Many have compared the steps required to overcome COVID-19 with those taken in previous economic crises or natural disasters, whereby the situation follows a similar pattern consisting of three stages: triage, stabilize, recover. While there is some applicability to the current COVID-19 pandemic, it implies a sequence and limited duration that may not truly characterize the nature of the challenges we now face. The reality is that COVID-19 is a more persistent phenomenon that may continue to ebb and flow for some time before it is fully under control.

Given the more entrenched and global nature of this crisis, it is likely that the consequences will be more varied and run deeper than what we have seen in past crises. To help get a sense of what these consequences may be for those who are most vulnerable, we asked a few members of CFI’s <a href="https://www.centerforfinancialinclusion.org/people/advisory-council" target="_blank" rel="noopener noreferrer">Advisory Council</a> to share some brief thoughts on what they see as the biggest implications of COVID-19 and the ways in which the inclusive finance sector can address them.
<h2>Camilla Nestor, Adjunct Professor at Columbia University</h2>
From my perspective, one of the biggest implications of COVID-19 is on food security for countries and populations that were already vulnerable. Before COVID-19, the world’s estimated 500 million smallholder farmers were one of the most financially underserved segments, with an estimated <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">$100 billion lending gap</a> in Africa alone.

As a result of COVID-19, smallholder farmers are dealing with significant volatility in demand for both cash crops and food crops, challenges securing the necessary inputs, and limits on accessing markets. On top of this, they are also facing reductions in access to already-scarce capital. If unaddressed, this lack of capital will directly impact their ability to produce food. We see that commercial lenders are pulling back on lending to agriculture; <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_Summary_FINAL.pdf" target="_blank" rel="noopener noreferrer">cross-border social lending</a> is flat; and supply chain financing is at risk – for example, in a recent <a href="https://www.afap-partnership.org/covid-19-impact-assessment-on-the-agrismes-and-farming-communities-of-ghana-malawi-mozambique-tanzania-and-uganda/" target="_blank" rel="noopener noreferrer">survey</a> of 5 markets in Africa, farmers noted reduced access to both supplier credit and trade credit since the onset of the pandemic.
<blockquote>With smallholder farming contributing up to 80% of the food supplies in some regions, there is significant risk to food security at both a household level and a national level.</blockquote>
With smallholder farming contributing <a href="https://www.ifad.org/documents/38714170/40706188/Smallholders+can+feed+the+world_e.pdf/460ca6c2-7621-40d8-9f79-a56f6f8fa75e" target="_blank" rel="noopener noreferrer">up to 80%</a> of the food supplies in some regions, there is significant risk to food security at both a household level and a national level. This is an opportunity for the financial inclusion community and agricultural finance experts to come together to develop short-term and longer-term mechanisms to ensure that financing flows to this critical segment.
<h2>Mark Pickens, Senior Director of Social Impact at Visa</h2>
We need to step up for small and micro businesses as they are the backbone of the global economy. Unless they remain resilient and grow, most economies are going to suffer because small businesses typically account for half of all jobs and GDP. The challenge is even greater with women-owned small businesses, which face many challenges, including lack of access to capital.
<blockquote>Key factors to building resiliency will include how small and micro businesses digitize payments, access other financial services, and skill-up to operate in an increasingly digital economy.</blockquote>
Key factors to building resiliency will include how small and micro businesses digitize payments, access other financial services, and skill-up to operate in an increasingly digital economy. Earlier this year the Visa Foundation announced $210 million to help small businesses. Visa also launched online toolkits via Small Business Hubs in 20 countries, expanded our Practical Business Skills portal for a greater geographic reach, and committed to digitally enable 50 million small businesses as we collectively recover from the COVID-19 pandemic.
<h2>Joanna Ledgerwood, Independent Consultant</h2>
It has been well-documented that the COVID-19 crisis has disproportionately affected women and girls. In most countries, social norms dictate that women bear primary responsibility for feeding and caring for their families and managing the household. With children not able to attend school and sick family members needing care, women have increased responsibilities, exacerbating an already heavy workload. The result is women have less time for paid work, and because of the pandemic, less access to informal financial services such as savings groups or local shop credit to help them through.
<blockquote>This pandemic provides an opportunity to proactively promote women’s empowerment.</blockquote>
However, this pandemic provides an opportunity to proactively promote women’s empowerment and advance household food security. Understanding how women and men are impacted differently by the pandemic, as well as the risks, constraints and hardships women face and their specific needs, requires the collection and analysis of sex-disaggregated data. This data can help to design appropriate programs and policies and inform financial products and delivery channels to effectively reach women.

For example, providing digital cash transfers directly to women increases their chances of receiving and controlling money to meet household needs, which in turn is likely to lead to greater bargaining power at home. The use of sex-disaggregated data can help to design programs that mitigate unintended consequences of cash transfers such as increased domestic violence. In addition, G2P programs that take gender biases into account can enhance women’s resilience to future economic shocks and can influence change to social norms over the long-term. Now is the time to ensure that women’s increased responsibilities and reduced ability to earn income will not further widen the gender gap in financial inclusion that existed long before this pandemic.
<h2>David Ferrand, Independent Consultant</h2>
Much depends, I think, on factors beyond financial inclusion. The indications remain rather positive that the health impact on Africa will be relatively bearable, notwithstanding the tragic loss of life. But we still don’t know yet the eventual economic cost to Africa, either in absolute terms or in how it will be distributed. There is a very real concern that the recovery from the crisis could see the micro and smaller scale business sectors re-emerging significantly disadvantaged relative to larger scale. And many people who have lost their livelihoods in the crisis may end up in long-term poverty traps.
<blockquote>Only governments have the balance sheets necessary to bear the risks involved.</blockquote>
There are financial sector providers positioned to play a pivotal role in restoring liquidity to communities and investing in rebuilding. But it would be unrealistic to expect that financial sector players can do this alone. There needs to be a new partnership between the financial sector, communities, and governments. Only governments have the balance sheets necessary to bear the risks involved – but they need help from across the financial system in providing the support where it is needed.

Over the longer term, there is also a need for genuine innovation in developing solutions to deal with the human and economic losses. Digital transformation has extraordinary potential, both now and in the future, to change our societies and ultimately lead to ever greater economic, social and cultural integration of countries and the world. The best-case scenario is that the COVID-19 crisis could lead to our harnessing digital finance to empower the rebuilding and development of local communities. But this is going to require bold, swift and pragmatic action.

Implications of COVID-19 for the Most Vulnerable: A Snapshot of Views from CFI’s Advisory Council

Advisory Council

Our People

Test of a Lifetime: COVID-19 and Financial Inclusion

Agricultural and Rural Finance

Credit

Challenges and Crises

Enabling Environment

Digital Credit

Digital Financial Services

Delivery Channels

MSME/SME Finance

Policy, Regulation and Government Initiatives

Smallholder Farmers

Underserved Groups

Supply Chain Finance

Women

Blog Post

Prior to the onset of COVID-19, very few of us would have foreseen a pandemic spreading so rapidly across the world, forcing governments to take actions like lockdowns and border closures. We have observed how these events found many essential services unprepared and resulted in businesses focusing on “response” and “recovery.” In many countries, the pandemic started as a health crisis, while in Sub-Saharan Africa it started as an <a href="https://www.worldbank.org/en/news/video/2020/04/21/africas-pulse-covid-19-coronavirus-causes-first-recession-in-25-years" target="_blank" rel="noopener noreferrer">economic one</a>, as closures happened quicker than the virus spread.

Despite the fact that many agricultural value chains are considered an essential service, agri-SMEs in Sub-Saharan Africa are still facing a <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">decline in demand</a> (particularly those providing farm inputs), <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_Summary_FINAL.pdf" target="_blank" rel="noopener noreferrer">liquidity shortfalls</a>, harvesting and production problems due to labor shortages, <a href="https://csaf.org/wp-content/uploads/2020/07/CSAF_State_of_Sector_2020_FINAL.pdf" target="_blank" rel="noopener noreferrer">export and transportation delays due to lockdowns</a>, and cancelled international contracts. All these challenges are exacerbated by ongoing climate change-related shocks, like droughts, floods and <a href="https://www.nationalgeographic.com/science/2020/02/locust-plague-climate-science-east-africa/" target="_blank" rel="noopener noreferrer">locust plagues</a>. The resilience of agri-SMEs (small and medium-sized businesses that are formal and registered entities engaged in agricultural production) is being tested with these events.

While it is too early to estimate the full economic impact of COVID-19 on agri-SMEs, most lenders are taking steps to address the most pressing challenges faced by these agri-SMEs. Though it is prudent to move quickly to overcome these challenges, agri-SMEs would be better supported in the long run if lenders approach these problems through a systemic lens to understand the root of the challenges instead of focusing only on the symptoms of the overall shock.

Aside from the lack of infrastructure, agri-SMEs’ biggest challenge to growth is their limited access to finance and the regulatory burdens constraining this access. As will be discussed below, these challenges are deeper and more structurally embedded, and therefore require a long-term coordinated commitment to provide agri-SMEs access to capital.

<strong>This blog highlights steps lenders are currently taking to help agri-SMEs weather the storm and suggests areas where they can expand their focus to support these businesses in being better prepared for future economic shocks.</strong>
<h2>Explore new options to mitigate risk and increase capital flow to agri-SMEs</h2>
Since the outbreak of the pandemic, most lenders have focused on serving existing clients by increasing their financing, restructuring loans, or deferring payments to meet their clients’ liquidity challenges. By doing so, lenders are also making sure their current portfolio is not at immediate risk.
<blockquote>It’s essential that lenders offer non-traditional options to mitigate risks and increase the flow of capital to agri-SMEs.</blockquote>
While lenders may be tempted to take a more conservative stance, those with sufficient capacity should be initiating even more new deals in order for agri-SMEs to keep goods and services flowing through the highly interdependent agricultural value chain. For instance, <a href="https://datastudio.google.com/u/0/reporting/0f453d56-7fef-4823-8cd2-b2bd02773603/page/TP9WB" target="_blank" rel="noopener noreferrer">72% of MSEs in Zambia</a> need working capital to continue and grow their business, and <a href="https://datastudio.google.com/u/0/reporting/0f453d56-7fef-4823-8cd2-b2bd02773603/page/TP9WB" target="_blank" rel="noopener noreferrer">61% are running on their savings</a>. COVID-19 is exacerbating the financing gap, and it’s essential that lenders offer non-traditional options to mitigate risks and increase the flow of capital to agri-SMEs.

Luckily, lenders have successful examples which they can use to build new and more innovative risk mitigation options. Credit guarantees, such as non-bank financial instruments that mitigate default risk for lenders in Sub-Saharan Africa, are a known practice. Between 2008 and 2015, AGRA worked with several partners to offer several guarantees to extend credit to many agriculture value chain actors in Africa, demonstrating the bankability and feasibility of investing in perceived risky agricultural businesses. Additionally, <a href="https://aceliafrica.org/" target="_blank" rel="noopener noreferrer">Aceli Africa</a> has developed a new market platform that aims to incentivize financial service providers to lend to agri-SMEs while also providing technical assistance to them.
<h2>Create new strategies to find and support agri-SMEs</h2>
Many agricultural lenders are reporting that servicing new clients has either stopped or dropped to low levels, not just because of risk concerns, but also because it is almost impossible to conduct thorough due diligence without on-site visits. Given that on-site visits may not be feasible in the near-future, lenders will want to design creative strategies and leverage data to support remote discovery of new agri-SMEs.
<blockquote>Promising agri-SMEs will become more visible to lenders by providing a common set of standard bankability metrics.</blockquote>
To this end, in early 2020, MIX and SCOPEinsight formed a partnership with the support of AGRA to help address the financing gap agri-SMEs face. Through this partnership, they are <a href="https://www.themix.org/news-blog/mix-and-scopeinsight-launch-partnership-with-agra" target="_blank" rel="noopener noreferrer">building bankability metrics</a> so that agricultural lenders can identify and pre-screen agri-SMEs. These metrics play an even more important role now due to COVID-19 disruptions, and they will feed into a portal which will bridge the information gap between agri-SMEs and lenders. As a result, promising agri-SMEs will become more visible to lenders by providing a common set of standard bankability metrics that lenders can use to reduce their costs to serve SMEs. By employing bankability metrics, lenders will be able to assess the potential for growth of agri-SMEs, which currently handle <a href="https://agrf.org/dealroom/wp-content/uploads/2020/07/AGRA-AGRF-Deal-Room-talk-by-Tom-Reardon-july20-2020-final-sent.pptx" target="_blank" rel="noopener noreferrer">680 million tons of food in Africa</a>.
<h2>Offer appropriate technical assistance to agri-SMEs</h2>
<blockquote>The key to this kind of support is that it offers business development assistance that is based on a high knowledge of the value chains and challenges.</blockquote>
Several of the lenders we spoke with are increasingly providing technical assistance to agri-SMEs, recognizing that in these extraordinary times, agri-SMEs are looking for direction. Lenders are offering guidance and training on financial management, crisis management, and operating a business with limited resources. After conducting a <a href="https://rootcapital.org/wp-content/uploads/2020/06/COVID-19-client-survey-report_JUNE-2020.pdf" target="_blank" rel="noopener noreferrer">survey on COVID-19's impact on 134 of its clients</a>, Root Capital decided to offer virtual technical support through its advisory team in four areas: crisis management, emergency operations, financial management and analysis, and digital data collection and analysis.
While technical assistance is not new and is already being offered to SMEs by many organizations, the key to this kind of support is that it offers business development assistance that is based on a high knowledge of the value chains and challenges, with the main goal to support agri-SMEs to grow and become bankable organizations. Helping agri-SMEs become more bankable, and thus more professionalized and visible to other lenders, can assist them to overcome barriers to financing and become more resilient and better equipped to face future risks and shocks.

