Narrator: Around the world, most farmers have suffered different sets of challenges in scaling and growing their farms. Although lending and crowdfunding platforms have popped up over the past years, it’s still very difficult for smallholder farmers to access financing.
Some banks and other financial entities have employed unsavoury and predatory tactics that affect these agricultural businesses in the long term.
In this episode of Built In Africa, we’ll be taking a look at how Kenyan startup, Apollo Agriculture, is solving the credit problem small-scale farmers face with technology.
In 2015, Geneva-based policy advisory firm, Dalberg Global Development Advisors conducted some research about small-scale farming. From its findings, $450b was required to meet the needs of smallholder farmers around the world. But these farmers only got $31b, which was less than one-tenth of the supposed financing.
Coming closer to home, The World Bank reported that while agriculture made up 18% of sub-Saharan Africa’s GDP, lending to the stakeholders in the agricultural sector represented only 1%.
If there’s anyone who understands the struggles of smallholder farmers in Africa, it is Kenyan entrepreneur, Benjamin Njenga.
Benjamin Njenga: “I grew up on a farm and my mother, a smallholder farmer, used to plant with low quality seeds, no fertiliser, harvested only 5 bags per acre each year”
Narrator: That was Benjamin Njenga recalling his mother’s experience running her farm
Benjamin Njenga: “We knew if she would have been able to access fertiliser and hybrid seeds, her production would double but she couldn’t access the credit to buy these tools.”
Narrator: The experience motivated Benjamin’s desire to solve the problem he faced with his mother. He would go on to study agribusiness and management at the university. He also spearheaded smallholder agriculture insurance at ACRE Africa in Nairobi, helping to insure over half a million smallholder farmers against weather risks.
In 2017, Benjamin officially launched Apollo Agriculture with his co-founders, Eli Pollak and Earl St. Sauver, whom he met through a mutual friend. Benjamin serves as the Chief Customer Officer while Eli and Earl serve as CEO and COO respectively.
Benjamin Njenga: “Eli and Earl used to work for a company called Climate Corporation, a US company that uses machine learning to provide optimised recommendations to help US farmers increase their yield, which was later on sold for $1bn in 2013.
We got connected, I and my founders, with the same mission. With my background and knowledge working with farmers and their technical skills from the US, it was a perfect match to develop a company to support farmers”
Narrator: The goal with Apollo Agriculture was simple: To use machine learning and automated operations technology to help small-scale farmers with everything they need to maximise their profitability. They believed this was a necessary solution in a market where most farmers are producing 10% of what US farmers are producing.
The vast majority of small-scale farmers in Africa still cannot access tools like hybrid seeds, fertilisers, and insurance that can increase their yield and income. This boils down to two reasons.
Benjamin Njenga: “One, smallholder farmers are very rural, remote and difficult to reach. But second, they lack access to credit and, therefore, cannot afford the affront cost of well understood, high return investments like hybrid seeds and fertilisers.”
Narrator: Till date, approaches to smallholder financing have relied on human-driven and manual processes. The problem is these processes are costly and slow to scale.
This is where Apollo comes in, by digitising and simplifying these processes.
First, they build credit profiles for unbanked small-scale farmers using machine learning models that process large volumes of customer data, including satellite data of fields.
Next, the data obtained is then used to build automated digital processes for each step in a farmer’s lifecycle from customer acquisition, to training, to collecting the payment. This is in a bid to reduce the cost of generating actionable data throughout the customer’s lifecycle
Benjamin Njenga: “We are collecting insights on a demographic in a way that hasn’t been done before. We have to do this in a very super challenging environment where farmers have no financial records like bank statements and impact of climate change.
We have been able to develop tools that enable us to rate these customers and still be able to extend loans to them which they would otherwise not be able to access because of these challenges”
Narrator: Additionally, the company helps the farmers access increasing levels of their investment over time.
Benjamin Njenga: “This year only, we have been able to reach 25,000 customers and cumulatively since we started in 2017, we’ve been able to serve over 40,000 customers.”
Narrator: However, the team isn’t resting on its oars. It has plans to rapidly scale by partnering and securing more farmers
Benjamin Njenga: “We just recently closed $6m Series A funding as well as working capital funding to finance our loans and grant funding which primarily supports our research and development project.
Narrator: The $6m Series A round Benjamin mentions was led by Anthemis Exponential Ventures. Also in participation were The Omidyar Group’s Flourish Ventures, Leaps by Bayer, and Sage Hill Capital, among others.
After bringing its total capitalisation to $7.6m, the chief customer officer says Apollo is focused on growth in the year ahead.
Benjamin Njenga: “We have got a great product that farmers love and we want to continue to scale it.”
Narrator: To drive home its mission of maximising farmers’ productivity and profitability, Apollo is looking to transition its customers from subsistence farming to commercial farming so that they can make more money.
Benjamin Njenga: “We are also exploring new ways to support our customers and build resilience. Particularly, with the challenges around food security as a result of COVID-19. We are piloting a variety of options to best support our customers through these challenging times.”
Thank you for listening to the Built In Africa Podcast.
This script was adapted by Muyiwa Matuluko
Research and interview by Heritage Kene-Okafor
Sound design by Oghenekaro Obrutu
This is a production of Techpoint Africa
I am Oluwanifemi Kolawole
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