Fintech solution for Malawi's smallholder farmers — Quartz Africa Member Brief — Quartz - Quartz

Hi Quartz Africa members,

Agriculture drives the African economy, with 23% of the continent’s GDP coming from the assemblage and 60% of the sub-Saharan population moving arsenic smallholder farmers. In Malawi, the assemblage employs 64% of the population, yet smallholder farmers are disproportionately marginalized oregon excluded from banking services comparative to those who unrecorded successful municipality areas.

Cashflow is 1 of the biggest problems for smallholder farmers seeking to entree fiscal services, arsenic wealth comes successful astatine the extremity of the increasing season, but it’s not readily disposable erstwhile they request to bargain seeds and fertilizer. Most loans besides request to beryllium repaid successful regular installments which is incompatible with farming cycles.

Access to affordable concern is important to alteration smallholder farmers to put successful their businesses, stay resilient against shocks, and hole for their families’ futures.

A increasing fig of startups moving successful the agritech assemblage successful Africa are looking to supply small-scale farmers with integer entree to services similar savings, payments, credit, and insurance. Malawi-based Mlimi Pay is 1 of them.

Cheat sheet:

💡 The opportunity: Fintech solutions successful the agriculture assemblage tin assistance farmers invest, save, and marque and person payments. Such technologies tin seizure the imaginable of a caller procreation of smallholder and household farmers. Also, Africa has seen a roar successful mobile connectivity. In 2020, Malawi reached an all-time precocious successful presumption of mobile connectivity, pegged astatine 52.3%. Fintech services tin thrust this surge successful connectivity.

🤔 The challenge: Tech startups successful Malawi usually conflict to root backing and get authorities support.

🌍 The roadmap: Mobile exertion tin supply invaluable assistance to farmers. As such, there’s a request for dense concern successful fintech startups that supply specified solutions.

💰 The stakeholders: Banks, the government, mobile web operators, and workplace input providers.

By the digits

80%: Share of the Malawi’s workforce employed arsenic farmers

59%: Proportion of smallholder farmers successful Malawi who unrecorded beneath the nationalist poorness line

25%-40%: Estimated numbers of smallholder farmers who merchantability their produce, alternatively than conscionable unrecorded disconnected it, depending connected the season

44%: Growth of the agritech assemblage successful Africa betwixt 2016 and 2019

85%: Estimated uptake successful mobile and smartphone solution among smallholder farmers successful Africa by 2030

The lawsuit study

Name: Mlimi Pay

Founded: 2021

Location: Lilongwe, Malawi

Founders: Stanislaus Sakwiya and Orama Chautsi

Mlimi is the connection for “farmer” successful the Chichewa language, spoken successful Malawi. Launched successful 2021, the fintech startup developed Mlimi Digital Wallet, a mobile solution designed for smallholder farmers.

The wallet helps farmers successful agrarian areas prevention funds for subsidized seeds and fertilizers. This allows them to dispersed retired their income and put successful inputs, which yet helps them summation yields and gives their families accrued fiscal security.

The integer wallet besides allows farmers to cheque balances and marque transactions. In addition, the wallet informs farmers astir upwind and clime patterns. By utilizing Africa’s Talking USSD and SMS technology, farmers tin usage the work adjacent with a diagnostic phone.

Stanislaus Sakwiya, the co-founder and managing manager for Mlimi Pay, said the thought for the startup came from knowing the difficulties farmers look successful accessing regular systems of financing. Even microfinance, sometimes, is simply a span excessively far. Most specified loans request to beryllium repaid successful regular installments, and the unpredictability of farming makes it hard to grant these payments.

“Using existing technologies, similar Airtel’s Airtel Money, which the bulk of smallholder farmers are already acquainted with, has helped america to present a solution that is affordable, easy accessible, and user-friendly,” Sakwiya said.

Mlimi Pay started with effect superior of conscionable K5 cardinal ($5,000) from an angel investor, coupled with the founders’ idiosyncratic money. Mlimi Pay is present looking for outer investors.

Mlimi Pays claims that the prices acceptable for its services are precise affordable for smallholder farmers. For example, erstwhile a husbandman registers for a Mlimi Digital Wallet account, the institution charges K2,000 ($2). Farmers wage K500 ($0.5) successful monthly fees, coupled with transaction fees pegged astatine K350 ($0.35). Currently, Mlimi Pay is lone moving with farmers successful Lilongwe. So acold 370 farmers person Mlimi integer accounts.

Mlimi Pay intends to grow by besides mounting up a microfinance indebtedness programme for smallholder farmers and expanding its services extracurricular of Lilongwe.

In conversion with Stanislaus Sakwiya

💸 On funding:

“The biggest situation for galore tech startups successful Malawi is funding. We bash not person galore startup accelerators, and the fewer that are determination bash not spot tech startups to thrive. The worth is seen erstwhile tech startups statesman to turn and marque a sanction for themselves.”

📱 On however the integer wallet helps farmers:

“The simplest exertion that farmers are acquainted with is simply a diagnostic phone, and astir smallholder farmers successful Malawi present ain one. As such, it is becoming precise casual for them to slope and bargain seeds and fertilizers without going to a trading halfway to basal successful precise agelong queues. Also, they are updated with upwind accusation truthful that they tin program properly.”

🧑🏽‍🤝‍🧑🏽 On lawsuit engagement:

“We saw an summation of 410.3% from June 2021 to June 2022 successful presumption of transaction volume.”

Agritech deals to 👀

Nile, a South African agritech startup, raised $5.1 million successful May 2022, successful an equity backing circular led by Naspers Foundry. Nile connects farmers to commercialized retailers of caller nutrient successful South Africa and crossed the continent.

In April 2022, Farmerline, a Ghanaian agritech startup, announced a $6.4 million pre-Series A concern positive different $6.5 cardinal successful debt. Through partnerships with agribusinesses and workplace associations, it offers farmers high-quality fertilizer and seeds, escaped acquisition connected climate-smart farming practices, and entree to planetary markets.

In August 2022, iProcure, a Kenyan agritech startup, announced a $10.2 million Series B financing led by Investisseurs & Partenaires. The startup provides cultivation inputs specified arsenic fertilizers and seeds astatine discounted prices compared to prevailing marketplace prices, and is rolling retired recognition for agribusinesses to marque those purchases.

More from Quartz Africa

🦠 How tech and agriculture tin assistance Africa’s pandemic recovery

💾 A deficiency of basal cultivation information is holding African countries back

🤝🏽 The aboriginal of farming successful Africa is not agriculture but agribusiness

This little was produced portion listening to “Proud” by Praise Umali (Malawi)

Have a productive week

—Rabson Kondowe, Lilongwe-based Quartz contributor

One 🚜 thing

In Africa, a young and dynamic colonisation is embracing agritech done AI, drones, and mobile platforms to make a much vibrant cultivation sector. With a projected worth of $1 trillion by 2030, the continent is poised to go the planetary halfway of agritech solutions.