Going forward, the uncertainty of this pandemic makes it unclear how the next season or harvest will affect agri-SMEs, who are <a href="https://www.raflearning.org/post/covid-19-emergency-briefing-agri-smes-operating-uncertain-financial-operational-and-supply" target="_blank" rel="noopener noreferrer">highly interdependent actors in an agricultural value chain</a> where one simple disruption in the flow of goods and services creates challenges for other actors. Along with prioritizing their existing clients, as they are currently doing, lenders could consider the crisis an opportunity to employ long-term strategies that can help agri-SMEs grow into resilient institutions. Coordinated responses and actions by lenders and other actors will play a critical role in ensuring that these businesses are strong enough to continue to feed the world in the face of new pandemics and other global challenges to come.

From Crisis to Opportunity: How Can Lenders Help Build Resilient Agri-SMEs

Sub-Saharan Africa

Resilience

Financial Health

Responsible Investing

Impact Investing

Scrolling through Instagram these days, I’ve noticed a pattern that has emerged since COVID-19 prompted lockdowns across the globe. With movement restricted, many social media users in the US have engaged in culinary adventures. New experiments in the kitchen abound despite the noted shortage of ingredients like flour on supermarket shelves.

But what I haven’t been seeing on my social media feed on the food front is much more dire: COVID-19 will push up to an estimated <a href="https://www.oxfam.org/en/research/dignity-not-destitution" target="_blank" rel="noopener noreferrer">half billion people into poverty</a> across the globe, threatening food security. Prior to the pandemic, approximately <a href="https://www.who.int/news-room/detail/11-09-2018-global-hunger-continues-to-rise---new-un-report-says" target="_blank" rel="noopener noreferrer">820 million people were chronically hungry</a>. Now, the World Food Program estimates that by the end of 2020, <a href="https://insight.wfp.org/covid-19-will-almost-double-people-in-acute-hunger-by-end-of-2020-59df0c4a8072" target="_blank" rel="noopener noreferrer">265 million people</a> in low and middle-income countries will be under the threat of starvation.
<h2>A Challenge for a Continent</h2>
These issues are particularly acute in several countries in Africa, where job losses and income losses are affecting food security, defined as access to sufficient, safe, and nutritious food. In a recent <a href="https://amref.zoom.us/rec/play/uZZ_Ju2p-zo3E9ed4wSDBKR6W9S9J_2s0iFP-qZemkixVXRQOlWkYuAbMLeKlvVOBygaPgBJmSDPJCzg?continueMode=true&amp;_x_zm_rtaid=FQWENb2fTM2AEbhvJuEg9g.1590501183404.6cee48bfc63a9f06cac60da22d85013d&amp;_x_zm_rhtaid=599" target="_blank" rel="noopener noreferrer">Africa Dialogues webinar</a>, hosted by Dalberg Advisors and Amref Health Africa and moderated by Lolem Ngong and Edwin Macharia, Professor Hamadi Iddi Boga of the Ministry of Agriculture, Livestock, and Fisheries in Kenya; Sara Menker, Founder and CEO of Gro Intelligence; and Monica Musonda, Founder and CEO of Java Foods, explored how the pandemic is disrupting agricultural supply chains and impacting smallholder farmers and vulnerable populations across the continent.

As Menker highlighted, there isn’t a lack of food around the world. Food insecurity, rather, is rooted in a massive distribution problem and a widespread inability to afford food, now exacerbated by COVID-19. Foreign exchange reserves across the African continent are at an all-time low due to the pandemic. In a weakened macroeconomic environment, the cost of imports has increased, and although some African markets are experiencing food insecurity to a greater extent than others, net importers of calories are finding themselves in an increasingly precarious situation. In Zambia, for example, the <a href="http://www.fao.org/giews/countrybrief/country.jsp?code=ZMB" target="_blank" rel="noopener noreferrer">price of fortified cereal</a> for children has increased to $6. Groups including informal workers, microentrepreneurs, and women tend to be the most adversely impacted by such price fluctuations.
<blockquote>Informal workers, microentrepreneurs and women tend to be the most adversely impacted by price fluctuations.</blockquote>
Musonda noted during the webinar that up to 60 percent of wages from informal work in Africa are used to buy food. Finding themselves without work, or with fewer working hours due to COVID-related restrictions on physical movement, informal workers and microentrepreneurs face increasing food insecurity, and women, who allocate more of their own resources to <a href="https://www.cgap.org/blog/3-ways-financial-inclusion-improves-womens-food-security" target="_blank" rel="noopener noreferrer">other members of the household during hardship</a>, are disproportionately affected.
<h2>How Does Financial Inclusion Come into Play?</h2>
As a well-documented <a href="https://www.uncdf.org/financial-inclusion-and-the-sdgs" target="_blank" rel="noopener noreferrer">enabler of food security</a>, financial inclusion has an important role to play in the mitigation of COVID-19’s harms to vulnerable groups. Here, I highlight a few of <a href="https://centerforfinancialinclusion.org/covid-19-reveals-the-limits-of-individual-action-and-market-based-solutions/" target="_blank" rel="noopener noreferrer">many considerations</a> for financial inclusion initiatives when taking action to reduce food insecurity.
<h3>Supporting SMEs and Smallholder Farmers</h3>
Propping up small and medium-sized business is an important consideration for financial inclusion and, by extension, food security in Africa. SMEs form an <a href="https://www.researchgate.net/publication/315516536_AFRICAN_SMALL_AND_MEDIUM_ENTERPRISES_SMES_CONTRIBUTIONS_CHALLENGES_AND_SOLUTIONS" target="_blank" rel="noopener noreferrer">integral part</a> of the food supply chain in Africa. According to Musonda, <a href="http://www.ipsnews.net/2019/09/smes-main-drivers-africas-food-economy/" target="_blank" rel="noopener noreferrer">SMEs handle 64 percent of food</a>, much of which is fresh and perishable, on the continent. These are the foods that are crucial, but we must do more to ensure that SMEs stay alive during this time of crisis.

This is where financial service providers (FSPs) play an important role. FSPs need to address both short-term and longer-term financing options for SMEs. In the short-term, as <a href="https://www.covid-finclusion.org/forum/discussion/surviving-the-liquidity-crunch-what-are-your-expectations-and-plans-for-managing-mfi-liquidity-what-worries-you-most" target="_blank" rel="noopener noreferrer">FSPs themselves are struggling with liquidity constraints</a>, the role of other actors, such as impact investors, development finance institutions, and policymakers, will be important to filling the void in available liquidity. But beyond liquidity through FSPs, there is a broader role for governments to play when it comes to food security.

In Kenya, the government has created an ecosystem of SMEs to support smallholder farmers in a mutually beneficial initiative that connects nodes of the supply chain. According to Prof. Boga, 90 percent of farmers in Kenya are smallholder farmers. To support this population, the government has created an ecosystem of SMEs to support them, and has implemented an e-voucher program in which farmers receive vouchers on their mobile phones to exchange for partially subsidized farm supplies based on their individual and household needs.
<h3>Promoting and Strengthening Cash Transfer Systems</h3>
Government-to-person (G2P) and person-to-person (P2P) <a href="https://blogs.worldbank.org/voices/responding-crisis-digital-payments-social-protection-short-term-measures-long-term-benefits" target="_blank" rel="noopener noreferrer">cash transfers are an effective strategy</a> to increase both financial inclusion and food security. NGOs, governments, and the private sector are working together to promote and strengthen this most important vehicle for quickly delivering crucial cash to low-income households and individuals. <a href="https://www.unicef-irc.org/publications/pdf/IRB 2016_04.pdf" target="_blank" rel="noopener noreferrer">Evidence</a> from several large-scale <a href="https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7596.pdf" target="_blank" rel="noopener noreferrer">evaluations</a> shows that as households receive more in cash transfers, they spend more on food, with positive impacts on meals consumed and dietary quality.

The regulatory environment and payment infrastructure in many countries can present a challenge for massive payouts, but the financial inclusion community views the current crisis as an <a href="https://blogs.worldbank.org/voices/responding-crisis-digital-payments-social-protection-short-term-measures-long-term-benefits">opportunity to fast-track improvements to payments systems</a>, particularly through digital payments ecosystems. While digitalization is promising, however, CFI’s Alex Rizzi <a href="https://centerforfinancialinclusion.org/a-covid-digitization-stampede-mustnt-trample-consumer-protection/" target="_blank" rel="noopener noreferrer">cautions</a> that rushed pushes to go digital may harm the poor, and it will continue to be important to put base-of-the-pyramid consumers at the center of considerations for digital cash payments.
<blockquote>Countries with strong DFS infrastructures are taking the lead in implementing systems to help people afford food.</blockquote>
In Africa, countries with strong DFS infrastructures are taking the lead in implementing systems to help the base of the pyramid afford food and other living expenses. The Western Africa Central Bank (BCEAO) is promoting the use of electronic payment tools by making it easier for people to open a mobile money account and by making P2P transfers free. Kenya’s National Treasury <a href="https://www.ugogentilini.net/wp-content/uploads/2020/04/Country-social-protection-COVID-responses_April3-1.pdf" target="_blank" rel="noopener noreferrer">appropriated</a> an additional 10 billion Kenyan schillings, or $100 million, to support for the elderly, orphans and other vulnerable groups through cash transfers. In addition, fee waivers on P2P mobile money transactions on M-PESA were <a href="https://techcrunch.com/2020/03/16/kenya-turns-to-its-mobile-money-dominance-to-stem-the-spread-of-covid-19/" target="_blank" rel="noopener noreferrer">approved</a>. The Moroccan Economic Watch Committee activated a mobile payment device for cash transfers directly to an estimated 3 million informal workers, while in Tunisia, the government is offering one-off cash transfers to households with members working in the informal sector and housing the elderly.

To support governments and markets where the digital payment infrastructure is still developing, initiatives like the <a href="https://www.worldbank.org/en/topic/paymentsystemsremittances" target="_blank" rel="noopener noreferrer">World Bank’s G2Px</a> focus on bringing together expertise across sectors to scale G2P payments responsibly. NGOs such as the World Food Program <a href="https://www.wfp.org/cash-transfers" target="_blank" rel="noopener noreferrer">continue to employ cash transfers</a> in coordination with partners.
<h3>Supporting Women’s Financial Inclusion as a Means to Greater Food Security</h3>
Research indicates that within households, women are at a <a href="https://www.adb.org/sites/default/files/publication/30315/gender-equality-and-food-security.pdf" target="_blank" rel="noopener noreferrer">greater risk of being food insecure</a>. In times of hardship, such as the current pandemic, they are more likely to reduce their own food consumption to leave enough for men and boys. However, access to secure financial services <a href="https://www.cgap.org/blog/3-ways-financial-inclusion-improves-womens-food-security" target="_blank" rel="noopener noreferrer">has the potential</a> to <a href="https://elibrary.worldbank.org/doi/abs/10.1093/wbro/lkx003" target="_blank" rel="noopener noreferrer">promote women’s empowerment</a> and advance food security. Women with bank accounts are likely to have greater bargaining power to allocate more household resources to purchasing nutritious food. Increasingly, many donors and policymakers are recognizing the need to shift cash transfers to women as one approach to tackling food insecurity. This provides an <a href="https://elibrary.worldbank.org/doi/abs/10.1093/wbro/lkx003" target="_blank" rel="noopener noreferrer">on-ramp for digital financial services while improving convenience and confidentiality</a> of these payments.

Will our documentation of this moment in time capture the resilience, cooperation, and hard work of the individuals and institutions responding to this unprecedented crisis? Food security is a critical basic need, and financial inclusion is an important means of achieving it. With financial services digitizing at a breakneck pace, we mustn’t forget our most basic needs and how inclusive finance can serve them.

