By Hugues [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
Kenyan startup FarmDrive is trialling a mobile app providing farmers with new financing options by connecting them with investors interested in funding local producers, while also providing a range of tools to help farmers improve their skills and records.
FarmDrive co-founder Peris Bosire told HumanIPO despite 80 per cent of Kenya’s population living in rural areas and performing agricultural activities, the majority of the country’s agriculture is comprised of smallholder farmers due to the difficulties in accessing financing options to enable expansion.
“Smallholder farmers in Kenya lack access to finance. They are limited in their capacity to acquire and use modern farming techniques hence cannot progress,” Bosire said.
“About half of Kenya’s total agricultural output is non-marketed subsistence production. The main cause of this worrying trend is the lack of finance to expand and grow farming ventures in order to gain access to the economic value chain,” she said.
“There is need to enhance value addition of the agricultural produce among the small scale farmers which requires investment in the farmers to enable them expand and grow their farming ventures so that they can participate in the global value chain.”
FarmDrive aims to address this gap in the market through leveraging mobile technologies to improve the farming and business practices of smallholder farmers, and in doing so improve their bid for financing while connecting them with interested investors.
“Our focus is to give smallholder farmers the capacity to enhance their produce and shifting agricultural practices among smallholder farmers from subsistence to commercial by revolutionising the way small scale farmers get access to finance,” Bosire said.
“[Their integration into the value chain] will be achieved by leveraging on existing mobile and web technologies to help farmers keep records of their farming expenses, productivity and revenue which will then build a business case to enable farmers to seek loans directly from potential investors,” she said.
Bosire expects FarmDrive to be more attractive to farmers than traditional financing solutions such as banks, given the lack of bureaucratic and administrative requirements involved in the system, as well as the added benefits of access to decision support tools relating to issues such as expenses, revenues and productivity.
To provide reassurance to investors, the only requirement is for farmers to form groups of five, collectively providing “security” for investments made into their farming unit, with each member of the team registered via their mobile phone number, guaranteeing easy communication with recipients of investment.
From the investor’s point of view, Bosire said FarmDrive provides a unique opportunity to launch into a market sector hitherto largely untapped, yet which accounts for a substantial segment of the country’s economy.
“Agriculture is the backbone of the East African nation’s economy contributing over 26 per cent of its GDP. In Kenya, the agriculture industry contributes 60 per cent of the total revenues earned by the country through exports,” Bosire said.
“We are offering investors interested in the promising and profitable agricultural value chain an opportunity to invest in profitable farming ventures where they might not have the time to do it themselves.”
The developers of FarmDrive continue to optimise the application for use in areas with low smartphone and internet penetration, although Bosire insists with connectivity improving in Kenya technology will not hinder the success of the application.
“We recognise the issue of connectivity in the country is a challenge, therefore we have optimised the mobile web application to perform relatively well in such areas and at the same time ensuring transparency,” she said.
“However, given that the mobile network penetration capacity is rapidly increasing we expect that the application will be accessible to everyone.
“The first phase of deployment is accessible to users whose phones have internet/web capability but as we expand, we plan to have agents in such areas to allow all farmers access to our services.”
FarmDrive currently has 50 farmers in regions across Kenya trialling the app, with a number of investors already having expressed interest – including a restaurant owner hoping to finance a farmer to provide a direct line of supplies for the establishment.
The startup intends to raise revenues by charging a subscription fee from investors using the service, but also eventually from selling data.
“FarmDrive will be able to accumulate and generate accurate valuable data on agriculture from different regions which then will be sold to farmer-centric organisations that can use it to create new business models,” Bosire said.
“We charge interested investors for a connection to verified farming enterprises such that they will be able to view profiles of farmers and decide on where to invest.”
After rolling out to all areas of Kenya, FarmDrive will be launched across East Africa, filling the role of credit scoring provider for the agricultural industry.
“We are also viewing the entire East African region as a space to expand our operations. We see ourselves as a credit scoring firm for the agribusiness industry by being able to use character-based lending models and predictive models based on the data accrued to ascertain creditworthiness of farming ventures,” Bosire said.
