5 African Agri-Fintech to watch

African Agri-Fintech

An intriguing paradox emerges in the the dynamic landscape of African economy. On one side, we have witnessed the rise of fintech startups able to attract billions in venture capital.

On the other side, agriculture, the bedrock of the continent's economy, is often overshadowed and underfunded.

Why African farmers struggle to access credit

Access to credit remains a critical challenge for African farmers. Traditional lenders are hesitant to provide loans without detailed information to assess creditworthiness. But farmers cannot provide much information about what they do.

And even when they can, data often requires manual and time-consuming processes.

The business of farmers is also hindered by the lack of direct access to agricultural inputs. Farmers often depend on intermediaries to procure essentials like seeds, fertilizers, or machinery. And this leads to increased costs, delays, and overall market inefficiency.

Agro-Fintech is the solution

However, the emergence of agritech and fintech providers, especially in East and Southern Africa, has brought an innovative solution designed to address the needs and challenges of smallholder farmers and underserved groups.

From Kenya to South Africa, a bunch of agritech pioneers are the forerunner of the continent agriculture industry revolution. The following are five of the fastest-growing ESA companies providing farmers with innovative digital financial services.

1. Apollo Agriculture, the app that helps farmers to access to credit

Launched in 2016 and based in Nairobi, Kenya, Apollo Agriculture is a tech company that aims to support small farmers in rural Africa.

The company provides a platform with a variety of bundled services that include credit, farming inputs, customized advice and consultancy, insurance coverage, enabling farmers to improve productivity and increase their income.

Farmers can use the platform to apply for bundles of services such as seeds, fertilizers, location-specific advice and crop insurance, based on their necessities.

Once a request is approved, Apollo issues a voucher that farmers can redeem at local agro-dealers, which the company then pays off its own balance sheet. Farmers can repay the value of their bundles once they sell their products after harvest.

Apollo Agriculture leverages machine learning (ML), remote sensing, and mobile payments to accurately underwrite farm credit risk.

The startup also built an automatically managed network of more than 5,000 agents and nearly 1,000 retailers that enables last-mile delivery of farm inputs and services to small-scale farmers.

2. Pula Advisors is used by 8 million farmers

Established in 2014 in Kenya, Pula Advisors is an agricultural insurance and tech company that designs and delivers digital and innovative agricultural insurance products to support smallholder farmers in enduring yield risks.

The company operates across Africa and Asia and has insured over 8 million farmers so far, improving their farming practices and increasing their incomes over time.

The startup offers insurance and agronomic advisory services, including provision of inputs, farm monitoring, data analytics, and advisory services to mitigate risks for smallholder farmers while also enhancing farm yield and climate resilience.

Pula Advisors utilizes technology such as remote-sensing data and drones to improve their yield insurance products and increase cost efficiency. They also implement an adaptive learning process to better serve farmers.

Operating under a business-to-business model, the company partners with financial institutions and agricultural SMEs that subsidize its services at low or no cost to end customers. These partners gain access to Pula Advisors' aggregated data on their customer base, reducing their portfolio risks.

3. EzyAgric, the power of digitalization

Headquartered in Uganda, EzyAgric provides a value chain digitization platform designed to increase crop yield.

The platform aims to provide farmers with easy access to agro-inputs, credit financing, e-extension and advisory services, as well as market linkages.

EzyAgric operates as a "demand aggregator", collecting orders from different customers to achieve better pricing in purchasing agricultural inputs and selling produce. The company uses its own warehousing and logistics operations to better manage seasonal demand for its customers.

EzyAgric's products and services include farming data and analytics, farm management and solutions, inputs and equipment, lending (including "buy now, pay later"), and credit scoring through partnerships. According to data, the company operates through around 300 local agricultural shops, 600 village agents, and 100 farmer associations as local hubs and agents.

4. Oko Finance, how satellites help farmers

Founded in 2018 and headquartered in Mali, Oko Finance is a provider of mobile-centric micro-insurance products, offering crop insurance at affordable prices and providing instant claims processing.

The company operates across Mali, Uganda, and Cote d'Ivoire, and offers an automated insurance coverage. It uses satellite imagery to assess if a field is negatively affected by weather patterns, particularly droughts and floods. Premiums and reimbursements are settled via mobile payments.

As of July 2022, the company had provided insurance to more than 15,000 farmers in Mali and Uganda.

Oko Finance claims to partner with advanced weather information providers to obtain hyper-local data that can be used to accurately assess risk and optimize premium pricing. They also automate the claim validation process through analysis of historical data.

The company relies on innovative tools to distribute insurance in remote areas and reach unbanked farmers. These tools include a digital platform that allows farmers to manage their policies from any mobile device, a mobile app that offers a seamless customer experience and can be used offline, as well as an application programming interface (API) that enables partner institutions like micro-finance institutions to securely access relevant information.

5. Emata, IA to empower farmers

Founded in 2021, Emata is a digital lending provider from Uganda serving smallholder farmers. The company offers affordable digital loans that are specifically designed to empower farmers to invest in their farms and increase their revenue, leveraging artificial intelligence (AI) and advanced risk analytics to offer tailored loans that farmers can afford.

Leveraging technology and digital platforms, Emata says it is able to automate the entire loan process, from data collection and credit scoring, to loan disbursement, and offer small loans too (about US$15).

Since its founding, Emata has partnered with 43 agricultural organizations and reached 38,000 dairy, coffee, maize, and oilseed farmers. The company has provided loans amounting to US$810,000 to 2,500 small-scale farmers. These loans have resulted in an average 25% increase in farmers’ productivity for dairy farmers, Emata claims.