Food Security and COVID-19: How Financial Inclusion Can Support Livelihoods

Entrepreneurs of MSMEs

Payments

<em style="color:#5e514d">&gt; Posted by Jeffrey Riecke, Communications Associate, CFI</em>

<a href="http://www.flickr.com/photos/55034788@N08/5758970864/"><img class="aligncenter wp-image-14750" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/04/5758970864_fa51c58c71_z.jpg" alt="" width="600" height="398" /></a>The 450 million smallholder farmers around the world, who comprise the majority of those living in absolute poverty, have <a href="http://dalberg.com/documents/Catalyzing_Smallholder_Ag_Finance.pdf">an enormous unmet financing need</a>. Such financing requirements include small loans for inputs like seeds and fertilizer. A few weeks ago, seven leading social lenders, who collectively disbursed $360 million in 2013 toward agriculture financing, joined forces to spur sustainable growth and instill responsible practices in this vital lending area: they formed the Council on Smallholder Agricultural Finance.

Launched at the Skoll World Forum in Oxford, the Council is made up of Alterfin, Oikocredit, Rabobank’s Rabo Rural Fund, responsAbility Investments AG, Root Capital, the Shared Interest Society, and Triodos Investment Management. The Council will meet regularly, share experiences and insights, and develop best practices and industry standards across three areas: market growth; responsible lending principles; social and environmental impact.

The Council particularly targets loans to “missing middle” agricultural businesses in low- and middle-income countries. The “missing middle” refers to businesses that require financing in the $25,000 to $2 million range, which are amounts often deemed too large for microfinance and too low for commercial banks. These businesses include producer organizations, companies that source from smallholder farmers, and companies that provide productive assets to smallholder farmers, often on credit. These companies can serve hundreds to thousands of farmers, offering an array of services including market access support, training, financial services, and accessible assets. Though millions of smallholder farmers are connected to these missing middle businesses, the vast majority are not.

There’s a huge opportunity to expand the missing middle agricultural financing market. The groups in the Council plan to increase their combined disbursements in this area to a total of $500 million by 2016. They also aim to facilitate successful market entry for new lenders. Research indicates the addressable financing gap for this market area to be about <a href="http://dalberg.com/documents/Catalyzing_Smallholder_Ag_Finance.pdf">$12 billion</a>.

While promoting market growth, the Council will look to instill responsible practices – across social, environmental, and corporate governance areas - among all financial institutions serving the missing middle market. The Council created a <a href="http://www.csaf.net/lending/lending-principles/">set of responsible lending principles</a> for these lenders, which include principles on transparency, prevention of overindebtedness, trusted information sharing, and fair treatment.

To ensure that their lending efforts are creating positive social and environmental change, the Council created and endorsed a set of <a href="http://www.csaf.net/impact/">seven impact metrics</a> that its members will collect and share annually, and use as a basis for deeper impact analysis in the future.

To learn more about the Council on Smallholder Agricultural Finance, <a href="http://www.csaf.net/">click here</a>.
<p style="color:#5e514d"><em>Image credit: <a href="http://www.flickr.com/photos/55034788@N08/5758970864/" target="_blank"><span style="text-decoration:underline">Africa Renewal / UN Photo / Fred Noy</span></a></em></p>
<p style="color:#5e514d"><span style="font-weight:bold">Have you read?</span></p>
<p style="color:#5e514d"><a href="http://cfi-blog.org/2014/03/27/agriculture-microinsurance-in-africa-to-subsidize-or-not-to-subsidize/" target="_blank">Agriculture Microinsurance in Africa: To Subsidize or Not to Subsidize?</a></p>
<p style="color:#5e514d"><a href="http://cfi-blog.org/2014/01/29/the-hunger-games-are-real-for-millions-of-people/" target="_blank">The Hunger Games Are Real for Millions of People</a></p>
<p style="color:#5e514d"><a href="http://cfi-blog.org/2014/03/31/asset-based-financing-and-flexible-repayment-schedules-to-better-serve-africas-smallholder-farmers/" target="_blank">Asset-Based Financing and Flexible Repayment Schedules to Better Serve Africa's Smallholder Farmers</a></p>

New Council to Expand Responsible Financing for Agriculture

Responsible Digital Finance

Consumer Protection

<em>&gt; Posted by </em><i>Laurence Dare <i>and Stephanie Hanson</i>, East Africa Policy Manager and Director of Policy and Outreach, One Acre Fund</i>

Expanding access to finance isn’t enough. Clients need access to financial products that they will actually adopt. That’s why addressing customer needs, one of the pillars of the <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion" target="_blank">Financial Inclusion 2020 Roadmap to Inclusion</a>, is so critical for making finance more inclusive. For smallholder farmers in rural Africa, <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=2&amp;cad=rja&amp;uact=8&amp;ved=0CDoQFjAB&amp;url=https%3A%2F%2Fwww.mfw4a.org%2Fdocuments-details%2Ffinancial-inclusion-in-africa.html%3Fdl%3D1&amp;ei=osUwU9zeJPSQ0gHDioCoDA&amp;usg=AFQjCNEfXdiaXnDcAXy1C7BZ66UuPIxtYg&amp;sig2=hPgAjLL1GQrJmkjN1Pq3PQ&amp;bvm=bv.63587204,d.dmQ" target="_blank">where inclusion rates are 19 percent compared to the urban rate of 34 percent</a>, the financial services provided don’t come close to <a href="http://api.ning.com/files/BpcxhYIbWSb--9dVh4I6Vp8t042J6m87aqI8DN47rXSg*4UvXaDtH5vNtygCoe5x-zKwCF14kyP*ktfXrOePlLwVwQS3uCEd/Initiative_for_Smallholder_Finance_Briefing_1.pdf">meeting the demand</a>. Asset-based financing and loan products with flexible repayment schedules can help close this gap.

Among other financial services, smallholders desperately need access to financing for basic inputs—improved seed and fertilizer—that could dramatically increase their agriculture productivity. Properly designed, this financing could make an important contribution to growth and poverty reduction in Africa.

<img class="aligncenter  wp-image-14492" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/het1099.jpg" alt="" width="525" height="348" />Unfortunately, microfinance products created for Africa’s poor do not necessarily meet such needs. Most microfinance institutions are <a href="http://pdf.usaid.gov/pdf_docs/pnadf010.pdf">concentrated in urban and peri-urban areas</a> and primarily offer cash loan products on strict repayment schedules. These products meet the needs of the urban and suburban poor, most of whom receive small but frequent income from businesses or jobs. Smallholder farmers have different challenges.

Unlike urban clients, smallholder farmers receive the majority of their income all at once after harvesting. As small jobs come in, such as day labor on a neighbor’s farm or a local construction project, farmers can earn some extra income, but this is incremental and unpredictable. A cash loan product on a strict repayment schedule does not meet these financing needs.

How should a loan product be structured to meet the needs of smallholder farmers? At <a href="http://www.oneacrefund.org/">One Acre Fund</a>, we designed a product pairing asset-based financing and a flexible repayment schedule that is working for 180,000 smallholder farmers in Kenya, Rwanda, Burundi, and Tanzania.

Instead of cash, One Acre Fund lends the assets that farmers need for success. By buying through us, farmers are able to avoid the potential pitfalls associated with local sellers, such as poor quality or fraudulent inputs and high prices. Our organization sources materials from large suppliers, negotiates bulk fates, and imposes rigorous quality control standards.

There are other advantages to lending assets rather than cash, as well. Farmers are less intimidated by taking a loan when they are receiving a comprehensive package of inputs that is proven to be profitable. Because it shares features with <a href="http://www.ifad.org/operations/projects/regions/pn/factsheets/nena_islamic.pdf">Islamic finance models such as murabaha</a>, asset-based lending can provide a workable alternative for Muslim clients.

[caption id="14458" align="alignright" width="342"]<a href="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/graph.jpg"><img class="wp-image-14458 size-none" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/graph.jpg" alt="Money flows in throughout the season rather than all at the end. In the past three years, One Acre Fund has seen stable and steady repayments." width="342" height="241" /></a> Loan repayment money flows in throughout the season rather than all at the end. In the past three years, One Acre Fund has seen stable and steady repayments.[/caption]

For the lender, the asset-based lending model lowers risk and reduces the need to assess credit worthiness. The lender knows what investment the client has made and knows that the investment can be used in a profitable business model. It also allows for specifically tailored training. With all of their clients using the same inputs, microfinance institutions can provide precise information on how to use them to maximize profits. Our field officers provide highly-specific training at weekly meetings to ensure that clients get the most out of their investments. Field officers also use these meetings to encourage continuous repayment and offer modest incentives for meeting targets early.

Instead of enforcing a strict weekly repayment structure, our flexible repayment structure has just two deadlines for clients. First, farmers must meet a “prepayment” requirement before they receive any of our services (roughly 10 percent of their total loan size). The second repayment deadline is the final one, due after the harvest. After paying that first 10 percent, farmers are free to make repayment on their own schedule, at any time throughout the season.

This type of flexible repayment schedule works because it meets the needs of smallholder farmers, boosts demand for credit and <a href="http://www.econ.yale.edu/conference/neudc11/papers/paper_146.pdf">increases the amount invested in farm inputs</a>. And it has been shown that offering a flexible repayment schedule generally <a href="http://www.hks.harvard.edu/fs/rpande/papers/repayfreqjeea_1107.pdf">does not increase delinquency or default</a> among microfinance clients.

At One Acre Fund, the flexible repayment schedule has been very successful, supporting a growing number of clients as well as excellent repayment statistics over the past three years. Our overall repayment rate is over 98 percent.

<em>Image credit: Hailey Tucker, One Acre Fund</em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/07/29/financing-smallholder-farmers-with-fairtrade-access-fund/" target="_blank">Financing Smallholder Farmers With Fairtrade Access Fund</a>

<a href="http://cfi-blog.org/2014/01/29/the-hunger-games-are-real-for-millions-of-people/" target="_blank">The Hunger Games Are Real for Millions of People</a>

<a href="http://cfi-blog.org/2014/03/03/weather-index-insurance-to-benefit-from-new-nasa-satellite/" target="_blank">Weather Index Insurance to Benefit from New NASA Satellite</a>

Asset-Based Financing and Flexible Repayment Schedules to Better Serve Africa’s Smallholder Farmers

<em>&gt; Posted by Jeffrey Riecke, Communications Associate, CFI</em>

On Thursday NASA and the Japan Aerospace Exploration Agency <a href="http://www.washingtonpost.com/blogs/capital-weather-gang/wp/2014/02/27/nasa-launching-game-changing-satellite-for-global-precipitation-monitoring/?wpisrc=nl_buzz">launched a new weather and climate satellite</a> that generates a near-global view of precipitation, closing previous large observation gaps. This development has the potential to inform an array of important weather-related activities, including weather index insurance.

The satellite, known as the Global Precipitation Measurement (GPM) satellite, uses a radiometer and dual-frequency radar to measure the presence and even the intensity of rain, snow, and ice, to a time window of three hours, across a geographic range of 65 degrees north to 65 degrees south latitude. Data generated by the satellite will be publicly available to anyone around the world.

[caption id="attachment_14147" align="aligncenter" width="587"]<a href="http://www.nasa.gov/press/2014/february/nasa-and-jaxa-launch-new-satellite-to-measure-global-rain-and-snow/#.UxSe_fldWSo" target="_blank"><img class=" wp-image-14147  " style="border:0;margin-top:8px;margin-bottom:8px" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/14-055-gpm1_0.jpg?w=490" width="587" /></a> A Japanese H-IIA rocket launching the GPM satellite from the Tanegashima Space Center in Tanegashima, Japan.[/caption]
<p style="text-align:left">NASA’s predecessor satellite was only able to detect rain, and not to varying intensities. It also covered a more limited geographic area of 35 degrees north to 35 degrees south. The new NASA satellite could prove an invaluable resource for weather-related initiatives like disaster response and relief.</p>
<p style="text-align:left">Weather index insurance is well-positioned to benefit from the newly detailed precipitation data. Weather index insurance offers a payout to farmers in the event of extreme weather, such as drought or a hurricane. The financial support helps farmers sustain their families while their source of livelihood, their land, recovers. This safeguard also makes it less risky to take out loans to invest in the productivity of land. The payout is triggered by weather index readings that register as extreme weather. This mechanism yields low transaction costs – a necessity as it rarely is practical for insurance agents to travel to smallholder farmers and verify the weather and land conditions.</p>
Available weather data has been a limiting factor for the scope and accuracy of weather index insurance. A few years ago, those with index insurance hit by Hurricane Sandy in the Caribbean were not able to receive payouts because the limited range of the NASA satellites in operation did not cover the impact zone. As the new satellite expands the data’s geographic reach, weather index insurance is also positioned to expand. With the new satellite, weather index insurance could expand beyond rain, too. Hail storms, for example, are currently a significant risk in countries like Malawi and Zambia, but the data has been lacking to support weather index insurance with hail coverage.

When we heard about this exciting development, we reached out to Véronique Faber, Executive Director of the Microinsurance Network, to see what she thought. "This data will be a game-changer, especially as NASA plans to give access to everyone in the world," she said, adding, "Stakeholders involved in weather index insurance for small farm holders will watch this space closely!"

