April 16, 2018

Alternative credit scoring for smallholder farmers

The Stability Innovation Atlas team, led by FHI 360 and funded by the Rockefeller Foundation, will release their finished product in Spring 2018. The complete Atlas will feature economic stability-enhancing innovations that empower the world’s poor and vulnerable people in managing and investing with confidence in their future. We will be profiling several innovators and innovations that were identified during the research and crowd-sourcing process over the coming weeks and months.

The large majority of the world’s poor live in rural areas and subsist by working on small plots of land. For these households and communities, accessing the necessary inputs, equipment and finance can be a great struggle, leaving them unable to increase their yields and revenues while trapping them in an unbreakable cycle of poverty and instability.

As young girls raised in smallholder farming communities in Kenya, Rita Kimani and Peris Bosire experienced first-hand many of these challenges and later dedicated their academic careers to finding a solution. They met on their first day as students at the University of Nairobi and became instant friends and soon-to-be business partners. At university, they further developed their computer science skills and, believing that the lack of agricultural productivity in their communities derived from a lack of capital, resolved to bridge the gap between smallholder farmers and financial service providers.

After graduating in 2014 – with First Class Honours – Rita and Peris founded FarmDrive, a start-up that uses mobile phones to build credit for base of pyramid farmers. FarmDrive is an alternative credit scoring model that uses SMS and its own Android application to build detailed credit histories of smallholder farmers for financial institutions, thereby linking the un-banked and underserved to credit while at the same time helping financial service providers to grow their agro-loan portfolios in a cost-effective way. It also allows farmers to track their revenues and expenses. Using this simple mobile technology, advanced analytics and non-traditional data sets (e.g. weather, climate, social interactions, satellite data) combined with farm-level data, FarmDrive is democratizing lending by offering its products through a free and simple mobile platform, accessible anywhere at any time, and is leveling the financial playing field for men and women by making available loan products and risk assessment tools that do not require asset ownership.

In 2017, Rita Kimani was selected by the United Nations as one of the young leaders to help promote the Sustainable Development Goals (SDGs) among youth. In that capacity, she was an advocate for the youth’s voice in designing programs to help young farmers across Africa. The SDG mantra of “leaving no one behind” has particular resonance with Rita, who feels that agriculture provides young Africans the best opportunity to escape poverty and to achieve the SDGs, particularly given the ways technology and data-driven solutions are changing the way farm work is conducted and managed.

Peris Bosire was exposed to computers at a young age and started writing basic programs while in high school. While at university she interned as a data technician with PricewaterhouseCoopers and later worked as a software engineer in IBM’s African research lab. Now, she says, the prevalence of mobile devices across Africa is enabling technology to make a real impact towards greater financial inclusion in rural areas.

Thus, the two smallholder farmers-cum-tech entrepreneurs feel that this is the perfect time to scale: within the next five years they are aiming to extend loans to a half million farmers in Kenya and many more across the continent.