Laura Caron Georgetown University

By Laura Caron

Background & Opportunities for Digital Finance in Agriculture.

Many rural and peri-urban smallholder farmers and agribusinesses struggle to access financial institutions, especially in Sub-Saharan Africa. According to the Global Findex 2017, only 23% of adults in Sub-Saharan Africa were able to save in order to start, operate, or expand a farm or other business, and only 30% of adults living in rural areas had any account at a financial institution. This lack of access leaves a large need for additional access to finance in agricultural contexts: a 2016 report by Dalberg Global Development Advisors, the Rural and Agricultural Finance Learning Lab, and the Initiative for Smallholder Finance estimated that traditional formal financial institutions in the region are only meeting about 5% of the need for short-term agricultural finance and less than 1% of long-term needs.

Farmers may have particular need for financial products due to the nature of their work and incomes which are tied closely to their crops. Their incomes may be highly seasonal and dependent on the harvest time, so farmers may take advantage of savings or credit to manage their cash flows throughout the year. At the same time, they are often exposed to the risk of loss of their incomes due to crop failures or natural disasters. Farmers especially face increasing risks of relating to climate change, as the potential for natural disasters increases. Meanwhile, agriculture may also require large investments that take time to yield rewards, indicating a need for credit to be able to afford these investments.

One growing approach to addressing the need for greater access to finance for farmers, especially smallholder farmers, in the region, is through increasing use of digital financial services (DFS). DFS offer clients greater convenience and flexibility, as well as ease of access, especially when they live in rural areas that are difficult to reach due to distance or lack of transportation infrastructure. This would give access to credit, savings, and insurance systems to farmers who would otherwise have no access to finance or for whom financial transactions are associated with high costs in terms of travel time or safety. The process of expanding access to finance through digital methods has already begun: even despite these low rates of financial inclusion, the 2017 Findex reports that 19% of those in rural areas have used a mobile phone to access a financial account.

And these services have continued to grow rapidly in recent years. In 2019, nearly 400 players in digital products to support farmers and agriculture, a subset of which focused on financial services, operated in Africa, and 60% of these were founded in the last three years. Digital technologies for agriculture have been concentrated heavily in East Africa, especially in Kenya, where over half of Sub-Saharan African firms are headquartered.  At least 22 DFS providers for agriculture operated in Kenya alone in 2019. Ghana has also recorded strong presence of digital technology for agriculture service providers incorporating financing into their business models to reach smallholder farmers at scale.

Although evidence on how DFS might improve farmers’ lives is still emerging and in a preliminary stage, there are some signs to suggest that this field will continue to grow and may have positive impacts. For example, reviewing existing preliminary internal and external evaluations, CTA suggests that digital financial technologies for agriculture has the potential to improve yields by up to 40%, with figures even higher for bundled products.

Challenges for DFS in agriculture.

However, along with unique opportunities for providing access to finance for farmers and agribusinesses, DFS also face unique challenges in this area. Along with the difficulty for farmers and agribusinesses in remote areas having trouble accessing traditional financial institutions comes a lack of information, credit histories, and credit records for these individuals. At the same time, rural markets may also have lower financial literacy than urban ones, meaning that financial products and user interfaces must be designed to be appropriate to the targeted audience.

Approaches and opportunities.

DFS providers have begun to consider solutions to these challenges in order to better incorporate farmers into their services. For example, one emerging approach to include farmers and agribusinesses who have no credit records or history is to use digital sources of data to build profiles of clients. As pointed out in the IFC/Mastercard Foundation handbook Digital Financial Services for Agriculture, these alternative data sources include images of farms and crops taken from satellites and drones, GPS trackers on farming equipment, and mobile surveys that can be answered from a mobile phone.

In line with the Responsible Finance Forum’s Investor Guideline 5: Establish Customer Identity, Data Privacy, and Security Standards, these approaches help DFS providers build profiles of their clients and offer them products designed to lower risks for both provider and client. However, this guideline also emphasizes the importance of data privacy, which becomes complicated when using alternative data sources. For example, even if a farmer wants to keep information about their farm private, satellite data is often publicly available and not owned by the individual. However, DFS providers can respect client privacy by incorporating informed consent to use of their data and allowing farmers to have control over the parts of the data that would identify them, such as the boundaries of their farm land. Providers may also grapple with new ways of providing consent mechanisms that allow more data privacy and protection for clients, as opposed to current consent models which are often incomplete, hidden, or impossible to opt out of.

