How can we finance smallholder farmers with little or no collateral?

Inspire Africa for Global Impacts Initiative’s Ignite Innovation Lab (IGL) Digital Transformation Challenge alumnus Tafadzwa Chikwereti is a core member of the E-Agro team. E-Agro is connecting farmers to credit and low-cost insurance premiums through alternative data and machine learning to close the critical data gap that prevents financial institutions from lending to creditworthy smallholder farmers.

 

Tafadzwa’s enthusiasm to develop solutions in the Agriculture sector is unmissable.

 

At the 2020 IGL virtual challenge, Tafadzwa’s team won first prize for coming up with “farmers market”, an online market place designed to eradicate wastage of farm produce by giving farmers access to premium markets. Fast forward to a year later and he has been recognised for similar innovation (albeit significantly different as well) called E-Agro .

 

Speaking to Tafadzwa on how he and his team came up with the idea, he points to how many smallholder farmers “just need a little bit of money to buy their inputs” so they can farm and yield profits. The problem for these smallholder farmers, however, is that they usually have little or no collateral to which they can tie their loans, meaning they cannot access most loans offered by the banks.

Copyright: E-Agro Facebook

 

The solution then for Tafadzwa and his team at E-Agro is an application which digests information for lenders on how much profit/loss a smallholder farmer is likely to make when given a certain amount of inputs. This app interprets variables like the type of seeds being used, the type of soil on which the crops are being farmed, the amount of rainfall that can be expected as well as the yield that they can look forward to.

 

This information would make it easier for micro-financers to lend money to those in need of it the most with little or no collateral as they have a predictive tool that allows them to gauge the margins the smallholder farmers will be working with.

 

It is no wonder that this idea was ranked 2nd best at Tech Hub’s 2021 Hackathon in Zimbabwe, winning them 4,5 million Zimbabwe dollars (US$ 26,470). It was not an easy road to second place as they were as many as 90 young innovators at the beginning, before being trimmed down to 30 and then the final 10.

 

Copyright: E-Agro Facebook

 

As a winner of two highly competitive innovation challenges in the space of a year, Tafadzwa says “winning brings a certain level of responsibility. “The IGL by Inspire Africa was a great help, it actually made us change our initial design of the solution as we were able to get a more comprehensive step-by-step education of the human centered design process.”

 

He also acknowledges that getting started is always the key. He is convinced that the fact his idea already had its feet on the ground before entering the Tech Hub innovation challenge gave him and his team the upper hand.

 

“Many people start saying ‘where will I get the money to fund my idea'”, he says. “But by starting you get to know what works and what doesn’t work, meaning your idea becomes better and better.”

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