If you want to help the world’s poorest, help them to farm. So says Bill Gates, and it makes sense. More than three-quarters of the poorest live in rural areas and most are smallholder farmers working less than two acres. They often lack the seeds, machinery, livestock, and finance they need to grow, so they struggle to emerge from poverty.
Two young entrepreneurs from Kenya have an idea to help: FarmDrive develops credit histories for farmers, so they become more attractive to financial institutions offering loans. So far, they’ve signed up more than 3,000 farmers on their mobile-based platform. In 2016, working with a financial partner, they helped disburse about $130,000 in loans to 400 farmers.
“The main reason farmers aren’t able to access funding is that financial institutions can’t assess the risk,” says Mary Joseph, FarmDrive’s director of external relations. “They don’t know if the farmer is creditworthy or not, and the farmers don’t have collateral that lenders look for.” Many smallholder farmers rent their land, says Joseph, so are not able to put up title deeds, for example.
Founded by Rita Kimani and Peris Bosire, FarmDrive mostly works via SMS. Farmers put in information like seed and fertilizer expenses, their livestock, their revenues, plot dimensions, and personal details. Then FarmDrive combines that with data on weather, soil conditions, typical vegetation levels for that area, and so on. After a few weeks, farmers can start applying for a loan, Joseph says.
FarmDrive is one of several alternative credit scoring startups trying to widen access to finance in poorer countries. Others include Branch and Lenddo, which combine data on social media habits, cell phone usage, and even the quality of someone’s grammar to build a sense of credit risk. Meanwhile, new mobile services, including weather reports, extension service advice and commodity market pricing, help bridge the information gap between larger and smaller farmers.
Joseph hopes technology can help encourage young people to farm. “A lot of people are moving to cities but there isn’t a lot of work, so we’re trying to make agriculture a sexy profession for young farmers. They tend to see it as something their parents or grandparents do,” she says. “With all these digital innovations, they’re becoming more attracted, and that’s going to help the youth employment rate and also food security.”
[Photos: Alice Lee Photography/FarmDrive]