However, many of them continue to face low and unstable incomes, with a large number earning less than RM2,000 per month. This situation underscores the importance of enhancing financial skills and literacy among agropreneurs, enabling them to manage resources more effectively, reduce debt, and improve their overall well-being.

Financial literacy means having the knowledge and skills to make smart choices about saving, budgeting, borrowing, investing, and managing risks.

FINANCIAL LITERACY

Financial literacy plays a crucial role in enabling small agropreneurs to manage their farms more effectively. When farmers understand how to budget, save, manage loans, and plan for the future, they are better equipped to make informed decisions, such as when to purchase fertiliser, livestock feed, or equipment, and how to prepare for unexpected challenges. These skills also help them avoid unnecessary debt and make more effective use of their limited resources.

In Malaysia, many smallholders still earn modest incomes and operate without proper financial records or formal banking access. According to the Khazanah Research Institute( 2023), farmers with certifications such as MyGAP were more likely to track their income, use bank accounts, and seek financial information. This result indicates that financial knowledge facilitates more effective farm management and fosters

By Nor Asila Nazmi and Haruna Babatunde Jaiyeoba

International Institute for Halal Research and Training( INHART), International Islamic University Malaysia

trust in financial systems.

STRUCTURAL CHALLENGES

Small farmers, who form the backbone of Malaysia’ s agricultural sector, often face challenges when seeking financial support. Most financing from financial institutions is directed toward large-scale commercial crops, such as palm oil and rubber, leaving many smallholders behind.

These farmers often lack the collateral or formal records required by financial institutions. At the same time, they may not meet the strict criteria to be eligible for government-assisted financing schemes.

As a result, many small agropreneurs end up borrowing from informal lenders who charge high interest rates. This can lead to longterm debt burdens that are hard to escape. The problem becomes worse when loans do not match with seasonal income patterns, where expenses are high during planting and returns only come after harvest.

Additionally, rural entrepreneurs often struggle with limited financial awareness. Many are unfamiliar with basic financial planning, accurate record-keeping, or the various types of funding available to them.

This lack of support, coupled with limited digital literacy and internet access in rural areas, means they often miss out on potentially beneficial financial services and information, including alternative financing options( e. g. Islamic Finance) that might be better suited to their needs.

These combined issues create significant barriers, making it harder for small agropreneurs to invest in better tools, fertilisers, or technology that could improve their yields and boost their income.

Without the right support and financial understanding, they remain highly vulnerable to market price changes, natural disasters like floods and droughts,

and other unexpected challenges that threaten their livelihoods.

DIGITAL FINANCE

New technologies and financing methods are creating valuable opportunities to support small agropreneurs. Digital financial literacy refers to the ability to utilise tools such as mobile banking, e-wallets, online credit platforms, and other digital services to manage money and perform financial tasks.

When combined with basic financial knowledge, these skills help farmers buy supplies, receive payments, compare prices, and reach wider markets more easily.

In Malaysia, however, the adoption of digital finance among small-scale agropreneurs remains limited. While some are open to using digital tools, many remain cautious, often due to a lack of internet access( as previously mentioned), limited digital experience, or mistrust of online platforms.

These challenges are more common in rural areas, where digital infrastructure and awareness are still developing. Although various support programmes and financing schemes exist to assist agropreneurs, many farmers are not aware of them or find the application process too complex.

To overcome this gap, financial education plays an important role. Training that teaches farmers how to understand loan terms, compare interest rates, manage repayments, and explore financing options to help them make informed financial choices.

When digital skills are included, farmers are more likely to apply for loans online, monitor their repayments through mobile apps, and participate in online marketplaces, opening up new opportunities to grow their businesses.

For Muslim agropreneurs, programmes that incorporate Islamic finance principles, such as avoiding riba( interest), promoting fairness in contracts, and encouraging