This blog is part 2 of a 5 part series on what is financial inclusion and how is it informing the design of the curriculum for IDDS Kenya.
In Kitui (about 3h NE of Nairobi), the Ojukwus also rely on agriculture for their livelihood but on a larger scale. Michelle, a single mom with two kids lives with her extended family. She dedicatedly works her land but faces challenges due to her limited resources and access to financial tools which hinder her ability to scale.
Farmers are one of the world’s most vulnerable groups, often at the mercy of unpredictable weather events, with limited access to infrastructure or support and little in the way of financial tools to help them mitigate risk. Agricultural insurance reaches just 10% of smallholders worldwide (falling to 1% in Africa). One of the main barriers for access to agricultural loans and services is the lending decision is often based on ability to pay and not on the productive capacity of the land. Lack of information on credit history and the high cost of in-person land assessments can also make the barriers to risk taking on the MFIs side higher.
However, a few solutions out there are trying to change the Ojukwus situation by using satellite imagery to inform credit assessment. With the use of algorithms, we are able to see details such as what crops are being planted and how much yield is produced on the field, and generally build a detailed and insightful picture of a farmer’s life. With the right data, the risk of crop failure can be assessed and the high costs of frequent visits to rural areas where farmers live can be eliminated.
This is the case of Apollo Agriculture that launched a combination of services to rural farmers in Kenya putting together a package of hybrid seeds, fertilizers, farming advice and insurance (in partnership with Pula) and all accessible via a mobile phone. In this sense Apollo not only identifies a farmer but also increases a farmer’s yield by supplying a package that ensures the farmer will be able to repay the loan and make more money.
The most interesting part about this set of solutions put together to help families like Ojukwus is the behavior change that comes. And this is beyond the outcomes of empowering farmers like Michelle to be in front of her strategic decision making process backed by insurance to increase her confidence to switch to higher-yielding but higher-risk crops. Without better risk management strategies, Michelle would not make those decisions. If the new crop fails, the consequences for the farmer and family could be pretty negative, no one would take that risk. And with insurance and credit, farmers are not only able to look beyond low-yield crops, they also begin to form a credit history and move along their journey to full financial inclusion.
Stay tuned for the next story from the field!
IDDS kenya 2018 will be held in Embu from July 8 to 23 with the aim to co create solutions to boost access to innovative financial products and services focused on rural populations. We encourage to follow our journey. We are also crowdfunding for selected participants with high potential that are unable to pay for their transportation and expenses during the summit. If you or anyone you know would like to contrtibute to the cause please click in in our StartSomeGood crowdfunding campaign https://startsomegood.com/projects/financialinclusionkenya.