Agriculture remains the lifeblood of the African economy, but there are serious issues regarding financial institutions' assessments of farmers funding requirements. At the African FinTech Awards at the Finance Indaba Africa 2016 in October, FarmDrive director of partnerships and external relations Mary Joseph discussed how her socially conscious firm was using blockchain technology to impact the agricultural sector and bring hope to millions of farmers starved of funds.
Founded by University of Nairobi graduates Peris Bosire and Rita Kimani,FarmDrive connects farmers to financial institutions, loans and insurance through their mobile phones and customises loan terms to crop type, land size and season. The company ensures a grace period sufficient to allow enough time to plant, grow, harvest and sell before installment payments begin and bundles loans with weather-index insurance to further reduce the risk.
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Mary explained that financial institutions were ill-equipped to conduct risk assessments of unbanked farmers with no credit histories often in remote rural areas and set the context for the funding conundrum:
"The lack of access to capital is a problem that affects 50 million smallholder farmers throughout Africa. Although 65% of Africans are employed through the agriculture value chain and 32% of Africa's GDP comes from agriculture only 6% of commercial lending actually goes to the agriculture sector. This contributes to the $425 billion global funding gap between financial institutions and farmers. This means that throughout Africa, there are farmers who are unable to purchase the quality and inputs they need to increase their harvests and incomes and escape poverty."
The African FinTech Awards celebrate innovators that shape the future of finance, and acknowledges the work these companies are doing to have a positive impact on their target markets. The nominees were chosen by a panel of industry experts, stakeholders and investors from all over the world, who selected the three finalists in six categories to deliver their pitch at the Indaba.
The Finance Indaba is the biggest annual event on the continent for financial managers and specialists who are seeking partnerships to drive progress. Thousands of delegates will gain valuable insights into realising financial performance and growth, becoming more efficient and accessing funding, among a host of other opportunities from leading players in financial services.