Along with these potential advantages, it’s important to consider a few factors that might constrain the satellite’s ability to support weather index insurance. Typically, insurance product pricing and design is calibrated using historical data on claims and damage. This will be lacking at first when the new satellite data comes on stream, and could limit its rapid use. There is also the potential for the satellite’s new techniques to not be as accurate as hoped across all regions. It’s still not uncommon for particular satellites to be more or less accurate for particular geographies. For instance, the previous NASA satellite was more accurate in the Caribbean and East Asia than it was in Africa.

<em>*Some of this post's content was generously provided by <a href="http://www.microensure.com/" target="_blank">MicroEnsure</a>.</em>

<em>Image credit: <a href="http://www.nasa.gov/press/2014/february/nasa-and-jaxa-launch-new-satellite-to-measure-global-rain-and-snow/#.UxSfnPldWSp" target="_blank">NASA/Bill Ingalls</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/12/06/microinsurance-gets-three-wishes/" target="_blank">Microinsurance Gets Three Wishes</a>

<a href="http://cfi-blog.org/2014/02/25/mobile-microinsurance-products-and-financial-capability/" target="_blank">Mobile Microinsurance Products and Financial Capability</a>

<a href="http://cfi-blog.org/2013/04/16/silos-no-more-financial-inclusion-for-the-whole-value-chain/" target="_blank">Silos No More: Financial Inclusion for the Whole Value Chain</a>

Weather Index Insurance to Benefit from New NASA Satellite

Alternative Data

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Federico  Gomez Romero

Libby Morley

Mona Kapoor

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Article

Podcast

Brazil has been hit especially hard by the COVID-19 pandemic, and the crisis is changing every aspect of society. Now that the most obvious and immediate effects have set in, we are beginning to see what the mid- and long-term consequences will be in the country.

I strongly believe that fintech will be one of the sectors that will emerge from this crisis both reinvigorated and transformed. As a fintech entrepreneur, you have the chance to rebuild a better Brazil.
<h2>Transforming uncertainty into new opportunity</h2>
It’s not a surprise that the macro landscape looks grim right now. The economy is <a href="https://blogs.imf.org/2020/06/26/outlook-for-latin-america-and-the-caribbean-an-intensifying-pandemic/" target="_blank" rel="noopener noreferrer">expected to contract around 9 percent</a> this year, and although analysts predict a positive rebound next year, the main players in the financial sector are still in shock. As a consequence of increased payment deferrals for loans, the current level of non-performing loans is unknown and financial institutions are navigating in the dark. The CEO of Itau referred to their strategy around managing these loans as <a href="https://www.fool.com/earnings/call-transcripts/2020/05/06/itau-unibanco-holding-sa-adr-itub-q1-2020-earnings.aspx" target="_blank" rel="noopener noreferrer">"more an art than science.”</a> I cannot find a better phrase to describe the current situation of the traditional financial sector. Amid all of this uncertainty, it is clear that fintech players will be better positioned to recover from the economic downturn if they can use alternative data sources to access updated financial information.

Those tech companies who already have access to real-time data will have an added advantage due to <a href="https://www.businessinsider.com/brazil-moves-forward-with-open-banking-2020-5#:~:text=The%20Central%20Bank%20of%20Brazil%20has%20released%20open%20banking%20regulation,the%20customer%20agrees%2C%20per%20Finextra." target="_blank" rel="noopener noreferrer">an open banking regulation released by The Central Bank of Brazil</a>, which will be fully implemented next year. In addition to the data they already have, fintechs will benefit from accessing additional information from their clients that allows them to provide a better, more personalized service. At the same time, the opportunities for fintechs to partner with banks will increase as banks seek to connect to third party providers and enrich their businesses.

But negatively hit sectors aren’t the only place where tech startups can find opportunities to offer financial services to the underserved. For example, agriculture is <a href="https://www.world-grain.com/articles/13958-record-soybean-shipments-forecast-for-brazil" target="_blank" rel="noopener noreferrer">posting record results</a>, and some industries within the gig economy, like last-mile delivery, are also growing more than ever before. There is a huge potential to layer digital financial services in these and other thriving sectors.
<h2>Data is king</h2>
Fintech companies are in an advantageous position when they have rich and timely data needed to make the right business decisions. And those data-driven companies that build strong relationships with customers by solving problems that aren’t financial — before embedding fintech solutions — are in an even better position. In the past, <a href="https://www.forbes.com/sites/vikasraj/2019/11/20/platform-fintechs-are-cominghow-should-startups-respond/#742436bb2b0f" target="_blank" rel="noopener noreferrer">we have explored how super-platform tech companies are doing this</a>, and now this approach is expanding across multiple sectors. For example:
<ul>
 	<li><a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">Terra Magna</a> has spent years building a huge database of farming regions and crop performance using high-tech satellite images. With a unique knowledge of the business, it is now starting to provide responsible financing to farmers.</li>
 	<li><a href="https://www.loopa.digital/" target="_blank" rel="noopener noreferrer">Loopa</a> is a startup that provides a free platform to MSMEs for credit card reconciliation, allowing them to have a better understanding of their business and solve cashflow inefficiencies. That type of relationship with customers is the one that provides infinite possibilities to add financial services.</li>
 	<li>Finally, <a href="https://www.smartmei.com.br/" target="_blank" rel="noopener noreferrer">SmartMEI</a>, one of our portfolio companies, is building solutions for the future of work. They understand the needs of a workforce that is changing every day and have built targeted financial products for an evolving workplace. The company started by providing simplified accounting services and has grown to offer a full suite of products.</li>
</ul>
<h2>But who is investing right now?</h2>
At the onset of the pandemic, capital immediately dried up for entrepreneurs. Many investors had to concentrate their efforts on helping their portfolio companies stay afloat, and others were too wary of the situation to keep investing. As Nigel Morris, partner of QED Capital, recently said in an episode of <a href="https://www.accion.org/a-great-company-going-into-covid-is-invariably-a-great-company-coming-out" target="_blank" rel="noopener noreferrer">VentureKast</a>, “We are going to see fewer tourists involved in VC in the fintech space.” The ones that will keep betting on the sector — and that have already restarted actively investing — are the true fintech specialists.

So, the big question is: who should you pitch your startup to in Brazil? Many great investors come to mind. This complete <a href="https://www.contxto.com/en/brazil/venture-capital-brazil-2020/" target="_blank" rel="noopener noreferrer">cheat sheet recently published in Contxto</a> lists some of the most active equity investors divided by industry and stage.
<h2>Don’t miss the chance to grow your startup, with some caution</h2>
The pandemic, despite all its negative connotations, is creating a temporary blue ocean for many fintechs. Now may be an excellent moment to fundraise and accelerate growth, but you should consider a few things before doing so:
<ol>
 	<li><strong>Don’t be afraid to be selective.</strong> Choose your customers wisely and make good use of your data collection and analysis capabilities.</li>
 	<li><strong>Mind your unit economics.</strong> This is a moment to grow, but definitely not at all costs. Bear in mind that this is a time ruled by uncertainty. The less you burn, the more runway to have to survive through the storm. VCs are certainly looking at this before investing.</li>
 	<li><strong>Valuations are coming down.</strong> Early-stage valuations in Brazil reached astronomical levels in recent years, and now it’s not uncommon to see up to 30 percent cuts. Believe it or not, this could be a good thing for your startup as you can align incentives with your investors and reduce the risk of a down round in later stages.</li>
 	<li><strong>Banks will catch up.</strong> This blue ocean won’t last forever, and open banking will facilitate access to information for all players. Start preparing for what will come after COVID-19, whether or not you work directly with banks.</li>
</ol>
<h2><strong>Accion Venture Lab is here to help the ecosystem grow</strong></h2>
Accion Venture Lab’s mission is to support innovative companies that help the financially underserved. We are always working to grow the fintech ecosystem — even outside our portfolio. This the first in a series of blog posts and webinars we will be hosting in the coming months, made possible by support from FedEx, to help the Brazilian fintech ecosystem thrive through the COVID-19 crisis. We invite you to follow along and <a href="mailto:accionventurelab@accion.org">reach out</a> if there is any way we can support you.

Now is the time for fintechs to accelerate growth in Brazil

China’s economy has experienced tremendous growth in recent years, with a booming micro, small, and medium enterprise (MSME) market. There are over 50 million MSMEs in China that collectively account for over 60% of China’s GDP and over 50% of the government’s tax income. These businesses create 80% of total employment in China’s urban areas.

Despite China’s overall economic growth, the need to foster full financial inclusion is still imperative. In 2010, 38 million MSMEs lacked access to formal financial services, forcing them to borrow informally from friends, family, and moneylenders.

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

Accion’s partners have always used innovative approaches to bring financial inclusion to underserved people and businesses in emerging economies. The coronavirus pandemic has put their spirit of innovation to the test as they must find new ways to continue serving clients while protecting their wellbeing and that of their employees.

We’re sharing examples of adaption from our partners around the globe that we hope will be helpful for all organizations to keep in mind when considering client and staff safety and business continuity during a time of constant changes.
<h3>1. Ensure staff has the equipment and education to do their jobs safely.</h3>
Our partner <a href="https://www.accion.org/this-company-is-making-healthcare-more-accessible-in-emerging-markets" target="_blank" rel="noopener noreferrer">Field Intelligence</a> is a startup operating in Nigeria and Kenya that uses data-driven supply chain management software and highly efficient distribution service to help pharmacies operate more efficiently. Their pharmacy clients remained open throughout the pandemic to provide necessary services in their communities. As a preemptive measure, Field Intelligence completed a handwashing and safety campaign to encourage 150 pharmacies to use safe practices that prevent the spread of the virus. They also supplied and trained all of their delivery staff on proper personal protective equipment usage. By tapping into their existing network, they were able to quickly provide training to their staff. These steps were critical for keeping essential workers safe over the past few months. As many countries begin to reopen and ease restrictions, businesses should prioritize safety above all else and provide the training and equipment that staff and clients need.
<h3>2. Enable staff to provide customer support remotely.</h3>
<a href="http://apolloagriculture.com" target="_blank" rel="noopener noreferrer">Apollo Agriculture</a>, another startup in Kenya, partners with small-scale farmers to help them access everything they need to maximize their profitability, from financing and insurance to farming products and optimized advice. These <a href="https://www.accion.org/this-agricultural-fintech-empowers-the-farmers-who-feed-the-world" target="_blank" rel="noopener noreferrer">farmers are facing great challenges</a> during the pandemic and Apollo empowers them to be productive and sustainable. To continue providing customer support to farmers, Apollo faced a major challenge: transitioning their call center of over 150 people to remote work. Most of their call center agents did not previously have internet or a computer in their home. Despite these challenges, Apollo successfully transitioned the entire team to remote operation and equipped all staff with reliable internet in a matter of days — all during their busiest time of year and the COVID-19 crisis. As remote work may continue for some time, staff need to be fully equipped to work remotely to make these solutions sustainable in the long-term.
<h3>3. Innovate to meet customer's needs digitally.</h3>
In Bolivia, <a href="https://www.accion.org/transforming-finance-low-income-people-bolivia" target="_blank" rel="noopener noreferrer">BancoSol</a> — a regulated commercial bank dedicated to serving micro and small entrepreneurs — knew that their customers needed urgent services to stay afloat during the pandemic and that digital tools would be crucial for reaching them. BancoSol launched a pilot of a remote lending program and is also working on revamping their existing mobile application to serve more clients digitally. Additionally, tellers are encouraging clients to sign up for online banking services and begin using them to minimize face-to-face contact and continue to be able to manage their businesses and connect with customer service representatives. So far, results from BancoSol’s initiative have been encouraging — in the first ten days of their efforts, online transactions increased by five percent, and transactions have continued to rise since then.
<h3>4. Make a plan to keep your team safe and productive in the long-term.</h3>
As China has reopened its economy and more people have returned to work, conversations with our partner <a href="https://www.accion.org/giving-customers-a-reason-to-trust-digital-finance-in-china" target="_blank" rel="noopener noreferrer">Grassland Finance Limited</a> have given us a glimpse into what many of our other partners may experience in the coming weeks and months. Grassland shared with us that their staff is:
<ul>
 	<li>Practicing social distancing in the office. Staff continue to work in shifts and will do so until the situation improves.</li>
 	<li>Wearing protective masks and regularly monitoring for symptoms to ensure those coming into the office are healthy.</li>
 	<li>Avoiding in-person team activities and unnecessary travel.</li>
</ul>
For Grassland and other partners, the need to increase digital capacity to adapt to immediate challenges and to move into a new normal is a key theme. Seah Hooi Koon, Grassland’s COO, shared, “The disaster also showed again the importance of building up the digital capability of both our company and of our clients, and this will be key in our strategy going forward.”

Digital capability, adaptability, and a spirit of innovation will continue to guide companies forward as the situation evolves around the globe. At Accion, we will continue to stay in close contact with our partners to learn from them as they adapt and to provide resources to help them increase digital capabilities, keep staff safe, and continue to serve their clients.

