FarmDrive (FD), a Kenyan startup set to unlock millions of dollars in loans for smallholder farmers in Kenya and sub-Saharan Africa, received a follow-on investment from EWB Canada last month, with participation from AK IMPACT INVESTORS, 1 to 4 Foundation, ADAP SEED FUND 2 and The Lakes Charitable Foundation.
This FinTech startup founded by two Kenyan women is positioned to reach 3 million smallholder farmers in Kenya in the next 5 years. The two co-founders, Peris Bosire and Rita Kimani, aim to deliver productive digital loans and layaway savings products to smallholder farmers (SHFs) to grow their incomes and resilience. Using a combination of agriculturally relevant data, Know Your Customer data, and advanced behavioural analytics, FD has developed a proprietary Lending Engine to extend loans to
This follow-on investment will allow FD to scale to $13 million of loan originations in 2019 with minimal losses and exceptional returns using, RiPe, a customizable lending engine that will allow lenders to plug in and access low-cost loans origination channels such as USSD, credit scoring, identity verification and a portfolio management suite that includes recovery and collections, payments, customer support and advanced real-time data analytics.
Elena Haba, Acting Director of Investments at EWB Canada says, “ FD has the potential to shift market attention and fill the credit gap between creditors and underserved small business owners like smallholder farmers. We believe that addressing this credit accessibility issue is a seminal first step toward building more inclusive and sustainable economies.”
The agriculture sector in Africa employs an estimated 70 per cent of the population and contributes over 40 per cent of GDP, but receives less than 4 per cent of total bank lending due to a lack of personal assets, credit history, and technological tools for smallholder farmers. FD has built credit histories for smallholder farmers who didn’t have financial identities before and has approved input loans to more than 53,000 farmers from as little as $5 to $500.
FD uses mobile technology, predictive modelling, AI and a customer first approach to democratize access to loans to all farmers; ensuring farmers can apply for a loan from any type of phone and receive a decision on their loan application in seconds. FD has achieved this by building multiple channels of access and a fully automated lending process.
For example, an SMS chatbot simulates a conversation between a borrower and a loan officer offering a private human-centred experience for the loan application process and ensuring a positive customer experience.
Previously, FD received $50,000 USD of early-stage seed funding from EWB Canada to develop their platform and prove to financial service providers that smallholder farmers are profitable clients. In the last 4 years, FD has seen that their loans increase the productivity and incomes of farmers and has led to reduced costs, increased scale, and improved quality of agricultural portfolios for lenders.
They also secured a partnership with Safaricom, Kenya’s largest mobile network operator, to launch DigiFarm Loans, a mobile USSD platform (*283#) that provides farmers access to affordable input loans, customized input packages, market and agricultural learning content. Today, approximately 1 million smallholder farmers in Kenya are registered on DigiFarm.
Peris Bosire, FD’s CEO says, “Rita and I are not only passionate about this work, we understand deeply from personal experiences the value of giving loans to smallholder businesses - our school fees were paid through farm proceeds and we went on to earn First Class Honours in Computer Science.