Changing lives through innovative finance: 7 lessons learned from WFP’s SheCan Initiative
Discover key learnings from the World Food Programme’s experience implementing SheCan, an innovative finance initiative that supports smallholder farmers and micro-entrepreneurs to promote food security and financial inclusion in emerging markets.
By Gulia Rakhimova
The World Food Programme (WFP) Innovation Accelerator explores new sources of sustainable financing as part of its Innovative Finance portfolio to attract more funding for humanitarian operations and achieve social impact on a larger scale.
One such approach is SheCan, a blended finance initiative that seeks to broaden financial inclusion for micro-entrepreneurs and smallholder farmers, predominantly women, in regions supported by WFP. Financial institutions tend to consider smallholder farmers and micro-entrepreneurs as high-risk borrowers. Additionally, the cost of managing loans makes it less profitable for financial institutions to operate in remote areas, leading to strict loan terms like high-interest rates. As a result, rural populations, particularly women, frequently find themselves unable to access finance. SheCan addresses these issues by merging WFP’s humanitarian assistance with innovative financing approaches.
Since starting its operations in 2022, SheCan has concentrated on ecosystem research and concept design, piloting the model in Rwanda, Zambia, Peru, and Malawi. In this blog post, we share seven lessons learned from our journey with the SheCan initiative, that can offer insights to other organizations and innovators working in innovative finance at the humanitarian-development nexus.
Lesson 1: Continuously assess your business model and stay open to change
Innovation is a journey filled with twists and turns, and one of the most important lessons we learned along the way was the significance of iteration. When SheCan started, the goal was to create a crowd-lending platform operated and overseen by WFP internally. This platform would direct zero-interest loan capital from individuals to financial institutions, more specifically to Microfinance Institutions (MFIs). Thanks to the capital provided through the crowdlending platform, MFIs would be able to offer affordable loans to people assisted under WFP resilience programmes, to support their businesses and income-generating activities. However, we soon realized that besides regulatory hurdles, solely focusing on a crowdlending model was not compatible with the speed and scale of required assistance and that the magnitude of the systemic problem of financial exclusion was too big to be tackled through crowdlending alone.
That’s when we pivoted and began to focus on developing a more scalable and sustainable approach, one that would help in creating an enabling environment for financial inclusion while benefiting both the microfinance sector and the borrowers themselves. In this regard, we redirected our efforts towards diversifying SheCan’s funding sources, bringing together key local and international stakeholders to streamline the allocation of concessional capital to MFIs from a variety of sources. Currently, these financing sources span external crowd-lending platforms, impact investors, development or international finance institutions (DFIs/IFIs), and government entities. By supporting MFIs accessing capital at rates below the market average, we enabled them to accumulate a larger pool of funds specifically designated for micro-loans to WFP target populations.
The catalysed loan capital is topped up by WFP donor funds, intended for covering the specific operational costs in addressing those populations as well as technical assistance to specific groups and MFIs through WFP Country Offices and NGOs. We offer financial education, tailored to these groups’ needs, and assist MFIs in adopting digital tools to enhance their efficiency. This leads to reduced operational costs for MFIs and more affordable loan options for farmers. Additionally, SheCan’s support, which besides financial literacy also includes supporting access to markets for the target population to sell their harvest at better conditions, helps to positively alter the risk profile of smallholder farmers, making them more attractive borrowers for MFIs. Through strong partnerships with the public and private sector and a focus on education, SheCan strives to build trust, establish access to financial services for our target population and create a foundation for a sustainable financial ecosystem.
Lesson 2: Tap into institutional knowledge
Involving key stakeholders from WFP and learning from their perspectives and expertise allows for a more comprehensive understanding of the problem at hand. This approach proved to be particularly critical for the development of SheCan’s approach. By connecting with different programme teams across WFP and integrating diverse perspectives, the WFP Innovation Accelerator’s Innovative Finance team was able to better understand the systemic challenges faced by smallholder farmers and micro-entrepreneurs and activities already undertaken by WFP programmes to address these. This allowed the team to design a tailored, complementary, and more inclusive approach for SheCan.
