Entrepreneurs in Africa plug into new technologies

Key innovations and technologies are helping to drive change across Africa’s agricultural value chains, from mobile payment systems to centralised information registries.

A number of these were showcased at a ‘Plug and Play’ day on the eve of the Fin4Ag 2014 conference, in an attempt to find practical solutions to existing challenges.

These challenges include bridging the gap between risk perception in Africa and actual risk in the continent, as well as combatting the idea that smallholder farmers are not bankable.

One of the ways in which this is done is through the provision of more comprehensive information to banks, microfinance and other financial institutions to improve the prospects of credit being granted. Some platforms allow potential investors to track in real-time the operations of farmers through the use of GPS data.

Other platforms still seek to better connect different stakeholders across the value chain, from farmers to traders to bankers. The range of solutions offered reflect the challenging conditions in which many producers operate, despite the growth in recent years of Africa’s agricultural sector.

Linking farmers with financiers

Tangaza Pesa aims to accelerate the process of money transfers across Kenya, improving the cash flow of farmers who often struggle for liquidity. The first step to achieving this goal, however, is not in the transfer technology but in creating confidence for financiers to provide loans to farmers who need them in the first place.

It does this through a platform that allows farmers seeking finance to register onto their database and make loan applications to Tangaza’s pool of potential investors. One of the lures for the investors is in the KYC compliance measures Tangaza undertakes, procuring farmers’ photograph and biometric details, as well as checking their ID against the government’s registry.

“Not even banks have biometrics in Kenya, so we offer financiers the highest level of security,” says Gichane Muraguri, director at Tangaza Pesa.

Alongside this confidence, financiers are also offered convenience, with the ability to automate loan application, approval and disbursement processes according to predetermined criteria. Financiers are able to see farmers’ sales and the value of their inputs, allowing them to track the loan from issue to repayment.

More sophisticated information on the farmers can also be provided by local, on-the-ground agents. “Agents can go to a location where the farmer operates and provide not only GPS data but an in-depth profile of farmer to financiers, such as the number and range of animals they have on their farms or income details,” comments Muraguri.

All of the information helps to build a better credit profile for farmers who are often otherwise financially excluded, improving the credit prospects. Just as critically, there is a low barrier for entry, with applications and repayments made from any smartphone or tablet device – across all networks.

Tangaza operates under the directives of the Central Bank of Kenya and currently has around 2,000 farmers enrolled onto its programme. It hopes to rapidly accelerate that number through engaging with farmers and financiers, including providing demonstrations of its platform.

“To witness the operation live gives it a reality, as potential investors see real numbers, real transactions. It provides an actual demonstration and proves to people that it really works. The more we can demonstrate this, the more we can grow,” says Muraguri.

TXF will be profiling a number of technology platforms and providers seeking to add value to agri chains in its post-conference special report.