An integrated digital platform for the provision of quality services to agricultural entrepreneurs – the case of DigiFarm in Kenya
Mercy Corps AgriFin
DigiFarm is a highly successful integrated mobile platform launched in early 2017 by Safaricom (Kenya’s largest MMO), in collaboration with MercyCorp’s Agrifin Accelerate Programe. Its mission is to leverage technology to enable small-scale agripreneurs to become wealthier in a commercially sustainable way, by tackling in a holistic manner a range of barriers (including access to finance) that limit their productivity and profitability. The mobile platform acts as a one-stop shop that is able to provide farmers with a suite of services, which include direct input purchase (e.g. seed, fertilizers, agro-chemicals), input credit, harvest cash loans, crop insurance, business training, access to soil testing, customized information on agricultural best practices, and linkages to market channels. This last service was introduced in early 2018 in the form of a “digital marketplace” (DigiSoko) for registered farmers, connecting them with a range of major processors and wholesale buyers.
DigiFarm allows any farmer to access the platform by dialing a specific number on their phone. From there, a menu opens that presents a range of services and options. All payments made on the DigiFarm platform rely on the M-Pesa mobile money system.
DigiFarm’s model is centered around a network of partners responsible for providing its range of services: the interactive platforms Arifu and iCow, for example, provide the learning content; the digital start-up iProcure enables the input purchase component; and FarmDrive collects and aggregates the constant stream of data generated by the platform’s services to build a reliable credit score for the client. Safaricom also works to regularly update the platform and add more service features, such as access to transport services, by bringing in more partner companies. The amount of agri-related data generated on each user by the combination of these services allows DigiFarm to refine its credit scoring capabilities and provide loans at competitive rates, while reducing default rates.
Source: Mercy Corps AgriFin
As can be seen from the Figure, as of late 2019, the platform had registered over 1 million farmers, with more than 300 000 of them being regular users. Approximately 52 000 loans had been approved through Digifarm with a repayment rate of approximately 90 percent, for a pipeline value of Ksh 4.6 billion (US$ 42 million). As borrowers keep coming back to obtain more loans and strengthen their credit histories, Digifarm has been working to increase the individual loan amounts to up to Ksh 28 000 (US$ 254).The platform hosted more than 300 000 active learners engaged with its partner educational services, while more than 50 000 farmers had purchased inputs through its services (Benni, Berno and Ho, 2020).
Young Kenyan agripreneurs are ideal recipients of DigiFarm’s range of services, given their higher levels of familiarity with mobile technology, their tendency to act as early adopters of such innovations, and the higher rates of mobile penetration they register in the country compared to adults. The positive impacts that the platform brings are plenty, ranging from increased volume of sales, yields, new market linkages, increased resilience to climate shocks, and more efficient use of agri-inputs.
The DigiFarm model is an excellent example of how multi-service platforms can tackle in a holistic manner the multiple, compounding constraints that young agripreneurs might face when seeking to kickstart and expand their business idea. Oftentimes, one or two crucial constraints (such as, for example, lack of access to quality inputs) can spell the failure of a potentially viable business which carries all the other enabling factors to succeed. DigiFarm’s approach allows to intervene strategically to fill these specific gaps, providing regular and diversified support even in contexts marred by multiple structural and regulatory constraints that limit youth-led agri-enterprises’ growth from a variety of angles. Although such a model requires some vital enabling elements to be replicable in other contexts, chiefly a sophisticated digital financial regulatory framework (which includes financial consumer protection regulation), its undeniable results should spark the interest of policymakers and angel investors, with an eye to replicating its approach in other developing countries.