Four examples show how businesses can stay safe and effective right now

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

Each morning, Laal Kumari Singh rises early to feed her herd of cows, milk them, and leads them to a pasture to graze. As the sun begins to set, she leads them back home for another feeding and milks them once more. When her regular customers arrive to purchase fresh milk – an important source of protein and nutrients — throughout the day, Laal carefully measures the milk that her cows produce, saves exactly what she needs for her family, and sells the surplus both to people in her community in Raipur, India and to larger suppliers.

There are millions of small business owners like Laal in India, each working hard to support their families and fulfill a need in their communities. When these enterprises thrive, so do the families and communities that depend on them. That’s why our partner <a href="https://www.subk.co.in/index.php" target="_blank" rel="noopener noreferrer">Sub-K</a> set out to bring financial tools to underserved businesses in India, particularly the last mile where no financial services have reached before. Sub-K uses <a href="/instead-sending-people-bank-sub-k-brings-banking-people">its large network of agents</a> to reach people in rural communities in India and connect them to banks. “It’s really critical for us to have the touchpoints on the ground to interact with these communities that probably have never had a banking relationship. So to that extent, our agents play a very important role in introducing these communities to the banking system,” explains Sub-K’s CEO Sasidhar Thumuluri.

By working with Sub-K to purchase additional cows for her herd, Laal has expanded her business dramatically. When she first started her milk business, she only owned five cows. Now, her herd of cows, calves, and buffaloes has grown to nearly 40, producing 30 to 40 liters of milk for her to sell each day. Because of Laal’s success, she’s been able to support her three kids: two sons and one daughter. She uses her increased income from the expansion of her milk business to help pay for her children’s education. She’s thinking of the future, too — she’s already invested in buying a shop in nearby Sarura to further build her family’s financial security.
<h2>Continuing to serve small businesses during the pandemic</h2>
As the coronavirus pandemic leaves its impact on communities, the entrepreneurial dream that led Laal to build a better life for her family is in danger. To help small business owners in India overcome this devastating financial shock, Sub-K is introducing emergency loans and accelerating digital solutions. Even before the crisis hit, Sub-K recognized this opportunity for driving financial inclusion. “Digital is the way to go to reach the large-scale masses and the last mile,” says Sasidhar.

Despite the clear advantage in connecting small business owners like Laal to digital services, Sasidhar also knows the great challenges this presents. Many of Sub-K's clients have never had a formal bank account before, much less access to any digital banking services. So Sub-K is used to giving clients extra support to learn about products and become comfortable with new platforms. Their agents have typically done this work hands on in local communities, but as face-to-face interactions are halted, Sub-K is offering digital payment options on their mobile phones. Only 20 – 30 percent of Sub-K's clients in rural areas currently have smartphones, but even those without online access can utilize digital services through Sub-K's call center or by reaching out to local agents. As Sub-K works to quickly expand their digital platform to address new challenges from the pandemic, they are taking a multichannel approach that will continue to meet these clients where they are. If clients are given what they need to use digital financial services, this shift could make it possible to reach even more financially excluded people in the longer term.

Sasidhar stresses the importance of rebuilding from COVID-19 in a way that brings the most vulnerable microbusinesses into the digital economy: “Let’s not go back to our old normal, and let’s not wait for the situation to get normalized and then get back to the old way of doing business. Here is an opportunity that we need to grab. Let’s develop tools. Let’s educate them. Let’s make sure we build a new normal, which to me is a [digital] ecosystem play. It is possible. Let’s get together, collaborate, and make this happen.” With the right tools and support, entrepreneurs like Laal can grow their businesses and build stability for themselves and their families. The future of these small businesses — under threat from the pandemic — depends on their ability to access the financing they need digitally. Learn more from Sasidhar by watching our recent webinar, <a href="/going-digital-an-essential-move-for-msmes-in-a-post-covid-19-world">Going digital: An essential move for MSMEs in a post COVID-19 world</a>.

Finding a new way to reach the last mile in India

Our global food supply depends on the productivity of farmers all around the world, especially the smallholder farmers who live and work in emerging markets. But the coronavirus pandemic has presented new challenges for already-vulnerable farmers and disrupted global supply chains. This crisis poses a great threat to food security for much of the world’s population.

Even before COVID-19, the 300 million smallholder farmers around the world faced a funding gap of over $167 billion. Particularly in sub-Saharan Africa, which is home to over 50 million smallholder farmers, closing this gap would significantly boost efforts to fight poverty and hunger. Our partner <a href="http://apolloagriculture.com/" target="_blank" rel="noopener noreferrer">Apollo Agriculture</a> is addressing this need with an innovative, tech-based business model that helps farmers maximize their profits with a bundle of financing, farming products, optimized advice, and insurance. Accion Venture Lab is happy to extend our support of Apollo as they continue to empower farmers in East Africa with the tools they need to build financial stability, maximize their profits, and produce food for their communities, which is even more important amid the pandemic crisis.
<h2>Why we invested in Apollo Agriculture</h2>
Around the globe, smallholder farmers are the backbone of societies as they grow and harvest essential crops that feed nearly 2 billion people, mostly people living in emerging markets. Unfortunately, these farmers face tremendous hardships from climate-related challenges, trade volatility, financial limitations, and now, a global pandemic. Most smallholder farmers do not have access to credit and or the technical expertise needed to optimize their harvests. Their crop yields are also hindered by a lack of access to quality inputs, like seeds and fertilizers, and a need for appropriate agronomic advice.

<img class="wp-image-21198 alignleft" src="https://content.accion.org/wp-content/uploads/2020/05/apollo2.jpg" alt="" width="446" height="298" />In 2016, we supported Apollo Agriculture in their pre-seed round to help address the impediments smallholder farmers face, and we are excited to have the opportunity to support them again in a follow-on investment in their Series A. At its core, Apollo Agriculture is a tech-enabled financing solution for smallholder farmers in East Africa that allows them to <a href="https://www.accion.org/seeds-fertilizer-mobile-money-kenyan-farmers-get-the-supplies-they-need" target="_blank" rel="noopener noreferrer">acquire the agricultural inputs they need</a>. Their model combines input financing with sophisticated analytics, remote sensing, agronomic machine learning, and mobile money. Farmers can purchase high-quality farming inputs, such as hybrid seeds and fertilizer, on credit with flexible repayment terms and post-harvest due dates. The offering also includes customer-centric, voice-based trainings developed by the Apollo team to help farmers learn best practices for tasks like planting and combating pests and to develop financial literacy.

Accion Venture Lab is excited to continue supporting Apollo Agriculture as they grow and scale their business. We are most excited by Apollo’s:
<h4><strong>Ability to address a core financing need for a large, underserved segment</strong></h4>
Apollo Agriculture addresses one of the fundamental challenges of improving farmer livelihoods in Africa by financing the comprehensive toolkit of inputs, agronomic training, and planting tools that underserved smallholder farmers need to increase crop yields. Apollo is working with smallholder farmers in Africa who are growing vital staple crops, such as maize, tomatoes, sorghum, potatoes, and beans. The farmers in this segment cover a range of economic levels, including those who are truly the poorest of the poor to those who own small, commercial farms. Apollo’s model is flexible enough to work with all socioeconomic levels of smallholder farmers.
<h4><strong>Innovative business model</strong></h4>
At the time of our seed investment, we felt that Apollo was <a href="https://www.accion.org/fintech-startup-revolutionizing-kenyan-agriculture" target="_blank" rel="noopener noreferrer">the most innovative company in agricultural finance</a> and were excited to support a financing model focused on smallholder farmers. Nearly three years later, Apollo continues to focus on innovation by using cutting-edge tools like satellite imagery and remote sensing — technology used in developed markets for decades — to benefit smallholder farmers in Africa. Rather than inventing a new and unproven solution, Apollo is leveraging existing technology to provide a tried and tested set of solutions.

Since the pandemic began, Apollo has seen an increased need for its products, even while business conditions rapidly became more challenging due to significant mobility restrictions, a curfew, and a rapid transition to remote work. Their tech-enabled business model has allowed them to continue providing customers with high-quality farm products and financing throughout the pandemic. We believe that Apollo’s model could be the key to unlocking significant improvements in the livelihoods of farmers around the world, a critical need as the world grapples with a potential food crisis caused by the turmoil of the COVID-19 pandemic.
<h4><strong>Strong value proposition</strong></h4>
Beyond simply distributing agricultural inputs, Apollo’s integrated solution combines the financing and <a href="https://www.accion.org/learning-new-skills-helped-this-longtime-farmer-thrive" target="_blank" rel="noopener noreferrer">training that are necessary for farmers to use them effectively</a>. This approach allows farmers to increase their crop yields, leading to greater financial security, better livelihoods for farmers and their families, and a reliable food supply for the world. Farmers can select high-quality inputs purchased on credit, allowing them to reserve their money for other needs. Eventually, Apollo’s vision is to leverage its technology to provide customized inputs to farmers based on their specific geographical, weather, and land characteristics. These personalized farming techniques will also help to limit erosion and improve soil quality, further boosting productivity and sustainability.
<h4><strong>Ability to de-risk credit access to smallholder farmers</strong></h4>
Apollo will continue to serve a huge population of unbanked farmers who, prior to using their model, were too high-risk or inaccessible to receive the capital and resources they need to succeed. The team has proven that smallholder farmers, with the right tools and knowledge, can afford to pay back loans and continue to use their services. Apollo continues to have a high loan payback and customer repeat rate. Apollo’s offering has been strong enough to encourage farmers to re-engage even after experiencing disappointing crop prices or environmental challenges the previous season, and even during this unprecedented pandemic. As farmers are facing immense difficulties during the coronavirus pandemic, the ability to access capital will be critical for them to recover financially while continuing to produce the food that so many depend on.

It has been a great journey to see Apollo Agriculture grow, and we believe that this series A will propel them to empower so many more smallholder farmers — not only in Kenya, but across Africa. As Apollo continues to grow and scale, they can provide the critical financing farmers need to achieve their greatest potential and continue feeding the world.

This agricultural fintech empowers the farmers who feed the world

<span style="font-weight: 400;">Smallholder farmers in Kenya — like smallholder farmers everywhere — work very hard, and live precariously, always facing challenges from drought to floods to commodity market fluctuations. Margaret Auma Oyoko, who grows maize and raises cows, when asked to describe her day says simply, “When I wake up, I pray to God to help me in my activities like farming, feeding the cows, and other household duties.”</span>

&nbsp;

[caption id="attachment_20230" align="alignleft" width="500"]<img class=" wp-image-20230" src="https://content.accion.org/wp-content/uploads/2019/12/Kenya_Nakuru_0030-2-1024x684.jpg" alt="Alfred in maize field" width="500" height="334" /> <em>Alfred appreciates how healthy his crops are with Apollo’s fertilizer.</em>[/caption]

<span style="font-weight: 400;"><a href="https://apolloagriculture.com/">Apollo Agriculture</a>, an Accion Venture Lab portfolio company, was founded to help farmers like Margaret thrive in the face of their many challenges. When farmers become Apollo clients, they receive not only high-quality seeds and fertilizer but also advice to help them farm more effectively. </span>

<span style="font-weight: 400;">Alfred first heard about Apollo from a friend who is also a farmer. He reports that he and several neighbors have all had positive experiences with Apollo so far. “Their fertilizer is very </span><span style="font-weight: 400;">rich, which meant my crop yield was very high. After harvesting and selling my maize, I was able to pay the school fees,” he says, adding, “I’ve also learned so much more about </span><span style="font-weight: 400;">agriculture. They teach us a lot and show us how to do farm work.”</span>

[caption id="attachment_20232" align="alignright" width="500"]<img class=" wp-image-20232" src="https://content.accion.org/wp-content/uploads/2019/12/Nakuru_0023-1024x684.jpg" alt="Susan shows an Apollo agent her produce." width="500" height="334" /> <em>Susan shows an Apollo agent her produce.</em>[/caption]

<span style="font-weight: 400;">Susan Wangui Wanjiru also learned about Apollo through a friend, and while like Alfred, she appreciates the quality of its products, she is especially impressed by its tech-enabled systems. She first signed up as a customer via text message and then an agent came to her property and assessed her farm. Says Susan, “The beauty of it is that Apollo does not give out cash to anyone, not even the agents. You send </span><span style="font-weight: 400;">it</span><span style="font-weight: 400;"> directly to them [using M-Pesa]. You then get your balance as a text message.” For a busy farmer and mother, the convenience is invaluable.</span>

<span style="font-weight: 400;">Summing up his Apollo experience, Alfred says, “Before, I struggled to get farm inputs. The next problem was finances, as you have to buy everything with cash. It was also difficult to find people who could teach you something new. But now it’s better with Apollo.”</span>

