NAIROBI, Kenya — Inadequate access to credit by smallholder farmers in Africa has been identified as one of the key reasons for low productivity. This situation stems from the fact that most commercial banks consider smallholder farming a very risky venture due to the low technical and managerial intelligence of smallholder farmers. Banks also have no means to assess the farmer’s worthiness of credit.
Rita Kimani and Peris Bosire are the co-founders of the revolutionary technology, FarmDrive, which seeks to address this funding gap.
According to Bosire, there is very little aggregated data about the financial performance and history of smallholder farmers. The lack of data makes it difficult to conduct financial assessments of farmers in Africa. As a result, they can be locked out of formal financial systems because they are viewed as high risk.
FarmDrive is a tool that leverages simple mobile technology and data analytics to obtain relevant information on the operations of smallholder farmers. Through the use of short messaging services or a mobile app, farmers can record their activities, effectively tracking their expenses and revenues. The gathered information is then used to generate exhaustive credit profiles used to assess the credit worthiness of a farmer. This information allows financiers partnered with FarmDrive to make lending decisions.
An additional benefit of FarmDrive is that it utilizes the data gathered from smallholder farmers to make recommendations so the farmers can increase crop yields.
Financial institutions that partner with the company also stand to gain because they have access to a wide base of new clients who are fundable. Furthermore, the financiers can use the data analytics to inform the development of new financial products for the farmers.
The company operates on a sustainable business model where farmers in Africa who use the platform are required to pay a three percent transaction fee of the total loan that they receive through FarmDrive. Partnering financiers are charged a fee of one dollar for every farmer profile that they access.
BBC news reports on Stephen Kiguru, a farmer currently using the tool to keep track of his farm operations. Kiguru did not have a good grasp of how his business was progressing until he started using FarmDrive. “I didn’t know how much profit I was making from the different farming activities I am involved in, which farming activity had better profit margins and what had
“I didn’t know how much profit I was making from the different farming activities I am involved in, which farming activity had better profit margins and what had demand in the market,” Kiguru said.
He said he hopes to be eligible for a loan in the near future and will continue to grow his credit profile.
The co-founders of FarmDrive have big dreams and it is projected that 210,000 loans will have been administered by the end of 2018. They also said they hope to see half a million Kenyans benefit from services offered by FarmDrive within the next five years.
Having both grown up in rural smallholder farming communities, Bosire and Kimani are aware of the crippling poverty that grips smallholder farmers in Africa. They intend to use FarmDrive as a vehicle to end this poverty and promote sustainable economic growth.
Sources: BBC News, Disrupt Africa, FarmDrive, HowWeMadeItInAfrica