SMEs and how we can optimize our incentives, technical assistance, and market facilitation to promote economic opportunities for women entrepreneurs who have struggled to access finance as well as for the large numbers of, managers, employees, and farmers who can benefit from agricultural SMEs, regardless of the entrepreneur’s sex.

Data findings from two years of incentivizing gender inclusive lending


Aceli is a market incentive designed to address the high risks and transaction costs of lending to small- and medium-enterprises (SMEs) in the agriculture sector. By 2025, we aim to mobilize $600M in capital by 2025 to 1,500 underserved agricultural SMEs in East Africa. Our incentives steer lenders to seek out and serve the highest impact SMEs with a particular focus on women-led businesses or SMEs that otherwise meet the 2X Challenge Criteria [2] for gender inclusion based on the composition of their leadership teams, board members, employees, or farmer suppliers.

In this blog and a forthcoming learning brief, we share learning related to gender inclusion from Aceli’s work over the past two years with 25 lenders in Kenya, Rwanda, Tanzania, and Uganda. With support from USAID INVEST, we analyzed 467 loans registered for Aceli incentives from the program’s launch in September 2020 thru June 30, 2022.[3]

Reach. The enterprises receiving Aceli-supported loans collectively employ 9.8k workers, including 4k women (41%), and create market access for 427k smallholder farmers, including 178k women (42%).

Above target. At launch, Aceli set a goal of 30% of loans meeting the 2X criteria in line with the threshold established by 2X for a “gender inclusive portfolio.” To date, 68% of Aceli-supported loans (319 of 467) meet the 2X criteria.

Gender inclusion vs. women-owned businesses. The majority of Aceli’s supported loans that meet the 2X criteria do so based on: women employees (43% of total loans), senior leadership (31%), board members (22%), or farmer suppliers (21%). Only 8% of Aceli-supported loans go to businesses that are fully or majority owned by women. 

Gender and access to finance. SMEs that are gender inclusive have higher revenues and receive larger loans than non-gender inclusive SMEs. By contrast, women-owned SMEs (100% or majority) have significantly lower revenues ($376k v. $865k) and receive smaller loans compared to male-owned SMEs ($98k v. $137k). Interestingly, women-owned businesses receive larger loans relative to their annual revenues compared to male-owned businesses (46% v. 38%).[4] 

Women-owned businesses are more gender-balanced. Women-owned businesses hire a slightly higher percentage of women employees (41% v. 33%) and are significantly more gender-balanced in senior leadership (57% of leadership roles held by women v. 23%) and in their boards (62% v. 16%) than male-owned businesses. However, both women- and male-owned businesses purchase from a similar percentage of women farmers (44% for both groups).

Differential treatment? Women- and male-owned businesses tend to receive a similar percentage of the loan amount they request (~89% across ownership categories) and interest rates are comparable across Kenya, Rwanda, and Tanzania, though there appear to be some differences in Uganda.

What’s next? The gap between the large proportion of enterprises that meet the 2X criteria and the small percentage of women-owned SMEs has prompted us to reassess how Aceli promotes economic opportunities for women. Over the past six months, we’ve:

  • Revised our gender impact bonus to offer a “double bonus” for loans to SMEs that meet multiple criteria across women’s leadership (i.e., ownership, management, board) and participation as employees and farmer suppliers;
  • Set targets and developed a strategy for reaching more women-owned SMEs through our technical assistance (currently 27% of SMEs accessing Aceli-supported technical assistance are women-owned and we’ve set a target of 40% by 2025);
  • Offered a series of workshops on gender lens investing for 17 lenders and deeper advisory engagements with two lenders in partnership with Value for Women (VfW);
  • Launched a matchmaking service to connect SMEs graduating from Aceli’s technical assistance program to lenders; and 
  • Begun exploring with VfW how to support continuous improvement on gender inclusion for SMEs (eg, in their hiring and human resources practices). 

