Kenya’s agricultural sector is by far the largest contributor to the country’s economy, accounting for a 27.3% share of the Gross Domestic Product.
Much of this business is derived from the country’s nearly 6 million small scale farmers. These farmers represent a vital segment of the agricultural value chain which is so key to the country’s economy. Small scale farmers are an essential player in the World Bank’s Sustainability Development goals in the effort to achieve food security and promote sustainable agriculture.There are multiple obstacles and problems associated with production and financing that hinder this important sector’s ability to function at it’s optimum efficiency.
At present, despite the enormous sector share of the agricultural industry in the country's GDP, it is estimated that only approximately 3% of commercial bank lending is allocated and disbursed to the sector.
The country's farming value chains are fragmented and diffuse, with farmers facing difficulties in a multitude of areas. Among these issues are storage and wastage, use and availability of proper farming inputs, and lack of access to reliable information on farming practices and market information.
However, chief among the problems facing small scale farmers is financing. Farmers subsist on an average of less than $10 per day, and face a variety of costs and challenges that they are unable to meet. A lack of access to microfinancing is the reason these farmers often cannot afford to meet the costs that help them survive and maximise their output.
Although commercial banks and financial institutions have the desire and the funding capacity to service the demands of the segment, due to high transactional and administrative costs stemming from the lack of risk analysis data that they have, in practice very few farmers have access to such funding. Farmers live in remote locations, have sporadic and unreliable reporting on their inputs and outputs, and in many cases do not have bank accounts. This makes it nearly impossible for financial institutions to administrate loans.
Kenya is among the world leaders in mobile telephony, with mobile penetration estimated at 88.1% in 2016. It is estimated that 1 in 2 Kenyan's access mobile data in a monthly period. The country's mobile money service, MPESA, is an extremely powerful platform allowing users access to digital money. There are over 13 million active subscribers to the service and it is estimated that up to 48% of the country's GDP flows through the system over its millions of daily transactions.
The financial and agricultural climate in the country, coupled with an underused but powerful existing technological infrastructure lead to a ripe opportunity to leverage these factors into solutions that will greatly enhance the industry's participants by allowing them direct access to microfinancing via a digital mobile interface.
For an in depth view of our background, research and design methods, please view the attached pitch document for this idea.
** Updated - Please view our attached updated pitch document for an in depth view of our background market, as well as our research and design process for this idea.