Warehouse Receipt Lending in Senegal

Warehouse Receipt Lending in Senegal: a financial product tailor-made for smallholder farmers.

Warehouse Receipt Lending in Senegal

In rural Senegal, access to financial services for smallholder farmers is still a challenge; most farmers have limited capacity to invest in their farming and improve their production. To be able to produce better quality food in larger amounts, they need cash to finance and improve their farming methods. However, most smallholder farmers cannot afford regular loans, thus the need for adapted financial products. The Strengthening African Rural Smallholders (STARS) is a program of ICCO Cooperation and ICCO Terrafina Microfinance in partnership with MasterCard foundation. STARS works with selected microfinance institutions (MFIs) to develop and implement financial products that smallholder farmers need and can afford.

Implementing Warehouse Receipt Lending

One of the promising products, the STARS program is implementing is the Warehouse Receipt Lending, commonly known as “Crédit Warrantage” in French. Through Warehouse Receipt Lending, farmers can access loans using their stored production surplus as collateral: The surplus, which is expected to increase in value after some months, is stored in a warehouse, and is used as the farmer’s guarantee for a loan.

A financial product for smallholder farmers

In Senegal, STARS is partnering with the MFI “MEC FADEC” (Mutuelle d’Epargne et de Crédit de la Fédération des Associations de Développement Communautaire.) The MFI is based in Kébémer - Louga, in Northern Senegal. The MFI wants to contribute to the fight against poverty by offering equity and transparent financial services to the population.

“The advantage of our MFI is that it’s accessible to rural populations, especially farmers. We get to know the people and how best to serve them,” says Mrs. Samuella Tine, the director of MEC FADEC. “‘Crédit warrantage,’ which is a new product for us, has proven to be very attractive to farmers, as it gives them the opportunity to easily access loans without engaging their property as collateral.”

Through the MFI, a warehouse has been made available to farmers. It is equipped to store crops like niébé, a sort of black eyed pea. The niébé is one of the two crops that the STARS program is supporting through value chain development in Senegal. “The ‘niébé’ is one of the most cultivated crops in our region” indicates Mrs. Tine, “It is very rich in protein, and is basically the equivalent of meat for low-income families. It’s a crop that takes only 2 months to grow, it’s highly consumed, and on top of that, it’s mainly cultivated by women. This is very important to us, as we also want to empower women” continues Mrs. Tine.


To access loans through the warehouse receipt system, farmers bring their surplus to the warehouse; its quality is checked, then weighed and put in a special bag made for preserving crops against bugs and humidity. The bag is then sealed in the presence of the farmer, to assure him that his product will be safe. The quantity and quality is recorded, and the farmer signs a contract with the MFI for a loan that correspond to 80% of the value of the goods stored.

Warehouse Receipt Lending is beneficial for both the farmers and the MFI

A committee manages the warehouse, and there is always a teller and a guard present to ensure that the produce isn’t stolen or tampered with. With the produce safely stored in the warehouse, the farmer can get a loan to meet farm and personal needs while waiting for the cost of his merchandise to increase when the demand is higher than the suply.

The warehouse receipt system ensures that the risk for the MFI is minimal, while farmers can benefit from a loan to diversify their income activities, buy inputs for the next farming season, or cover other personal expenses. The warehouse receipt system also discourages farmers from selling their produce immediately after the harvest, when prices are low. With the appropriate storage, farmers can sell their produce at higher prices after a few months.

With a financial service like the Warehouse Receipt Lending, the STARS program aims to help MFI partners in Senegal to increase their rural outreach in a secure way, and to contribute to food security.


MEC FADEC started as an association in 1999 and has grown to 6 branches and 1 main agency in the region of Louga. The MFI offers different products, such as savings, farm loans, and construction and business loans. The warehouse receipt lending is a new financial product to MEC FADEC, introduced to them through their partnership with the STARS program and other partners.

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