FarmDrive is a Kenyan-based social enterprise that connects unbanked and underserved smallholder farmers to credit, while helping financial institutions cost effectively increase their agricultural loan portfolios. Using simple mobile phone technology, alternative data sets, and sophisticated data analytics, FarmDrive is closing the critical information gap that keeps smallholder farmers from loans that would allow them to grow and diversify their businesses.
Potentially creditworthy smallholder farmers are often denied loans because they lack the traditional credit profiles that lenders rely on to evaluate borrowers. Financial institutions do not have well-designed and operationally efficient methods of accurately assessing and managing smallholder farmers’ risk, making them reluctant to lend to farmers. Farmers are therefore left with little access to credit, and financial institutions with a hole in their client base and product line.
To bridge this gap, FarmDrive is developing an innovative credit assessment model that provides detailed risk profiles on smallholder farmers to financial institutions. FarmDrive’s comprehensive algorithms generate credit profiles and tailor-made loan products for farmers based on the nature of their farming activities. Thus, when farmers apply for a loan using the mobile application, financial institutions are presented with pre-vetted clients and individualized loan products that are further de-risked with weather-index insurance. This solution will not only unlock millions of dollars of previously risk-averse capital for smallholder farmers, it will improve the livelihoods of entire communities, thereby alleviating poverty, hunger, and inequality. Since launching the platform in December 2015, over 2000 farmers have joined the platform, and FarmDrive disbursed 350 loans totaling over KES 12 million (USD 120,000).