Informed by learning with our partners and across the growing sector of practitioners testing and refining approaches to gender lens investing, Aceli will continue to evolve our product offering to address deeply entrenched barriers for women entrepreneurs and women’s economic empowerment more broadly. Our upcoming learning brief will go into more detail on Aceli’s learning to date and our thinking on this topic. 

About Aceli

Aceli Africa (Aceli) is a market incentive facility that seeks to bridge the gap between capital supply and demand for agricultural SMEs and unlock their growth and impact potential. Aceli raises grant funding from public and philanthropic donors and offers a combination of financial incentives for lenders and technical assistance for both SMEs and lenders. More information on Aceli’s work promoting gender inclusion in the agri-finance sector is available in a companion blog co-written with Value for Women, case studies detailing two gender lens advisory engagements by VfW with Aceli lending partners, and our forthcoming gender inclusion learning brief. 


[1] Aceli’s incentives share in the risk and defray the transaction costs so the lender can cover its costs; an impact bonus is included to motivate lenders to seek out and serve gender inclusive businesses. Read more about Aceli’s incentives here.

[2] The 2X Challenge outlines and defines an international standard / set of criteria for gender inclusive portfolios within Development Finance Institutions to increase private sector investments in women around the globe.

[3] Aceli is a market incentive facility designed to increase lending to high-impact agricultural SMEs. Launched in 2020, Aceli is currently working in Kenya, Rwanda, Tanzania, and Uganda with 27 financial institution partners, including commercial banks and non-bank financial institutions domiciled in the region as well as international impact investors. Participating lenders are eligible for financial incentives that are tiered to offer lenders larger rewards for loans registered with Aceli that are to higher impact SMEs as described further here.

[4] The disparity in loan size for gender inclusive SMEs relative to non-gender inclusive SMEs may be partly linked to value chain as a higher proportion of the former (40%) operate in formal value chains (eg, export crops such as coffee as opposed to informal value chains for staple crops) than the latter (24%). However, women-owned SMEs have a similar distribution by value chain than their male-owned counterparts so other factors account for the differences in enterprise size.

Value For Women has been working closely with two Aceli partners – Mango Fund and Family Bank – over several months this year to help them progress on their gender lens investing journeys. Mango Fund is an impact investment fund based in Uganda, and Family Bank is a commercial bank operating in Kenya.

Read Value for Women’s case studies on Mango Fund and Family Bank to dive deeper into their individual experiences and insights, and learn more about Value for Women’s gender lens advisory work with Aceli’s lending partners by reading this blog.

There are many well-documented barriers to agri-SME finance: risk aversion on the part of lenders, lack of collateral on the part of SMEs, and weak infrastructure, among many others.

The Aceli team, led by Head of Financial Sector Andrew Ahiaku, has recently delved into a set of barriers that is not commonly discussed: Central Bank regulations.

These highly technical policies and the ways in which regulated financial institutions interpret them are key drivers of the agricultural credit gap. Our new Learning Brief on this topic draws upon our review of the literature, conversations with more than 70 practitioners in East Africa, and the experiences of our team from the perspective of both lending and borrowing.

Read it here

By Andrew Ahiaku


It was a good year. The rains came early to my farming community of Atidzive in the Akatsi-South District of Ghana, and we ploughed the fields for planting. Then came a truck with certified seeds (not the lower yielding ones we had saved from the last harvest) and bags of fertilizer (which we usually couldn’t afford). The farmers had formed groups and received loans for the farming season. The interest rate was high but the farmers were happy for the support from the district Community and Rural Bank.

My auntie, who was the Matriarch of the family, used her loan to hire additional farm hands for weeding. The harvest was so big that she had to hire extra help to carry it to the storage building. I remember being exhausted and sore from carrying so many 15 kg sized-bags of maize, but also jubilant – for the first time, my entire boarding school fees were paid at the beginning of the term! I was known for late payment of fees when I lost my Dad in at age 12. All the farmers in the village paid their loans on schedule. My auntie bought a new metal roof for her house, we got new clothes, and Christmas was festive with presents for all the kids. Around our village of a few hundred families, several families were able to send their children to secondary school that year, which was a big deal – that was the generation that became teachers and police officers.

