HerVest, the Nigerian Fintech That Wants to Bring Financial Inclusion To More African women
The financing gap between men and women is more expensive than ever in Africa. We know how women make a significant economic contribution to African economies through their entrepreneurial activities and involvement in the labour market. That’s why according to a McKinsey study, when Africa’s women are unable to access finance, Africa will lose out an estimated $316 billion in GDP by 2025.
For decades, African women have been trapped in cycles of poverty due to several underlying factors including unequal access to education, factors of production, restricted market access, underpaid or unpaid labour; harmful cultural practices and more. However, with financial inclusion high on the agenda of African countries, nowadays, many nations are setting concrete targets for women's financial inclusion.
That’s the mission of HerVest, a Nigeria-based fintech that aims to empower women's finances and reduce the financing gap for those women that work in agriculture.
The Crucial Role of Agricultural Sector
Women are increasingly playing a role in growing the continent’s largest sector, Agriculture. Most women tend to work in the agricultural sector and produce most of the food that feeds our families and communities. According to the African Union Development Agency (AUDA), women account for approximately 50% of the agricultural workforce in most Eastern and Southern African Countries. In sub-Saharan Africa, the financing gap for African women in agricultural value chains is estimated at $15.6 billion.
While positive steps have been made in enhancing gender focus in financial inclusion in this fast-growing sector, there is still a long way to go to bridge the equity gap.
To increase their economic opportunities, women need a level playing field with a sound educational foundation, more and better jobs, a business and legal climate that supports their economic pursuits, a financial sector that gives them access to affordable financial services tailored to their needs as well as and the recognition of their importance as a market segment which should be cultivated because it makes good business sense.
A Really Inclusive Approach
After years of working in marketing for several financial services companies, Solape Akinpelu noticed how “there is an alarmingly low adoption by women for financial services in Nigeria and all of Africa as a whole”. She found that the problem is particularly acute for women living in rural areas, especially those working on farms.
Thus, in August 2020, she teamed up with Yomi Ogunleye to launch HerVest, a startup that describes itself as an inclusive fintech company serving underserved and excluded women in Africa through a gender lens. Today, HerVest has over 30,000 women community members and is helping them achieve financial wellness through competitive returns on target savings, agro investments, and gender-driven financial literacy resources.
Put simply, the company offers a way to invest in female farmers while seeing a return on that investment and gives the farmers the financial literacy, education and opportunities they might not have otherwise had access to. Moreover, much of HerVest financial literacy material is made available in-app, with information provided in local languages to ensure that it is accessible, inclusive, and effective.
Offering blended finance to smallholder female farmers in underserved African communities
HerVest focuses on the critical issues that African farmers face: training, access to funding, and access to markets. The Lagos-based startup first works to ensure that female farmers have market access by securing up-front agreements with produce buyers. Plus, it trains women farmers in agricultural best practices, links them to farming inputs, and supports their financial access through a savings and lending model.
Most of Africa’s 33 million smallholder farmers sell their harvest to local markets and communities, rather than producing for larger buyers. Unsold crops are lost income. That’s why HerVest’s business model uses a community-driven approach to help farmers improve yields.
First, HerVest identifies commercial off-takers, then builds a network of female farmers who can fulfil the agreements it signs. This model helps fintech determine which goods are in demand, what kind of training needs to be provided, and how much funding farmers need.
After harvest, the app aggregates produce and sells it to the buyers. This approach ensures that farmers have a guaranteed market for their goods, and gives them collective negotiating power to command better prices.
When Women Supports Other Women
For the financial aspect of its work, HerVest is adapting a common system used by unbanked individuals: savings circles. Also known as rotating credit and savings associations, these are community savings and lending networks whereby small amounts of funding are regularly pooled and loaned out among a trusted group of members.
HerVest’s digital savings app allows women all across Nigeria to open savings accounts and set up savings goals. It then gives them the option of making short-term loans — which it calls “impact investments” on its platform — to the female farmers within HerVest’s network.
The model is different from traditional savings circles in that the borrowing option is only available to the farmers in HerVest’s network, not its entire member base. Nevertheless, the startup’s goal is to create a financial community of women who are supporting and financially empowering other women.
From Agriculture To Other Sectors
Now HerVest is moving forward. This year, the fintech renewed its mobile app and decided to enlarge its working area. Unlike the previous investment model on the app that focused largely on agro investments, the HerVest offerings have been expanded to boost access to funding for women-led entrepreneurs by connecting them to the capital and infrastructure required to scale their businesses.
The new HerVest app also has a dollar investment feature that allows users to invest in dollar-denominated assets such as stocks, and real estate, and a fixed income option to earn 10% – 14% returns in dollars. This feature protects investments from inflation and allows users to diversify their portfolios into high-quality investments to build wealth, said the company.
This is in addition to the newly integrated personal savings feature where users can earn 15% interest returns yearly, trade, and investment opportunities which are now available to users via the innovative, user-friendly app.
“Following our initial heavy concentration in the agro space, we have decided to expand and cover as many sectors as possible outside agriculture to help more women founders scale their businesses. Users of the revamped HerVest app can now access a range of financial solutions that allows them to build sustainable wealth either through a dedicated personal savings option, trade investment offerings, or an optimized dollar investment that can be fixed, put in stocks, or in the thriving real estate option,” Solape stated to the media.
“Access to sustainable finance is a huge challenge, as more women still face the challenge of being priced out of the existing market of microfinance loans. However, with our members-only cooperative model backed by technology, we are able to connect and lend peer-to-peer profitability”, she added.