24 year old Peris Bosire grew up in a small, impoverished farming community in rural Kenya. Almost the whole community – including her family – were unemployed, and relied on small scale agriculture for their livelihoods. But Bosire took a different path, and chose to study computer science at the University of Nairobi.
Here, she met Rita Kimani, also from a rural farming community in the Great Rift Valley in Kenya.
Together, the two girls hatched a plan – to disrupt the small scale farming industry in Kenya, through their combined tech and agricultural knowledge. Kenyan startup FarmDrive was born.
The girls honed in on one of the major challenges smallholder farmers in Africa face – the lack of access to finance -, and decided their solution would address this substantial obstacle.
According to Bosire, the underlying problem is that there is very little aggregated data about smallholder farmers, nor about their financial performance and history. The lack of data makes it difficult for financial institutions to conduct credit assessments on farmers, hence they are viewed as high risk, locking them out of formal financial systems. Currently, only one per cent of commercial loans in East Africa go to agriculture, Bosire says.
FarmDrive provides a simple digital record-keeping platform that enables farmers to keep track of their farming activities using a mobile phone. The farmers’ data combined with existing agricultural data is used to develop a comprehensive credit profile, to be used for the farmers’ credit assessment by financial institutions when they need funding.
In addition, FarmDrive also uses the records to understand each farmer’s specific needs and provide tailored information via SMS. This enables farmers to gain valuable insight into their farming operations, and maximize potential of their farms.
The result is that FarmDrive stimulates financial institutions to lend more to smallholder farmers, by de-risking the process through showing clear and transparent records and allowing the institutions to create products better catered to smallholder farmers.
According to Bosire, the prevalence of mobile devices across Africa – including large-scale uptake in rural areas – means the time has come when technology can have a real impact towards reducing financial exclusion.
“There is so much fundamental data that is generated by smallholder farmers especially when they make purchases of inputs at the local agro dealer, harvesting and farm gate selling that is not captured and aggregated. This data is very crucial in cash flow management and making lending decisions,” Bosire explains.
“With the proliferation of mobile phones in Kenya, mobile phones can be leveraged to digitize capturing this data to address the data gaps that exist leading to financial exclusion,” she says.
Bosire says mobile is a viable channel to engage with smallholder farmers, as most of the farmers currently trialling the service already owned and were familiar with a basic feature phone. FarmDrive’s services are available over SMS, USSD, as well as Android, as such Bosire says the solution is readily accessible to any interested farmer.
While she concedes that IT illiteracy remains a challenge, she says the fact that FarmDrive is available in multiple languages, and multiple platforms, means the IT knowledge required is limited to a very basic level.
“The digital nature of the product can be seen as exacerbating the usual challenges of ICT illiteracy. However, FarmDrive presents the record-keeping platform in different languages – it’s now available in English and Kiswahili – via a simple SMS to increase the uptake of record-keeping among rural farmers. So farmers don’t have to have a smartphone,” Bosire says.
“It also emerged during our pilot that farmers feel more empowered if they can their mobile phones for other activities apart from for calling, texting and mobile money. Their openness to embracing new ways of using their simple mobile phones to solve challenges is what drives the culture shift from keeping non-organized farm records on paper or none at all to digital record keeping,” she says.
Indeed, Bosire says the key to bring about this shift in behaviours, and educating farmers on the benefits of maintaining a credit record.
“The focus is on activating and sustaining the culture shift to record keeping and making sure the farmers see value in reporting credible records over a period of time so that they can eventually qualify for financing,” she explains.
Launched in late 2014, FarmDrive is currently being tested by a trial group of 50 farmers in Kenya, with the number of testers to be scaled to 3,000 by the end of the year.
Bosire says enough credible data will have been collected to enable the first batch of farmers to secure loans from partner financial institutions by the end of 2015.
The co-founders are thinking big, and hope to scale fast. They project 210,000 loans will have been processed by the end of 2018; and half a million Kenyan smallholder farmers will benefit from FarmDrive’s services within five years.
Then it will be time to expand to disrupting across Africa.
“FarmDrive expects to capitalize on the large underserved market that has been bottlenecked from inaccurate or lack of recordkeeping that will now have sufficient data to receive traditional financing,” Bosire says.
“The Company quantifies impact by increasing lending to smallholder farmers, which positively affects the economies and food security of these regions, has a huge economic impact and multiplier effect.”