Farmers in KenyaSmallholder farmers in Kenya are overwhelmingly denied access to traditional financial services, stunting the growth of the country’s agricultural industry. FarmDrive is an innovative startup that connects this unbanked population to new capital flows. So far, FarmDrive has facilitated 400 loans that amount to over $125,000.

There are 50 million smallholder farmers in Kenya, but less than 10 percent of this population has their economic needs fulfilled by traditional lenders. The agricultural sector makes up 32 percent of Africa’s GDP and employs 65 percent of its population, but less than 1 percent of bank lending goes to agriculture. Worldwide, there is an estimated $450 billion agricultural lending gap.

African smallholder farmers face barriers to traditional lending because they are labeled high-risk borrowers by financial institutions. Traditional banks use credit scores and bank statements to determine a loan applicant’s riskiness. However, the average farmer in Africa cultivates fewer than five acres of land and owns no collateral or financial records.

Limited credit availability leaves this population unable to improve their farming practices. Without access to capital, these farmers must forgo yield-increasing technology like fertilizer or irrigation systems.

FarmDrive combats this lack of financial visibility by calculating alternative credit scores for Kenyan smallholder farmers. The startup requires users to input their expenses, revenue and yield via SMS and creates a platform for farmers to record business activity. FarmDrive then uses a complex algorithm to combine individual financial information with additional factors like the climate in the farmer’s region. These outside inputs both verify farmer’s self-reported information and provide context for these records. For example, farmers living within arid zones will likely have smaller crop yields.

By accruing farmer data, FarmDrive eliminates some of the risk for banks. FarmDrive has partnered with African financial firms who accept their alternative credit scores and determine appropriate loans for smallholder farmers. Lending institutions thus consider both the self-reported financial history of farmers as well as exogenous variables that will affect their crop yields.

To gain access to remote farmers, FarmDrive depends on aid organizations, like USAID, and private firms that operate in the agricultural industry. FarmDrive is expanding its data collection through new partnerships with Planet, a satellite company, and The Impact Lab, a data analytics group, to potentially incorporate climate information gathered via satellite imagery into its algorithm.

Though the startup operates solely in Kenya, the founders would ultimately like to serve all 450 million smallholder farmers and 500 financial institutions in Africa. By linking unbanked farmers to needed capital, FarmDrive has the potential to revitalize Africa’s agricultural industry.

Katherine Parks

Photo: Flickr

Innovation Prize for Africa
The African Innovation Foundation recently announced its 10 finalists for the Innovation Prize for Africa. Among them are Peris Bosire and Dr. Dougbeh Chris Nyan. Their innovations will vastly improve the well-being of their nations’ citizens and beyond.

Bosire, a Kenyan entrepreneur, co-founded FarmDrive. It is a program accessed either through a mobile app or by signing up through text. It provides an alternative credit score to help smallholder farmers get approved for loans. Dr. Nyan, a Liberian research scientist, developed a rapid diagnostic test capable of simultaneously identifying and differentiating between three to seven infections in the space of 10-40 minutes.

What is the Innovation Prize for Africa?

The African Innovation Foundation launched this competition in 2012. The Innovation Prize for Africa seeks to find solutions to Africa’s problems from the continent’s own innovators and entrepreneurs. The Pan-African event’s thematic focus encourages innovations in five areas: Agriculture/Agribusiness, Environment, Energy and Water, Health and Well-Being, Information, Communication and Technologies (ICTS) and Manufacturing and Service Industry.

Every year, an expert panel of judges nominates 10 competitors for the top prize. The Grand Prize Winner gets $100,000 and the first runner-up and the Special Prize for Social Impact Innovation winner both receive $25,000. In addition, the remaining seven nominees each receive a $5,000 voucher.

Peris Bosire and FarmDrive

During their childhood in Kenya, Bosire and Rita Kimani bore witness to the difficulties their families and communities dealt with when farming. They bonded over this during their first day at the University of Nairobi. After sharpening their programming skills through internships at prestigious tech firms and competitions, they received awarded First Class Honors upon graduation. The pair went on to found FarmDrive as both a company and an app in 2014.

The app seeks to improve how loan officers assess smallholder farmers. Lenders don’t tend to give farmers credit because the established evaluation methods identify farmers as a risky investment. FarmDrive compiles information from six relevant categories: Individual Data, Social Data, Agronomic Data, Environment Data, Economic Data and Satellite Data. A learning algorithm then uses this data to create an alternative credit score.

According to Bosire’s Innovation Prize for Africa profile, FarmDrive’s usage has already “led to [a] higher acceptance rate of loan applications by farmers while maintaining a very low default rate.” This app consequently stands to act as a much-needed springboard for investment in Africa’s agricultural sector.

Dr. Dougbeh Chris Nyan and the Rapid Diagnostic Test

Dr. Nyan is a Liberian “medical doctor, a biomedical research scientist, an inventor and a social activist at the same time.” He invented his rapid test while working for the US Food and Drug Administration (FDA). The test detects and identifies the following viruses through blood samples: HIV, Hepatitis B, C, and E, Dengue virus, West Nile Virus and Chikungunya virus.

Because the test provides results in 10-40 minutes (instead of the usual three to seven day wait), this drastically reduces the turnaround time between the initial diagnosis and treatment decisions.

The Innovation Prize for Africa’s awards ceremony took place in Accra, Ghana on July 17-18. There, the panel of judges selected the winners and awarded prizes to the rest. In the end, Dr. Nyan won the Social Impact Award, and Ms. Bosire was a finalist.

Jada Haynes

Photo: Flickr