Islamabad;In a move to improve financial access for Pakistan’s smallholder farmers, Karandaaz Pakistan has officially launched the Digital Financing for Agriculture Challenge (DFAC) – Round 2. This initiative is aimed at supporting innovative digital solutions that foster an affordable, accessible, and sustainable formal financing ecosystem for farmers across the country.
Bridging the Financial Gap for Smallholder Farmers
Agriculture plays a crucial role in Pakistan’s economy, contributing nearly 20% to the GDP and employing over 38% of the labor force. However, access to formal financial resources remains a major challenge, particularly for smallholder farmers who cultivate less than 12.5 acres of land. According to recent reports, only 22.1% of farmers have access to institutional loans, while the majority are forced to rely on informal credit sources that often come with unfavorable terms, high interest rates, and exploitative conditions.
Challenges Faced by Smallholder Farmers
The lack of financial access creates numerous hurdles for smallholder farmers, preventing them from adopting modern farming techniques and improving productivity. Some key challenges include:
- Limited Access to Affordable Credit – High interest rates and collateral requirements make institutional loans inaccessible for most smallholder farmers.
- Inadequate Storage Facilities – Poor post-harvest management leads to significant produce losses and financial instability.
- Restricted Market Access – The dominance of middlemen (aarthis) reduces farmers’ profitability, as they receive lower prices for their crops.
- Capital Constraints – Insufficient funds hinder investment in quality seeds, fertilizers, and advanced farming techniques.
DFAC Round 2: A Digital Solution to Financial Inclusion
To address these challenges, DFAC Round 2 is designed to promote digital financing solutions that provide smallholder farmers with greater access to formal financial services. This challenge round focuses on:
- Collateral-Free Financing – Enabling farmers to access loans without requiring land or assets as security.
- Electronic Warehouse Receipt Financing – Allowing farmers to store produce in certified warehouses and use digital receipts as loan collateral.
- Digitalization of the Aarthi Model – Streamlining and regulating the role of middlemen through digital payment platforms.
- Input Financing – Facilitating access to affordable credit for purchasing seeds, fertilizers, and equipment.
Leadership’s Vision for Agricultural Finance Transformation
Waqas ul Hasan, CEO of Karandaaz Pakistan, emphasized the importance of innovation in agricultural finance, stating:
“Agricultural finance isn’t just about capital—it’s about systems, sustainability, and scale. Traditional lending structures fail to meet smallholder farmers’ needs, limiting their growth. DFAC Round 2 is an opportunity to disrupt this status quo with technology-driven solutions that build an inclusive, efficient, and resilient financial ecosystem. We must bridge this financial gap to ensure Pakistan’s farmers have the resources they need to thrive.”
Sharjeel Murtaza, Chief Digital Officer at Karandaaz Pakistan, further highlighted:
“Smallholder farmers make up 90% of Pakistan’s agriculture sector, yet they remain financially excluded. A sustainable, inclusive agricultural transformation—one that creates equitable economic opportunity, respects limits on natural resources, and gives the agriculture sector the much-needed technological and financial impetus—is key to Pakistan’s economic growth. DFAC Round 2 calls for innovative solutions that can trigger this transformation.”
Call for Applications: Who Can Apply?
Karandaaz Pakistan is inviting fintech and agritech companies, banks, non-banking financial companies (NBFCs), microfinance institutions (MFIs), and digital infrastructure providers to submit their proposals for innovative financial solutions targeted at smallholder farmers.
Eligibility Criteria:
- Solutions must focus on financial enablement through digital models that ensure accessibility, sustainability, and scalability.
- Proposed models should align with Karandaaz’s goal of enhancing financial inclusion in agriculture.
- Applications must provide a clear roadmap for implementation and impact assessment.
How to Apply
Interested applicants can submit their proposals via email to dfa@karandaaz.com.pk with the subject line: “Proposal Submission – DFAC Round 2”. The deadline for submission is April 14, 2025.
For more details, visit: Karandaaz DFAC Challenge.
The Bigger Picture: Karandaaz’s Commitment to Financial Inclusion
Karandaaz Pakistan continues to work towards financial empowerment, economic development, and digital transformation by supporting initiatives that promote access to credit for underprivileged sectors, including agriculture. By leveraging technology, Karandaaz is helping smallholder farmers overcome traditional financial barriers and improve their livelihoods.
With DFAC Round 2, Karandaaz is taking another significant step towards bridging the gap between smallholder farmers and formal financial institutions, ensuring sustainable economic growth in Pakistan’s agricultural sector.
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About Karandaaz Pakistan
Karandaaz Pakistan is a not-for-profit organization dedicated to promoting financial inclusion and driving economic growth. Through a combination of financial services, digital solutions, and strategic investments, Karandaaz works to create an inclusive financial ecosystem that empowers individuals, businesses, and communities.