Seeds, fertilizer, mobile money: Kenyan farmers get the supplies they need

<span style="font-weight: 400;">Rose Kilonzo comes from a long line of farmers in Kitui County, Kenya. “I love it because when you farm, you won’t go hungry,” says Rose. She has always valued being able to provide for her family through the crops she grows, both by putting food on the table and by selling the surplus to earn money for school fees and clothes for her five kids. Plus, she enjoys the autonomy of being her own boss. But Rose knows that a good harvest is never a certainty. She compares farming to playing a game of cards — the outcome is never guaranteed. A season of scarce rains can destroy her fields and leave Rose and her family with no food or source of income. </span>

<span style="font-weight: 400;">When Rose heard about Accion Venture Lab portfolio company </span><a href="https://www.pula-advisors.com/"><span style="font-weight: 400;">Pula</span></a><span style="font-weight: 400;">, she was excited to learn more about how their innovative insurance and agriculture advisory services could benefit her. Pula provides agricultural insurance for traditionally excluded small-holder farmers by leveraging cutting-edge technology and an extensive network of partners, including the </span><a href="https://www1.wfp.org/r4-rural-resilience-initiative"><span style="font-weight: 400;">World Food Program’s R4 Rural Resilience Initiative</span></a><span style="font-weight: 400;">. In addition to insurance, Pula provides data-driven insights and advice to help farmers like Rose gain higher yields on their crops in sustainable ways. </span>

<span style="font-weight: 400;">Rose now has confidence that she can provide for her family no matter the circumstances. “When you plant, you have faith it will be taken care of should your crop fail,” she says. Rose has become an advocate of insurance for farming and shares her experience with other local farmers. With a more secure income, she’s looking forward to expanding into commercial agriculture and teaching her children and grandchildren the trade. </span>

For Rose in Kenya, crop insurance is a game-changer

<a href="https://apolloagriculture.com/"><span style="font-weight: 400;">Apollo Agriculture</span></a><span style="font-weight: 400;">, based in Kenya, delivers customized packages of seed, fertilizer, and insurance on credit for smallholder farmers. The farmer customers also receive valuable guidance in farming techniques and information on weather conditions that may affect results. Accion Venture Lab was an early investor in the company and continues to work with Apollo in an advisory capacity.</span>

<span style="font-weight: 400;">Technology is at the center of Apollo’s model. Its founders, Eli Pollak and Earl St. Sauver, built on their experience at The Climate Corporation using data to help farmers make better-informed decisions. Apollo’s systems rely on remote sensing technology, data science, mobile money, and voice-based trainings to make them cost-effective and scalable.</span>

<span style="font-weight: 400;"><img class="alignleft wp-image-17740" src="https://content.accion.org/wp-content/uploads/2019/02/Kenya_Nakuru_0034-1-1-1024x684.jpg" alt="Apollo agents using mobile phone in Nakuru, Kenya" width="500" height="334" />At the same time, Apollo’s results-driven, customer-focused approach means it must stay in close contact with farmers and gather feedback on what works and what doesn’t. Some of its staff’s work is almost entirely out in the field. For example, Rebecca, a field associate, works with both farmers and with the Apollo agents that visit their farms and set them up with their accounts. She finds the opportunity to speak directly with customers very rewarding. She says, “I’m most satisfied when the farmers come to me and tell me how the quality of their harvest has gotten better. When you help that farmer come from nowhere, to know something, and he appreciates you, it gets you excited that you got to help. This inspires me to keep doing this.”</span>

<span style="font-weight: 400;">Other Apollo staffers focus more on the technical systems, like Nairobi-based operations designer Javin, who collaborates with the tech team to identify and address issues in various processes. Even so, keeping up with customers is a central part of his work, as he explains, “ We have a call center team that gets feedback from the field. I also deal with farmer communication, making sure that we are in touch with our farmers as often as we can, reminding them to check payments.” He also goes out into the field himself to see how processes are working and solve problems as they arise.</span>

<span style="font-weight: 400;">Says Javin, “The small farmers grow food that the country depends on, both for the community and their own family. I like work that impacts communities. It feels great.”</span>

Out in the field with the farmers

<span style="font-weight: 400;">“Change is the only permanent thing. We see a lot happening, like climate change, and for us to solve the issues of the smallholder farmers — we can’t use the normal way to solve issues,” says Jacobeth Barno, who works for Accion Venture Lab portfolio company Pula. In Kenya, where Jacobeth works, the past decade of change has led to a booming digital economy with </span><a href="https://globalfindex.worldbank.org/"><span style="font-weight: 400;">91 percent of the population</span></a><span style="font-weight: 400;"> using mobile money. </span>

<span style="font-weight: 400;">But smallholder farmers haven’t always gotten to enjoy the fruits of the digital revolution, particularly when it comes to insurance. “Insurance has not been available to them,” says Jacobeth. “The reason is not that insurance companies don’t like them, but because the approach does not suit the smallholder farmers — it’s too expensive for them. I realized there is an opportunity to be able to reach these people with innovations to help improve their years and change their lives.”</span>

<span style="font-weight: 400;">Fintech innovation is crucial for Pula as it seeks to serve rural communities. “Technology has helped us reach most people. Through technology, we have been able to advise farmers on methods to use that can improve production and their farming. We use our phones for farmers to pay with and to do research,” says Pula employee Cleopas Busienei. </span>

<span style="font-weight: 400;">But technology is only part of the story for Pula’s business model. Team members regularly visit communities to talk and share advice with smallholder farmers. Data-driven insights inform farmers about when and how to plant their crops to produce higher yields. Jacobeth sums up the company’s vision with, “I see a great future for Pula because we put out clients first and deliver on what we promise. We always come up with solutions. I want to see Pula help those who are in a struggle to scale up due to low-income, and I want us to help them.” </span>

<span style="font-weight: 400;">With 1.5 billion smallholder farmers worldwide, who are largely uninsured, Pula has a massive opportunity to help people.  With its formula of mixing cutting-edge insurtech products with a personal connection with clients, Pula is making strides in empowering a vital, yet underserved, segment of the population with knowledge and confidence. </span>

Driving resilience for farmers through tech and human interaction

<span style="font-weight: 400;">Andrew Murithi Karanja studied mechanical engineering but didn’t pursue it as a career. Instead, he found himself back on the land in central Kenya his father bought over 50 years ago. “Farming is deep in me because my parents were farmers. I just found myself in farming,” he says. However, even though he loved the land and his work, he found it hard to get ahead using the same skills his parents did. “Life was difficult,” he recalls. “I used inferior seeds, used less fertilizer. The yields were poor.”</span>

<span style="font-weight: 400;">That all changed when he signed up with </span><a href="https://apolloagriculture.com/"><span style="font-weight: 400;">Apollo Agriculture</span></a><span style="font-weight: 400;">, a Kenya-based fintech startup and Accion Venture Lab portfolio company that works with smallholder farmers like Andrew. Apollo helps farmers obtain the high-quality seeds and fertilizer they couldn’t afford before and also advises them on how to plant and tend the crops to maximize their yield. For Andrew, the results have been very positive. “They have taught me so much about farming,” he says. “We learned how to apply fertilizer, how to space maize, it has helped us.” He used to farm only an acre and a half of land, but with Apollo’s help, he is up to three acres and is confident he’ll soon be able to manage five. </span>

<span style="font-weight: 400;"><img class="wp-image-19105 alignleft" src="https://content.accion.org/wp-content/uploads/2019/07/Nakuru_0012-1024x684.jpg" alt="Andrew smiling outside of a home" width="500" height="334" />Andrew is so happy with his Apollo experience, he’s urged friends and neighbors to become customers as well. “People have learned about Apollo through me, especially my neighbors. They have seen how my farm is looking good, so I tell them about Apollo.” Now 58 years old, he plans to retire from farming in about a decade but thinks he might still want to keep working with Apollo. “I would like to retire. Then I can teach others about farming with Apollo. I cannot leave Apollo. I will continue to work with them,” he says. </span>

<span style="font-weight: 400;">Again, reflecting on his past struggles, Andrew says, “You would have pitied us if you saw us then. The futile labor of the past is gone. Apollo boosted me and helped me to see a ray of hope. Now I am proud to be with Apollo.”</span>

Learning new skills helped this longtime farmer thrive

<p class="p1"><em>By Simon Brunner in the <a href="https://www.credit-suisse.com/corporate/en/responsibility/dialogue/bulletin.html?WT.i_short-url=%2Fbulletin&amp;WT.i_target-url=%2Fcorporate%2Fen%2Fresponsibility%2Fdialogue%2Fbulletin.html">Credit Suisse Bulletin</a></em></p>
<p class="p1">“Show me your credit rating and I’ll tell you who you are,” is the unwritten rule of the economic mainstream: If a global company, a small village shop, a home buyer or even an entire country wants to borrow money, they must first provide proof of their assets and income. But how can a farmer in rural Kenya provide reliable financial information when such information depends in large part on his harvest?</p>
<p class="p1">Apollo Agriculture, a start-up founded in Nairobi in 2016, wants to solve this problem with the help of remote sensing technology and data science. Apollo uses machine learning models to build credit profiles for their customers, using alternative data sources. This includes inferences from satellite imagery of customers’ fields, as well as self-reported and behavioral data gathered during the customer enrollment process. Apollo then provides approved customers with a package of farm inputs, advice, and insurance, on credit that is customized to the size of their farms. This means that farmers in the Kenyan city of Nakuru, for example, can access the quality seed and fertilizer they need to increase their yields and are protected in case of drought.</p>
<p class="p1">Co-founder and CEO Eli Pollak has ambitious plans: “Our business is helping small-scale farmers make more money on their farms. We see fantastic opportunities to help farmers expand and achieve higher returns, including higher profitability crops, more crop diversification, irrigation, and access to markets.”</p>

<h2 class="p2"><span class="s1">Accion Venture Lab </span></h2>
<p class="p2">As part of its Financial Inclusion Initiative, Credit Suisse supports Venture Lab, the seed-stage investment arm of Accion, an NGO and pioneer in the area of financial inclusion. Venture Lab provides startup capital and support to innovative start-ups that facilitate, improve, and reduce the cost of access to financial services for people living in poverty. Apollo Agriculture is part of <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab/">Accion’s <span class="s2">portfolio. </span></a></p>

<h2 class="p1">Improving realities</h2>
<p class="p1"><em>A conversation with Laura Hemrika, the Global Head of <a href="https://www.credit-suisse.com/corporate/en/responsibility/economy-society/focus-themes/financial-inclusion.html?WT.i_short-url=%2Ffinancialinclusion&amp;WT.i_target-url=%2Fcorporate%2Fen%2Fresponsibility%2Feconomy-society%2Ffocus-themes%2Ffinancial-inclusion.html">Corporate Citizenship &amp; Foundations at Credit Suisse</a></em></p>

<h4 class="p1">Q: Laura Hemrika, what does Credit Suisse seek to achieve through its Corporate Citizenship activities?</h4>
<p class="p2">A: Through our work, we seek to contribute to a more inclusive future where all people can both access the resources and develop the financial, entrepreneurial, and other skills they need to thrive in the economy and society. We focus on the topics of financial inclusion, financial education, and future skills, and partner with NGOs and social enterprises transforming the realities of thousands of people worldwide.</p>

<h4 class="p1">Q: Why did Credit Suisse choose to support Accion’s Venture Lab?</h4>
<p class="p2">A: Venture Lab has a very successful approach to identifying innovative new financial inclusion business models and helping them reach scale. Thanks to their smaller size, presence on the ground close to investees, and international team with deep experience in building financial inclusion and tech businesses, they are better placed to do so than we are, and are a great complement to our strengths. They provide early-stage investment capital — which can be difficult to obtain, especially for start-ups in emerging markets — and work closely with entrepreneurs to help build their companies. These companies are the future of financial inclusion, merging big data, new technology, and new models to deliver financial services to new customer segments, especially low-income people in developing countries.</p>

<h4 class="p5">Q: What support does Credit Suisse provide to help partners achieve sustained growth and impact?</h4>
<p class="p1">A: Our partners need not only capital but also expertise to grow and achieve a greater social impact. We, therefore, complement our grant funding with the knowledge and expertise of our employees through a number of employee engagement programs. Whenever valuable, we also try to connect our partners to other Credit Suisse resources, such as our clients and business colleagues, or to our other partners. Together we can achieve an even bigger impact.</p>
<em class="markup--em markup--p-em">A version of this post appeared previously in the </em><a href="https://www.credit-suisse.com/corporate/en/responsibility/dialogue/bulletin.html?WT.i_short-url=%2Fbulletin&amp;WT.i_target-url=%2Fcorporate%2Fen%2Fresponsibility%2Fdialogue%2Fbulletin.html"><em class="markup--em markup--p-em">Credit Suisse Bulletin</em></a><em class="markup--em markup--p-em">.</em>

