African smallholder farmers face a recurring problem of access to finance and credit. Financial institutions, for their part, do not have access to many potential customers, considered as too risky. Young Kenyan computer scientists have developed FarmDrive, an application that aims to promote access to credit and financial services for smallholder farmers. banks remain to be won over, but the project is on track.
Linking supply to demand
Most smallholder Kenyan farmers are excluded from the financial system because they do not have a satisfactory credit profile. Without access to formal credit systems, they use alternative systems providing credit at high interest rates, which, in addition, are not well suited to support their farm and off-farm activities.
Having done this, the FarmDrive team met banks and organisations financing smallholder farmers to better understand the reasons for exclusion. They discovered that it is often the lack of information that locks farmers out of the financial system. They decided to try to fill this gap by collecting information from farmers, and analysing the data obtained, establishing their credit profile. Once this is done, farmers can apply for a loan via the platform FarmDrive.
Four Kenyan young entrepreneurs are at the origin of this project, three women, all who have studied Computer Science at the University of Nairobi. Peris Bosire, in charge of Business Development at FarmDrive, demonstrates the commitment of this young team, who wanted to use their knowledge and skills to help smallholder farmers. Being from a farming community, Peris Bosire has noted that few applications were available for family farmers in Kenya, hence her interest and desire to help.
Banks and small producers, “users” of FarmDrive.
The project is currently deployed to a group of dairy farmers from Githunguri Village, who are the early adopters and testers. The next phase will incorporate poultry farming and afterwards capture all types of production. The information collected from milk producers helps to establish an accurate profile of the farms: farm size, number of cows, milk yield, monthly expenses, income etc. FarmDrive also collects more general information on climate, and soil type etc. from the Kenya Agricultural Research Institute (KARI).
Established in May 2014, the project already includes 2,000 producers, who are mostly geographically isolated farmers that FarmDrive will canvas during field visits. The majority of these users are not equipped with high-end phones, but simple cell phones. FarmDrive technology is suitable for this equipment, and currently uses mobile web and SMS technology. The USSD and native Android are in the development process. The team organizes training to villages to educate producers and explain the benefits of the developed service. This training is an opportunity for farmers to ask questions and give feedback on the innovation, which is constantly being improved.
Initially, founders of FarmDrive thought they would manage peer-to-peer loans, but given national regulations, they had to work with recognized financial institutions to better understand adoption incentives. At present, FarmDrive founders are discussing a potential partnership with a Kenyan bank.
The section devoted to information on farmers has been developed. The FarmDrive team is now working on the financial part, to establish credit profiles. This step is crucial but complex in that bank requirements are stringent. The team is mostly facing financial difficulties in the project development phase. However, FarmDrive has attracted the interest of many actors beyond Kenya. Various stakeholders from the Caribbean and Japan were interested. A Nigerian company is exploring the possibility of having the system deployed locally. Peris Bosire is convinced that the idea is viable and she is optimistic: small producers represent a niche market that has not been explored by financing companies. Using FarmDrive, thanks to the data they acquire on producers, they will both be able to be reassured and better adapt their credit supply. ◀
Peris Bosire is cofounder of FarmDrive, Kenya
more information: www.farmdrive.co.ke