Bringing Life-Giving Drops to Parched Lands: How ACLs are Transforming Kenyan Dairy Farming

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For smallholder farmers in Kenya, water is not just a resource; it’s a lifeline. For dairy farmers facing chronic water shortages, every drop is precious. Precision Development’s (PxD) Asset Collateralized Loans (ACL) Initiative for Water Tanks is changing the game, transforming lives through innovative finance sustainable solutions. 

The Challenge of Water Scarcity:

Climate change poses significant challenges to water access for Kenyan farmers, especially for livestock producers who need continuous water supply for their animals to be productive. This has a direct impact on the livelihoods of over 1.8 million dairy farmers, who often lack access to reliable drinking water for cattle. Milk production, and hence milk income, falls during the dry season when water is not readily available.  The daily struggle to collect water, which can take up to 3 hours a day, not only affects productivity but also impacts the well-being of farmers and their families (Cook Kabubo-Mariara & Kimuyu, 2022). Collateral and guarantor requirements of standard loans make it nearly impossible for most farmers to access the credit they would need to purchase water storage technologies. 

The ACL Water Initiative: A Game-Changer:

When a farmer has a water tank, they do not need to collect water from long distances and can maintain milk production during the dry season. A water tank can pay for itself in two years from greater milk production – and can significantly increase incomes in the medium and long term.  But farmers cannot obtain loans to make these investments.  The ACL Water Initiative is revolutionizing access to water for Kenyan dairy farmers. Through the ACL model, dairy farmers can access water tanks without collateral, guarantors, or banking history, which are major challenges for many farmers to access credit. In this model, the water tanks themselves serve as the collateral for the loans, and repayments are taken from deductions in the milk they deliver to their local dairy cooperatives. This approach has been shown to result in a 10-20x increase in uptake of loans for water tanks among smallholder dairy producers compared to the standard loan model, increasing milk sales to their local cooperatives by 20-31%, when scaling the treatment effect for loan take-up (Jack et al, 2023). This innovative financing model offers flexible repayment terms, ranging from 12 to 24 months, tailored to the financial capabilities of the farmers. Additionally, the Savings and Credit Cooperatives (SACCOs) that PxD works with offer competitive interest rates, significantly lower than traditional lenders, making the program even more attractive for resource-constrained farmers. By procuring directly from manufacturers and including delivery fees to farmers’ homes in the cost, the ACL programme eliminates logistical challenges, ensures quality control, and saves valuable time for farmers.

Impact Beyond Water:

The ACL Water Initiative’s impact extends far beyond improving milk production. Increased milk production has led to increases in income through greater deliveries to farmers’ local dairy cooperatives. However, the water tanks also provide safe drinking water throughout much of the year, and can reduce waterborne diseases by 30% (WHO, 2022). On farm water storage also frees women and children from the burden of long water-fetching journeys. This, in turn, allows them to invest in education and income-generating activities, further improving the quality of life for the entire family. Farmers receiving water tanks through an ACL approach have shown to have improved school attendance for girls, as well as improved cattle health.   

Scaling Up for Greater Impact:

PxD is actively working to scale up the program and reach more farmers across Kenya. By partnering with additional dairy cooperatives, PxD aims to reach 20 new dairies in the next year. We will continuously collect data and feedback to optimize the program for different contexts and needs, with a focus on cost-efficiency and impact maximization. By collaborating with local organizations and government agencies, PxD will ensure long-term sustainability, community ownership, and policy support for the initiative.

This initiative builds on the work done by Nyala Dairy Cooperative in Kenya and a group of researchers, including Michael Kremer (PxD co-founder) who have been offering ACLs to dairy farmers since 2010. We would like to acknowledge our partners at the Development Innovation Lab (DIL) at the University of Chicago and the support of Dioraphte Foundation. 

Join Us in Making a Difference:

You can join us in making a difference by spreading the word and sharing our story with your network. Together, we can turn the tide on water scarcity and create a ripple effect of positive change, one dairy farm at a time.

And, if you’d like to know more about the initiative, sign up for our upcoming webinar! 

“Credit for Climate Resilience – Water Tanks for Smallholder Farmers,” scheduled for 23rd April. This webinar will explore how innovative financing solutions are transforming the lives of smallholder dairy farmers in Kenya. Join us to learn more about this impactful initiative and how you can support its expansion.

Together, we can create a sustainable future for Kenyan dairy farmers and empower them with the life-giving resource they deserve.


Cook, J., Kabubo-Mariara, J., & Kimuyu, P. (2022). The Short-Run Impacts of Reducing Water Collection Times on Time Use, Well-Being, and Education in Rural Kenya.