For instance, SheCan’s target demographic is primarily women, so it was critical to gain insights and expertise from WFP’s Gender Equality Office and WFP’s Monitoring and Evaluation Unit to ensure a robust gender-responsive component of SheCan. Similarly, the ongoing collaboration with WFP’s Resilience and Food Systems Service (PROR) and Climate and Disaster Risk Reduction Service (PROC) divisions provide essential insights into the difficulties smallholders face in achieving financial inclusion.
This continuous dialogue and knowledge exchange with diverse stakeholders allowed identifying elements of existing WFP programmes that were leveraged in the design process. Eventually, tight coordination and collaboration across units have proven essential to ensure targeted intervention and reap efficiency gains.
Lesson 3: Define what success looks like
Measuring and monitoring impact are essential aspects of any innovative finance initiative. SheCan recognized this early on and established core metrics that were continuously refined to ensure the relevance of the data collected and identify areas for improvement.
Metrics set for SheCan measure enhancements in farmers’ improvements in financial proficiency, their ability to access and repay micro-loans, income increase from economic activities linked to accessing the required capital when needed, and increased confidence in utilizing digital financial services. This monitoring and evaluation framework was largely influenced by best practices from other cross-cutting WFP programmes. We made sure to include WFP’s relevant standard impact-linked metrics while placing a specific focus on gender mainstreaming. This helped us develop a unique and comprehensive framework for SheCan.
Lesson 4: Understand the country context where your innovation pilots
As SheCan pilots operate in different locations, it became evident that the success of the pilots was closely linked to the context in which they were implemented. Even with a solid roadmap and a clearly defined Theory of Change, it is crucial to have a deep understanding of the unique needs and circumstances of the populations in each location we aim to assist.
On the ecosystem level, it has been essential to grasp the financial sector’s landscape, understand the roles of the government and stakeholders focused on financial inclusion, and recognize the challenges, capacities, and specific needs of Microfinance Institutions (MFIs) in varying contexts. This has also highlighted the significance of co-designing initiatives with local implementers and placing trust in their knowledge and insights. By taking the time to listen to the needs, preferences, and specificities of the community and working collaboratively with local as well as international partners, we can create sustainable and lasting impact.
For instance, in the pilot implemented in Peru, the WFP Innovation Accelerator learned that SheCan’s loan offering was not receiving as much interest as anticipated, highlighting the need for better population targeting. This encouraged the team to strengthen local partnerships to improve targeting, build credibility among micro-entrepreneurs and facilitate the provision of gender-centric financial products aligned with the needs of SheCan’s target population. This strategy was significantly informed by the insights and local contextual understanding gained through the WFP’s Country Offices affiliations with key governmental bodies, such as the Development Bank of Peru (COFIDE) and the Superintendency of Banking and Insurance (SBS).
Lesson 5: Get the core right before scaling to other countries
To ensure the long-term sustainability and effective expansion of SheCan, we understood the significance of prioritizing the core model and programme structure before introducing any additional elements or entering new markets. The key is to test and refine the core offering and establish a scalable and sustainable model, to then be able to proceed with further development and expand the activities.
SheCan’s core strategy focuses on reaching the most financially underserved groups, typically comprising smallholder farmers and micro-entrepreneurs, with a strong focus on women. We seek to enhance their involvement in the agricultural value chain by offering micro-loans for productive activities and providing technical assistance. As they enhance their financial management capabilities and grow their productive activities, SheCan connects them with other complementary WFP programmes like climate-risk mitigation and market support initiatives (including the R4 Rural Resilience Initiative and Smallholder Market Support). This creates better conditions to sell their produce, protect them against agricultural climate risks, and pursue a comprehensive approach to their economic participation.