Loans with the help of satellite images

<span style="font-weight: 400;">When asked how he feels about farming, Festus replies, “I enjoy it so much — I love it.” Farming allows Festus to be his own boss and is more stable than other forms of work. With his harvests, Festus puts food on the table, pays his children’s school fees, and incrementally improves his family’s standard of living. But, as all farmers know, a bountiful harvest is never a given. “When drought came, I would lack food and wait for the rain, farm again, and wait to get food.” Trapped in this cycle, and with no recourse from a failed harvest, Festus could never plan for the future.</span><span style="font-weight: 400;">
</span><span style="font-weight: 400;">
</span><span style="font-weight: 400;">Until recently, smallholder farmers have not had access to farming technologies that mitigate the risk of drought, pests, and floods. These farmers are at a higher risk of a bad harvest which can have wide-ranging consequences for their finances. When Festus learned about Accion Venture Lab portfolio company </span><a href="https://www.pula-advisors.com/"><span style="font-weight: 400;">Pula</span></a><span style="font-weight: 400;">, he saw an opportunity to boost his resilience and security. Pula offers more than crop insurance. Farmers like Festus benefit from interactive training on farming methods and tech-enabled insights accessible through farmers’ mobile phones. </span>

<span style="font-weight: 400;"><img class="size-large wp-image-18867 aligncenter" src="https://content.accion.org/wp-content/uploads/2019/06/Kitui_0012-1024x684.jpg" alt="Festus harvesting his crops" width="1024" height="684" />Festus has seen the benefits of working with Pula and regularly encourages other farmers to join. “I hope that Pula continues in the future and that we can continue to improve our future through its benefits,” he says. Knowing that his crop insurance provides protection from a bad harvest, Festus can take care of his family and his hopes and plans for the future can stretch beyond the next harvest. </span>

Insurance emboldens Festus to be his own boss

<span style="font-weight: 400;">Anastasia Ngala has to make sure her crops can thrive with only two rains per year. “We have long rain and short rain. We plant for the short rains this November. I am happy when it rains because I sell my farm products and earn my income.” Missing one of these rains can mean ruin for Anastasia’s harvest and financial hardship for her family of nine. But farming is Anastasia’s way of life and her only source of income. When she learned about Accion Venture Lab portfolio company </span><a href="https://www.pula-advisors.com/"><span style="font-weight: 400;">Pula</span></a><span style="font-weight: 400;">, she recognized the opportunity to further develop her agricultural skills while insulating herself from bad harvests.  </span>

[caption id="attachment_18776" align="alignleft" width="500"]<img class=" wp-image-18776" src="https://content.accion.org/wp-content/uploads/2019/06/Kitui_0051-1024x684.jpg" alt="Pula employee Jacobeth Barno" width="500" height="334" /> <em>Pula employee Jacobeth Barno</em>[/caption]

<span style="font-weight: 400;">Pula, a cutting-edge insurtech startup, focuses on providing crop insurance to traditionally underserved smallholder farmers. “It’s important to solve that sector because as soon as we support the smallholder farmer, we will directly be changing a lot of things in the dynamics of the economy,” says Pula employee Jacobeth Barno. As a Pula customer, Anastasia can access data-driven farming insights that boost her crop yields while also having the peace of mind that she will be compensated if the harvest fails. “When I planted without Pula, I took a risk that it was okay if I harvested or lacked yields. I was 50-50. But now, I am 99 percent assured by Pula,” she says.</span>

<span style="font-weight: 400;">The benefits of Anastasia’s relationship with Pula have been tangible. With the confidence of her Pula coverage, she has grown her farm from three to five acres and has encouraged her children to work with Pula. Anastasia has also become a vocal Pula advocate outside of her home. She urges her friends and neighbors to look into the benefits, “Some of my neighbors want to join the insurance because they have known about compensation and also want to get compensated.” Now, Anastasia has confidence that she can provide for her family and grow her farming capabilities to new levels.</span>

&nbsp;

<img class="size-large wp-image-18779 alignnone" src="https://content.accion.org/wp-content/uploads/2019/06/Kitui_0037-1024x684.jpg" alt="Pula client Anastasia" width="1024" height="684" />

After seeing the benefits of crop insurance, Anastasia’s an advocate

<a href="https://apolloagriculture.com/"><span style="font-weight: 400;">Apollo Agriculture</span></a><span style="font-weight: 400;">, a young startup based in Kenya, has ambitious plans. The company supports smallholder farmers with a suite of offerings, ranging from customized packages of seed and fertilizer to technology-aided information on agricultural techniques and weather forecasts, to insurance products to provide a safety net in case of crop failures. </span><a href="https://www.accion.org/fintech-startup-revolutionizing-kenyan-agriculture"><span style="font-weight: 400;">Accion Venture Lab was an early investor in the firm and continues to provide advisory support as it develops its growth plans</span></a><span style="font-weight: 400;">. </span>

<span style="font-weight: 400;">One key element of the Apollo model, which makes it possible to grow so quickly, is partnering with local agricultural businesses to reach rural, remote customers. With operational and tech support from Apollo, they provide agricultural inputs and information to the farmers who have signed up for Apollo’s services. We recently spoke with some of these partners in the area around Nakuru.</span>

<b><img class="wp-image-18259 size-large alignnone" src="https://content.accion.org/wp-content/uploads/2019/04/Kenya_Nakuru_0005-1024x684.jpg" alt="Charity Njeri" width="1024" height="684" />Charity Njeri </b><span style="font-weight: 400;">sells farm supplies and also distributes Apollo’s seeds and fertilizers through her shop. Both she and the farmers use Apollo’s app to manage the transactions. “They send their farmers to us, we give the farmers their package, and then they sign on the app. As soon as the whole process is done, the money comes in immediately. They pay us before the farmer leaves the store,” she says. Not only does Charity appreciate getting her cut of the transaction, the new customers coming in to pick up their Apollo supplies also sometimes buy other items while at the store. “The Apollo farmers have become our farmers,” she says. </span>

<b><img class="wp-image-18260 size-large alignnone" src="https://content.accion.org/wp-content/uploads/2019/04/Nakuru_0009-1024x684.jpg" alt="Nancy Njeri" width="1024" height="684" />Nancy Njeri </b><span style="font-weight: 400;">is a local agricultural dealer who sells crop and livestock supplies and has special training in treating animals. “Apollo visited me here at the shop, and we discussed how we can do business, and started working together. I found that it was a good deal,” she says. She uses Apollo’s app to process deliveries and transactions between the company and the farmers. “They have brought some new customers to us,” she says. “You try to guide them where to get effective advice and support. In turn, they benefit, especially when you treat their animals and they get healed. We advise them on crops, what to use at what time, and in return, they get good profit and come back.”</span>

<b><img class="wp-image-18261 size-large alignnone" src="https://content.accion.org/wp-content/uploads/2019/04/Nakuru_0018-1024x684.jpg" alt="James Mwangi" width="1024" height="684" />James Mwangi,</b><span style="font-weight: 400;"> another local salesman, says of his relationship with Apollo, “Farmers benefit, I benefit, and Apollo benefits. Farmers get their products, and my business is growing dramatically.” Sounding as confident as Apollo itself about the company’s future, he says, “Apollo is the only serious company working with farmers, and trying to improve farming in this area. Other companies don’t pay the farmers much attention or give them loans. That’s how they are going to grow.”</span>

<span style="font-weight: 400;">As Apollo continues to expand its work with smallholder farmers, these partnerships that help </span><a href="https://www.accion.org/the-tech-touch-balance/"><span style="font-weight: 400;">balance their high tech approach with local human interaction</span></a><span style="font-weight: 400;"> will be key to their success.</span>

Partnerships help this agricultural fintech startup cover more ground

<span style="font-weight: 400;">Virginia Wanjiru Ndegwa, who lives near Nakuru, Kenya, isn’t afraid of hard work. At age 72, she’s raised ten children, is now looking after some of her grandchildren as well, and she’s still rising early every day to tend to the family farm. “Who will help you feed yourself if you don’t work? You have to sweat before you can eat. That’s what I do, that’s what suits me,” she says. </span>

<span style="font-weight: 400;">Kenya-based </span><a href="https://apolloagriculture.com/"><span style="font-weight: 400;">Apollo Agriculture</span></a><span style="font-weight: 400;"> is a fintech startup that seeks to help hardworking, vulnerable smallholder farmers like Virginia with the challenges they face. Apollo, an Accion Venture Lab portfolio company, offers a suite of products, including customized packages of seed, fertilizer, advice, and insurance on credit — all enabled by advanced technological solutions like satellite data and digital communication.</span>

<span style="font-weight: 400;">When Virginia first met Apollo agents in her area, she was a little wary. “I told [them] I didn’t want to risk losing my farm! But we talked some more until I understood the product,” she says. Soon convinced, she enrolled. “I paid for the registration and </span><b>like a boss,</b><span style="font-weight: 400;"> waited for the fertilizer delivery,” she says. Apollo provided both fertilizer and guidance on how to use it. Planting was delayed due to drought, but once the rains came, Virginia reaped an exceptional harvest. </span>

<span style="font-weight: 400;">“Previously I would get eight to ten bags [of maize] per acre. This year I got around 23 bags,” she says. However, she explains, the selling price for the crop is low at the moment. “When prices are good, you can make money. But now prices are bad, and you are stuck with the crop,” she sighs. Knowing that this is a common problem for their smallholder farmers, Apollo is expanding into more profitable crops so customers are less affected by maize price volatility. Ever resourceful, Virginia’s thinking of how she might make some additional income as she waits to sell her maize. “Let’s do something else,” she says, chuckling. “We can have chickens, raise rabbits and the like.” </span>

<span style="font-weight: 400;">Even though her hoped-for profits haven’t come through yet, Virginia’s still glad for the security Apollo gives her to weather unpredictable harvests and markets. “Farming with Apollo has improved my life. I barely had anything in my pocket,” she says. “Get us a proper market, and we shall farm!”</span>

Helping smallholder farmers face challenges on multiple fronts

South Africa is a global hub for fintech innovation. Accion supports and advises South African innovators using technology to help entrepreneurs expand their businesses and families protect their homes around the world.

Fintech companies are, of course, technology-driven. The word “tech” is part of their name, after all! And yet, even fintechs usually include elements of human touch in their business models. For example, sales agents may help contact and enroll new customers, or support staffers may be available to help troubleshoot when problems arise.

In our recent paper, <a href="https://www.accion.org/the-tech-touch-balance/">“The Tech Touch Balance: How the Best Fintech Startups Integrate Digital and Human Interaction to Accelerate Financial Inclusion,”</a> we showcase several fintech startups in the Accion Venture Lab portfolio that are finding an optimal balance between tech and human interactions, making their offerings accessible, affordable, and attractive to their target customers. Two are located in Africa: Apollo Agriculture, and Lumkani.

Both companies are innovative in that they offer services that have not previously existed in the market. <strong><a href="https://apolloagriculture.com/">Apollo</a></strong>, based in Kenya, provides high-quality seeds and fertilizers for smallholder farmers. Apollo also provides guidance and information to the farmers so they can improve input yield and better respond to storms or droughts. The second Africa-based company profiled, <strong><a href="https://lumkani.com/">Lumkani</a></strong>, sells fire insurance to residents of informal settlements in South Africa. The insurance package includes an alarm that can detect a fire and then trigger an alert to residents and neighbors, so they have a chance to seek safety. And if a home does catch fire, the insurance payout helps policyholders replace damaged property. Since both Apollo and Lumkani offer products and services that customers are less familiar with, human interaction helps drive adoption and overall retention.

[caption id="attachment_17740" align="alignleft" width="500"]<img class="wp-image-17740" src="https://content.accion.org/wp-content/uploads/2019/02/Kenya_Nakuru_0034-1-1-1024x684.jpg" alt="Apollo agents in Nakuru, Kenya" width="500" height="334" /> <em>Apollo Agriculture balances its high-tech model with field agents to serve smallholder farmers in Kenya.</em>[/caption]

Apollo’s clients, smallholder farmers, are among the world’s most financially underserved populations. They also tend to be less digitally savvy, and many have had negative experiences with financial institutions in the past. At the same time, they are very interested in receiving help to boost their yields and incomes, so Apollo’s model is attractive.

Apollo primarily relies on tech to determine the creditworthiness of its customers: it employs a highly sophisticated, tech-driven underwriting process that leverages data collected from satellite imagery and the farmers themselves. All of Apollo’s loans are repaid through mobile money and require no human touch, which is convenient for farmers in remote, rural areas. Apollo also uses SMS to communicate with farmers for matters ranging from payment reminders to weather alerts.

On the other hand, Apollo field agents are an essential part of the customer journey, especially in the early stages, as they visit potential clients and answer questions. Agents are also available to go in person to handle challenges that can’t be managed through SMS. Call centers and automated Interactive Voice Response (IVR) systems are also part of Apollo’s tech-touch continuum.

In South Africa, mobile money systems are much less available than they are in Kenya, so they are not a good option for Lumkani clients to use to manage policy payments and payouts. Additionally, people in the informal settlements where Lumkani provides its services tend to be limited in both financial literacy and experience with technology, so they need information on what the insurance product is and how it works.

