Smallholder farmers in Africa often have a cashflow problem. They have money at the end of the growing season when they sell their crops, but they’re short of money at the beginning of the year when they need to buy seeds and fertilizer.
Recognizing this, Anushka Ratnayake came up with a new type of financial product: a system whereby farmers could layaway some money throughout the year against a large purchase in the spring. That way, farmers can spread out their income, invest in inputs that let them increase yields, and put their families on a firmer financial footing, she says.
Today her social enterprise, MyAgro, was named as one of six winners of this year’s Skoll Award for Social Entrepreneurship. She plans to spend the $1.25 million in prize money toward growing the business further in rural Mali and Senegal. In 2012, just 240 farmers had signed up. This year, MyAgro is on track to enroll up to 50,000. By 2020, she hopes to reach 200,000.
The concept is like layaway where you put down a deposit on an expensive item, such as a piece of furniture, then pay off the balance as you can afford it. Farmers using MyAgro sign up for packages of seeds and fertilizer nine months before they need them, then pay off the balance by buying scratch cards at a local store. They register their payments with the company by revealing codes on the back of the cards and sending in the numbers via an SMS message.
Ratnayake had worked for years for micro-finance organizations like Kiva and the One Acre Fund. But she says farmers didn’t necessarily need loans. They need a savings product to level out their income.
“I was trying to adapt a repayment process to match their cashflows. What I started to hear from farmers was really they wanted a savings program. They just didn’t call it layaway or credit. They would say things like “Can I have a loan, but I will pay you a year before I get the loan?’ or ‘Can I overpay my loan for next year’s loan?'” she tells Fast Company.
Farmers typically borrow about $35 a year to buy material that will increase their income by $150 over the season. “They just need to invest $50 or $100 in their farm, and that can make the difference between not having enough to eat and having enough to eat and having something to sell in the market as well,” Ratnayake says. “They’re so disconnected from banks–they can spend a whole day just traveling to the nearest branch. So this is a cost-effective way for farmers to pay in advance for seed and fertilizer.”
The other five winners of this year’s awards (each of which receives the same $1.25 million) include Angaza, which turns products like solar panels into pay-as-you-go propositions. Customers can thus buy equipment without paying the full amount up front, much like they were paying for phone credit. The San Francisco-based for-profit company embeds hardware, like GSM receivers, into equipment so manufacturers and distributors can track its usage and ensure they get repaid. CEO Lesley Marincola says it now retrofits 40 different products, including solar water heaters and solar lamps, mostly in Africa. In all, about 500,000 end customers have used Angaza hardware, she says.
Other 2018 winners include Code for America, which builds open-source government technology services; Callisto, which helps vulnerable women report sexual assaults by providing actionable data to authorities; SELCO, which develops renewable energy projects in developing countries; and Global Health Corps, which sends out young leaders to help in-need health organizations in Africa and the U.S.