The next season, my auntie leased additional land in anticipation of a higher loan amount. We cleared the farm early and waited for the bank to approve her loan. She stopped by the bank every week she was in the district town on a market day; they kept assuring her that approval would eventually come. A month later, after she had missed the best time to plant, she was told the bank won’t be giving loans – they had exceeded their limit or something of the sort. My young mind didn’t understand what that meant. Why would a bank refuse a client a loan when she has met her obligations on an earlier one? If they knew she won’t get the loan, why did they encourage her to lease more land?

That season was like most before and since. My auntie and the other farmers planted on small plots with the seed they had saved up from the previous harvest. They couldn’t afford the good seed or fertilizer, couldn’t pay for labor to weed – and at the end of the season, they didn’t need to hire extra labor because the harvest was paltry. We paid my school fees in bits throughout the semester and I was sent home more than once when we couldn’t keep up with the payments. But I was lucky. I made it through secondary school, worked for a few years as a basic school teacher, saved up money, and went to university.

Fast forward eight years, I was working at Barclays Bank and an opportunity came up to lead a new lending unit focused on agriculture. I took the job hoping I could help more farmers like my auntie and agricultural SMEs get loans. We were able to accomplish a lot. Our unit grew from just me to six people in three years. We broke down silos between origination and credit risk through a joint team training on underwriting and managing agri-loans. As the portfolio grew, senior management got excited and we also received accolades in the media. USAID even gave us an award for Agri-Lender of the Year in Ghana!

But we also came up against the barriers that have persistently stifled lending to my auntie and so many others. My colleagues on the credit risk team didn’t fully understand seasonality in farming and how timing makes all the difference in agriculture. Many times, we couldn’t get loans approved before planting season and farmers lost interest. We also had conservative policies. We required collateral valued at 120% of the loan amount but then we discounted the value of the collateral presented to us by 30-50% – so a business looking for a $100k loan needed to have collateral of $200k or more!

These internal policies at the bank were so frustrating, but over time I began to understand where they came from. To begin with, banks are naturally risk averse. Lending in agriculture is risky, takes a lot of work, and bankers have to get their nice shoes and suits dirty visiting clients. In Ghana (and most African countries) banks can earn a nice profit by collecting deposits, lending to the government, and getting fat on the interest spread.

Some economists call this the “lazy bank” model. But that’s only part of the story. Around the time my auntie was waiting for her loan that was never approved, international banking standards were changing under the first of the Basel Accords. By the time I was trying to make agri-loans for Barclays, Basel III had taken effect. Basel III was designed to prevent the kind of daredevil lending that led to the collapse of Lehman Brothers and the 2007-08 financial crisis.

The result of Basel III and the International Financial Reporting Standard 9 designed during the same period was more stringent requirements on banks. When I joined Aceli a couple of years ago, I wanted to understand better how these international standards affected Central Bank policies in Africa, and how those policies influenced commercial bank practices. Did banks really need to have such conservative collateral requirements, or were we just being lazy? Read Aceli’s new Learning Brief to find out what I learned.

Auntie Minawo Ate Ahiaku, I promised you that I’ll get to the bottom of this.

Andrew Ahiaku is the Head of Financial Sector for Aceli Africa, leading engagement with commercial banks to increase their lending to agricultural SMEs and supervising capacity building for both SMEs and lenders.







With support from the Swiss Agency for Development and Cooperation (SDC) and other partners, Aceli is working to mobilize $600M in private capital for agri-SMEs and positively impact the livelihoods of over a million people in East Africa.

“Small and medium enterprises (SMEs) are vital. They strengthen climate resilience, generate income and jobs, help smallholder women farmers and less qualified workers – especially women and young people – to emerge from poverty.”

Learn more in this article by SDC.