So Lumkani relies on agents — many of whom live in the same settlements — to do face-to-face sales pitches and enrollments. The agents, however, carry smartphones with an app for setting up the new accounts. Agents also collect cash payments in person but send SMS reminders to keep clients up to date. The fire detectors not only sound an alarm to warn people in the home when they sense heat nearby but also report back to Lumkani so that SMS alerts can be sent throughout the community. The company can then follow up with clients, both electronically and in person, to see if any fire damage occurred, and to begin the claims process if so. In combining tech and touch, Lumkani earns the trust of its clients while making the signup and payout processes faster and less expensive than many traditional insurance models.

For more examples of how fintech startups balance tech and touch as they develop their offerings, and general advice on these issues, read the full paper <u><a href="https://www.accion.org/the-tech-touch-balance">here</a></u>.

Two African startups where inclusive fintech comes with a human touch

In the heart of Kampala, along the bustling Bombo Road, sits the headquarters of UGAFODE Microfinance Limited (MDI). UGAFODE is a small but progressive microfinance institution (MFI) focused on serving peri-urban and rural Uganda, mainly in the agricultural sector. Under the guidance of CEO Shafi Nambobi, who joined in May 2017, UGAFODE has made sweeping transformations. The institution has gone from a primarily manual operation with lengthy loan approval processes, to being a competitive tech-enabled institution with a focus on digital channels and serving microentrepreneurs and “last mile” clients in the Ugandan market.

We recently called Shafi, and even though it was 6 pm in Kampala and he was gathering his bags to head home, he took the time to share his insights on the strategies that have turned the company around. “UGAFODE has always upheld a client-centric focus, and the company maintained this approach while implementing their new strategies,” he said. One of the first changes was bolstering their call center, which has been instrumental in attracting both new and former clients. This has proven to be a key component in maintaining the balance between <a href="https://www.accion.org/the-tech-touch-balance/">digitization and human touch</a>, as it allows customers to engage with a real person without having to make long journeys from rural areas to bank branches.

Most of UGAFODE’s clients are farmers, working in crop and livestock production. More than 80 percent of their clients live in rural areas, and some are as far as 40 kilometers from the nearest UGAFODE branch. Clients often struggled to make the long trips out to the bank when all they needed were simple banking services. To bring banking services to the people, UGAFODE has incorporated more digital products into its business plan. These products include:
<ol>
 	<li>Digital field applications (DFAs), which allow remote approval of loans</li>
 	<li>UGAFODE mobile app, which allows customers to move cash from their mobile wallets to their savings accounts</li>
 	<li>Digital document management for digital verification</li>
 	<li>Digital delinquency management for timely follow up on late payments</li>
</ol>
These new channels have improved customer interaction with UGAFODE’s products, allowing microentrepreneurs to cut costs and time to travel to the bank and spend more time developing their businesses.

The company is also working to improve its loan processing and renewal system. UGAFODE reduced processing time from more than 21 days down to less than a week to ensure that their clients can get their funding when they need it. Another issue in their previous process was that their loan repayment system would automatically prevent clients with delayed payments from applying for another loan. Shafi knows that life can throw curve balls that prevent clients from making payments on time — a family member falls ill, a bicycle part needs to be replaced, a home needs repair. As such, the company changed this policy and adopted more flexible considerations for loan repayment timelines.

Shafi is excited to continue the turn around and watch the company grow, and sees many opportunities for the future. As UGAFODE continues to digitize and expand into rural areas, they expect to onboard more women — currently about 60 percent of their client base. Additionally, Shafi indicated that Uganda has become a home to more than <a href="https://www.unocha.org/southern-and-eastern-africa-rosea/uganda">1.4 million refugees</a> from nearby countries, including Somalia, South Sudan, Burundi, and the DRC. These refugees have been neglected and excluded from financial services, which they need to establish their livelihoods and send remittances to friends and family members. UGAFODE is currently seeking approval to include refugees in their outreach offering.

As UGAFODE continues to find ways to bring more underserved clients financial services that meet their needs, they know that staying customer-centric is crucial. “When we listen to our customers, we are able to make suggestions to the board of what needs to change, and create a better customer experience,” said Shafi. And as UGAFODE’s digital transformation has shown: keeping customer needs in mind is good for business and financial inclusion.

Going digital to serve customers in Uganda

<p class="graf graf--p graf--startsWithDoubleQuote">“I have never been so proud because, that season, insurance made that harvest possible,” recalls Rose Goslinga, CEO and co-founder of Pula. She saw how insurance enabled 10,000 farmers in East Africa to reap a harvest against all odds in 2009. Rains fell early that year — well before farmers were ready — and the seeds they had already planted didn’t germinate. In most places across Africa and around the world, those farmers would have been out of luck. However, because their seeds were covered by insurance, the farmers were able to pick up new bags and enjoy a successful harvest in the latter part of the season. On <a href="https://soundcloud.com/accioninternational/pula-and-protecting-smallholder-farmers-through-insurance">our latest episode of VentureKast</a>, the podcast about the most innovative and impactful financial inclusion startups in the world, I sat down with Rose to discuss <a class="markup--anchor markup--p-anchor" href="https://medium.com/accion/in-a-changing-climate-technology-provides-a-lifeline-for-farmers-c2eb5133d79f" target="_blank" rel="noopener noreferrer">Pula, Accion’s first ever investment in insurance</a> for farmers.</p>
<p class="graf graf--p">Pula develops insurance products and distributes them to farmers, while simultaneously offering farm advisory services so that, in Rose’s words, their customers “can be the best farmers they can be.” Pula bundles their insurance products with farm inputs, such as fertilizer, seeds, or credit. This substantially lowers risk for farmers who want to be able to invest in more expensive, higher-yielding seeds and fertilizers. The insurance provides income stability for farmers who are at the mercy of droughts, floods, and pests. Pula uses satellite data and imagery to be able to underwrite these policies more efficiently and provide timely agronomic advice.</p>
<p class="graf graf--p">Across Pula’s eight African markets, insurance penetration rates are typically less than 5 percent. Pula innovates to improve this. The farmers realize that insurance is useful, but they are not willing to pay its upfront cost.</p>

<blockquote class="graf graf--pullquote graf--startsWithDoubleQuote"><strong class="markup--strong markup--pullquote-strong">“They don’t wake up in the morning thinking, ‘I want to buy new insurance.’ They think, ‘I have school fees to pay’ or when it starts raining, ‘I need to buy fertilizer now; where is my money for fertilizer?’”</strong></blockquote>
So, Pula figured out another way; they partner with input distributors to insure all bags of seeds and fertilizers — the costs are simply included in each bag. If the rain doesn’t arrive on time, the farmers can receive a voucher for another bag and plant again for a second chance at the harvest. The key is that the distributor pays for the insurance, not the farmer.
<p class="graf graf--p">Technology underpins Pula’s business model. Satellite imagery monitors weather conditions to facilitate underwriting and expedite claims processes. QR codes allow farmers to register for insurance policies by pushing a few buttons. SMS messages relay immediate advice on when to apply fertilizer or top-dressing to maximize yields. This use of technology allows Pula to scale much faster than most insurance companies and to reach previously inaccessible communities.</p>
<p class="graf graf--p graf--startsWithDoubleQuote">“What do farmers really want? They don’t necessarily want insurance, but they do want fertilizer, they do want seeds,” says Rose. Pula’s short-term insurance products are revolutionary for many of its customers, especially considering how few of the world’s 500 million smallholder farmers have insurance. For Rose, the future means expanding Pula’s work to provide seeds, fertilizer, and insurance around the world.</p>

Pula and protecting smallholder farmers through insurance

<p id="d33a" class="graf graf--p graf-after--figure">Smallholder farmers are the bedrock of sub-Saharan Africa’s and Asia’s agricultural markets, providing <a class="markup--anchor markup--p-anchor" href="http://www.fao.org/3/a-i4036e.pdf" target="_blank" rel="nofollow noopener noreferrer">over 80 percent of the food supply</a>, but they are growing increasingly vulnerable. Climate scientists estimate that over the next few decades, droughts will <a class="markup--anchor markup--p-anchor" href="https://www2.ucar.edu/atmosnews/news/2904/climate-change-drought-may-threaten-much-globe-within-decades" target="_blank" rel="nofollow noopener noreferrer">frequently affect Africa and Asia</a> as a result of climate change. As weather conditions cause decreased stability for family farms, there is an increased need for risk mitigation solutions that can add security to the lives of those most affected.</p>
<p id="9f1f" class="graf graf--p graf-after--p">Pula, <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/pula-secures-funding-from-global-investors-to-support-smallholder-farmers-in-africa-and-south-asia/" target="_blank" rel="nofollow noopener noreferrer">one of Accion Venture Lab’s latest investments</a>, provides insurance to smallholder farmers across Africa and India, enabling income security for a population whose livelihoods depend on climate patterns. <strong class="markup--strong markup--p-strong">Pula uses cutting-edge technology coupled with expansive distribution partners to make large-scale agricultural insurance feasible for rural farmers</strong>.</p>
<p id="8d1f" class="graf graf--p graf-after--p">Across their product portfolio, Pula uses various technologies, including automated voice calls to register customers, satellite imagery to monitor cloud cover, and SMS messages to provide agronomic advice. In the event of a drought or poor season, Pula uses weather data and yield samples to offer compensation to farmers for their losses. By coupling technology with large-scale distribution, Pula can make insurance practical for smallholder farmers at scale.</p>
<p id="cf02" class="graf graf--p graf-after--p">At Venture Lab, we’re most excited about a few core areas of the typical microinsurance value chain that Pula disrupts:</p>
<p id="2264" class="graf graf--p graf-after--p"><strong class="markup--strong markup--p-strong">Eliminating the purchase barrier</strong>: Pula’s distribution model circumvents the challenges of customer adoption and education that we’ve seen insurers struggle with in the past. Customers read about Pula’s coverage on a sticker on the bag of seed or fertilizer they’re purchasing, and then they register their unique policy via their mobile phone. Pula’s partners put stickers on every bag sold in a region, and there’s no visible added cost to the products, simplifying the farmer’s decision-making process. To that farmer, Pula’s coverage is easy to activate and presents pure upside.</p>
<p id="2945" class="graf graf--p graf-after--p"><strong class="markup--strong markup--p-strong">Increasing yields for customers with massive need</strong>: Pula focuses on some of the most vulnerable populations on Earth, and the insurance coverage is only the beginning of the benefit they receive from the product. By de-risking the purchase of farm inputs, such as seed, fertilizer, or credit, Pula is also able to incentivize farmers to purchase higher-quality products than they otherwise might — without the risk of failure. As a result, they can attain higher yields and incomes. Further, Pula provides the farmer with direct agronomic advice via SMS, leveraging the farmer’s GPS coordinates and their climate science team, and boosting the farmer’s yields.</p>
<p id="9622" class="graf graf--p graf-after--p"><strong class="markup--strong markup--p-strong">Lowering the cost to serve</strong>: With its innovative distribution, Pula has the potential to reach a customer that has previously been prohibitively expensive to serve. Formerly, insuring smallholder farmers required multiple field visits to determine if conditions were right for crops to grow and to educate the farmer about the benefits of insurance, ultimately convincing them to pay for coverage. Pula can automate and significantly cut costs by assessing the farm’s weather remotely using satellite and regional yield data. Working through distributors also enables Pula to offer free and straightforward insurance coverage that is fully integrated with the input.</p>
<p id="3f7f" class="graf graf--p graf-after--p">Venture Lab is thrilled to be working with the Pula team on their mission to provide insurance to smallholder farmers across Africa and Asia. Co-founder Rose Goslinga is a pioneer in the space, with a decade of experience and a <a class="markup--anchor markup--p-anchor" href="https://www.ted.com/talks/rose_goslinga_crop_insurance_an_idea_worth_seeding" target="_blank" rel="nofollow noopener noreferrer">TED talk</a> on her resume. She is working alongside Thomas Njeru, who provides actuarial experience and financial expertise as the company’s CFO.</p>
<p id="38d2" class="graf graf--p graf-after--p">As <a class="markup--anchor markup--p-anchor" href="https://www.microinsurancenetwork.org/sites/default/files/Microinsurance%20Network_Africa%20landscape%20full%20report-WEB_0.pdf" target="_blank" rel="nofollow noopener noreferrer">microinsurance in most African markets hovers at or below 5 percent,</a><strong class="markup--strong markup--p-strong"> there is a massive market opportunity to support the world’s most vulnerable as they grow food to provide for their communities</strong>. Pula tackles the arduous task of customer awareness by partnering with known brands and uses cutting-edge technology to make the product scalable. <a class="markup--anchor markup--p-anchor" href="http://www.thp.org/knowledge-center/know-your-world-facts-about-hunger-poverty/" target="_blank" rel="nofollow noopener noreferrer">Half of the world’s hungry</a> are farming families, and Pula strives to reach those most in need with security and stability.</p>
<p id="d671" class="graf graf--p graf-after--p">Venture Lab is excited to be supporting Pula as they take on one of the world’s most significant challenges.</p>