, NAIROBI, Kenya, Sep 15 – The Consultative Group to Assist the Poor (CGAP) and FarmDrive have partnered to explore the use of satellite-based imagery to help predict and solve the financial needs of smallholder farmers.
The partnership will see FarmDrive through CGAP’s financial contribution, collaborate with The Impact Lab and Planet to use satellite images to better understand planting cycles, crop yields, and trends in production to help forecast future revenues, timing of income and potential gaps in payments.
The data generated through this effort will help FarmDrive and other microfinance institutions to create relevant financial products tailored to the needs of smallholder farmers.
FarmDrive Co-founder Rita Kimani says the partnership comes at an opportune time where the gap in understanding the financial needs of smallholder farmers is widening.
“We are delighted by CGAP’s support. We created FarmDrive to revitalise agricultural production and improve the livelihoods of smallholder farmers. The opportunity to incorporate world-class satellite technology and data analytics is a monumental step towards achieving these goals,” she said.
Africa has an estimated 50.6 million smallholder farmers.
Although the agricultural sector employs 65 percent of Africans and accounts for 32 percent of Africa’s GDP, only about 5.8 percent of commercial lending goes to the sector.
“One of the key challenges smallholder farmers face is the lack of access to tailored credit products that match the timing of their crop cycles; we are very excited about the potential for this technology to help address that need in a scalable way,” said Maria Fernandez Vidal, CGAP Financial Sector Specialist.
FarmDrive is a Kenyan-based business that leverages on alternative datasets to create comprehensive credit profiles and tailored loan products which financial institutions use to lend to smallholder farmers at the base of the pyramid.
This solution is bringing financial services to the untapped market of African smallholder farmers.
Lack of finance has been attributed as the main cause limiting investors’ participation in agri-business, according to a new report by the Alliance for a Green Revolution in Africa (AGRA).
The report released during the ongoing Africa Green Revolution Forum in Nairobi indicates that the gap is for entrepreneurs that need funding between $1.25 million (Sh125 million) dollars and $1.50 million dollars (Sh150 million) to take their agribusiness to the next level of growth.
This according to the report provides an opportunity for banks and venture capitalists to come up with funding opportunities that will take agribusinesses to the next level.
He says the lack of financing has seen many agribusinesses stagnate making it difficult for Africa to realise its true agribusiness potential.