Farmers like Theresia Wairuba can now receive and repay loans via mobile phones. (Photo: Riccardo Gangale/Grameen Foundation)
By Juan Guardado and Caitlin Burton
More than half a billion Africans are smallholder farmers, and many need financing to invest and grow their farms. However, less than 3% of credit goes to Africa’s agriculture sector; the unmet need for finance is estimated at $450 billion across the continent. By all appearances, farmers are too risky to be offered credit because their cash flows are irregular, their track record is unknown, they are too costly to serve, and their needs are not well understood.
But our work in East Africa and Latin America is showing how digital innovations can overcome the challenges of rural financial inclusion: a farmer’s credit worthiness can be assessed, and agricultural financial services can be profitable and sustainable.