Once clients have a profile built from alternative or traditional data sources, DFS providers must also consider how to target their products to appropriately meet farmers’ needs. For example, IFC/Mastercard Foundation recommend that DFS providers take into detailed account the type of crops farmers will be growing, as each has a different harvest schedule or cropping cycle, and input needs that would have impacts for DFS providers. Other signatories and endorsers, including FINCA and FirstAccess, offer agricultural loans alongside products aimed at other types of customers. These products have features like being timed appropriately for farmers to be able to borrow during the planting season and repay after the harvest.

Solutions: Apollo Agriculture.

Since 2016, Kenya-based agricultural DFS provider Apollo Agriculture, supported by and receiving advisory support from signatory Accion Venture Lab, uses satellite data both to evaluate credit risks and to provide advice and agricultural inputs. Apollo combines offering customized recommendations of specific fertilizers, seeds, and advice with a credit and insurance package to help farmers afford these inputs. This new and highly-scalable method of using satellite data to evaluate credit-worthiness has been assessed and vetted internally, compared with other sources of data including psychometric and observational data.

To make sure customers are protected by having an adequate understanding of the services, Apollo combines digital outreach and onboarding strategies with local field agents, who are able to help the customers with any issues. They also use field agents to follow up when loans are not being repaid and find that customers are more comfortable with voice-based phone calls along with SMS technology. This builds trust between the consumer and provider and also strengthens the feedback mechanisms between them. They combine training on farming best practices with financial literacy training, decreasing risk of non-repayment for both parties, as recommended by Guideline 9: Prevent Over-Indebtedness, Strengthen Digital Literacy and Financial Awareness.

Solutions: mfarmPay.

Based in Ghana and Kenya, endorser mfarmPay and its parent company Syecomp Ghana Limited have also put alternative data sources to use to create opportunities for rural African smallholder farmers to have access to credit and derisk financing by financial institutions to farmers. Use of remotely sensed satellite data, historical crop yield data, and information on farm plot features and machine learning models allow mfarmPay to model credit risk and create validated credit scores for clients who would otherwise not have any credit record, also in line with Guideline 5. Recently, mfarmPay has also added a new element to its credit scoring: climate risk metric. Recognizing that smallholder farmers may be vulnerable to climate change, mfarmPay has incorporated what it calls its Climate-Smart Agriculture measure into its scores in order to encourage farmers to adopt climate-friendly methods and provide capital from climate-focused investors.

mfarmPay supports its customers by using the data it has collected not only for credit scoring, but also for providing bundled localized weather, crop information, and agronomic advisory alerts to farmers using their service powered via their Farmer Helpline Channel. In this way, they not only help farmers get access to credit but also help them improve their own businesses using the same data sources. This is client-centered product innovation as recommended in Guideline 8: Enhance Customer Services for Problem Resolution and Product Innovation.


Digital financial services have great potential to reach farmers, especially smallholder farmers, in Africa, in order to meet their specific needs. DFS providers and investors in DFS companies should consider:

  • Vetting and validating alternative data sources against more traditional data sources before scaling up, in order to make sure that assessments of clients are accurate and fair. This approach was used by Apollo Agriculture before expanding their satellite-based service in Kenya. The approach by mfarmPay was validated in 2016/2017 to a targeted 1700 rural farmers in four commodity value chains in Ghana leveraging on 17 defined parameters for the scorecard. Based on the successes and the need to further derisk the product for agri-lenders, mfarmPay expanded its datapoints to 60 non-equally weighted data points scientifically modelled.
  • Creating transparent and appropriate consent and privacy mechanisms for farmers who participate in these services, in line with Guideline 5. mfarmPay, via its parent company has signed up to Ghana’s Data Protection Regulation. Through this, they commit to adhering to incorporating client protection in their operations in Ghana and respecting all associated risk and compliance rules.
  • Use connections and relationships with clients and client data to expand the reach of financial products while also offering education and other services to farmers to improve their livelihoods, as both Apollo and mfarmPay do.


Laura Caron is a Scholar at the School of Foreign Service at Georgetown University, International Political Economy, with a focus on international development. This post is part of an ongoing Blog series to broaden investor-innovator collaboration and to harness ongoing experiences from co-founding, current and prospective Signatories of the Guidelines for Responsible Investing in Digital Financial Services.