The success of this approach is evident in the case of Zambia, where the SheCan pilot has successfully reached its objectives by fostering financial literacy and digital skills, and facilitating access to affordable credit for 4,813 smallholder farmers, of which 73 percent are women. Moreover, these farmers have tapped into the benefits of the R4 Rural Resilience Initiative, which equips farmers with risk-management tools like climate-index insurance. This approach counters the common perception of smallholder farmers as high-risk borrowers by MFIs and increases the broader financial inclusion of these populations.
In Zambia, the loan default rate within the SheCan project has been remarkably low. Out of the 265 loans disbursed, only one default occurred to date, resulting in a default rate of 0.02% of the total loan value. As the pilot phase concluded in August 2023, its remarkable achievements have set a promising foundation for the future scale-up of the SheCan initiative within the country. Building on this success, SheCan plans to expand its operations in Zambia for an additional 24 months. This expansion will continue to foster financial literacy, enhance digital skills, and facilitate access to credit tailored to the smallholder farmers’ needs, particularly women, across 7 Zambian provinces and 26 districts.
Lesson 6: Join efforts with external stakeholders to leverage comparative advantages
In developing the SheCan business model, it became clear that success hinges on harnessing the distinct strengths of diverse entities. By uniting the efforts of government bodies, private corporations, international groups, development financial institutions, NGOs, and foundations, we can integrate a multitude of skills and resources.
Especially with regards to SheCan’s blended finance approach, having a clear understanding of the funding appetite of diverse public and private funders is key to laying the ground for SheCan’s financial sustainability in the medium term and integration into the market in the long term. This collective approach not only is key to the multi-faceted strategy of SheCan but also amplifies our impact through a streamlined approach. Such collaborations lead to heightened efficiency, ensure the initiative’s longevity, and multiply our influence on financial inclusion efforts.
Lesson 7: Enhance impact through digital integration
SheCan’s experience has reiterated the game-changing role of digitization in financial inclusion, enhancing the efficiency, security, and cost-effectiveness of financial management at the individual level and loan management at the institutional level.
Besides financial literacy training, digital skills development and supporting access to digital tools have become core parts of SheCan’s capacity-building efforts. By onboarding Village Savings and Loan Associations (VSLAs) onto digital solutions such as Chomoka, we saw improvements in their financial management practices at the group level in terms of transparency and time efforts required to perform the individual share-out calculations. Building on these insights and the learnings regarding the integration of a push and pull system and digital wallet, the team plans to further leverage digitization to enable secure, fast, and manageable financial activities through cashless transactions.
On the institutional level, we could see that digitization has the potential to revolutionize the supply side, helping Microfinance Institutions (MFIs) automate processes and expand their reach to traditionally underserved populations, particularly in rural areas. However, digitization is not a one-size-fits-all solution. It involves a variety of service providers — ranging from systems that handle loan origination and management to platforms offering online banking services — and requires a tailored approach from the start. This ensures that the digital transformation meets the specific needs of everyone involved, aligning with the protocols of Mobile Network Operators (MNOs), governmental policies, and the wider financial services sector.
Besides the technical aspects of digital solutions, we found that trust and skill-building are essential for the communities we serve, requiring careful, focused training to ensure adoption and the sustainable use of digital tools. Selecting the right partner to implement a comprehensive digitization strategy, catering to the entire value chain from MFIs to farmers and micro-entrepreneurs, is essential.
The way forward
Since its launch in Zambia, Rwanda and Peru in 2022 (and now also operating in Malawi), SheCan has reached 7,500 individuals, of which 70 percent are women. In 2023 alone, SheCan provided affordable, gender mainstreamed micro-loans to 5,900 individuals, 73 percent of whom were women, and saw a remarkable repayment rate of 99 percent. Beyond their direct impact, the positive effects of SheCan’s financial inclusion reached more than 29,000 people in 2023.
Building on the success of the initial pilots, SheCan is entering new markets and has started a pilot programme in Malawi, and is currently designing a new operation in Iraq scheduled to launch in 2024.
Visit our website to learn more about SheCan.
