For the three years that Jannifer Waceke has managed her own store in Nairobi, she has struggled to overcome one barrier: accessing small loans to replenish her kiosk, buy more vegetables and goods, and in turn, grow her business. In many emerging markets, food retailers along with smallholder farmers, struggle to secure loans and develop a credit history. And without the proper financing, many of them fail to scale their businesses. To tackle this, IBM has been working with the Kenya-based food logistics startup Twiga Foods to facilitate micro-lending options for food vendors. Twiga Foods operates a mobile-based business-to-business supply platform for retail outlets and stalls. After analyzing these purchase records from mobile devices, IBM researchers determine creditworthiness, after which they use blockchain technology to administer the entire lending experience from application to receiving offers to accepting terms of repayment. The first eight-week pilot processed more than 220 loans averaging $30 each, with customers repaying within four to eight days with an interest rate of up to 2%. “When I didn’t have money to buy more stuff, it made things so much easier for me,” Waceke says of the loan, which she used to stock more fruits and vegetables. Across East Africa, digital credit scoring is being trialled to pave the way for more affordable loans. Mobile financial institutions are leading this, given that, unlike commercial banks, they don’t require credit scores, bank statements, lending history, and collateral. This is especially true for markets like Kenya, where mobile penetration stands at over 94% and mobile money services like M-Pesa help boost services ranging from e-commerce to healthcare, and transportation. For instance, fintech companies like Tala, a data science and mobile technology company, have tapped into this, providing affordable credit to customers in Kenya, Tanzania, and beyond. Blockchain technology could be used to help lower the barrier to enter financial systems and establish new markets and products. The platform’s decentralized ledger is said to allow users to keep track of transactions and forestall malpractice. The move also comes as Kenya softens its stance on blockchain, hoping to use its digital system to tackle land registration and corruption. As well as IBM, plugging into the agricultural sector, startups, like iProcure and FarmDrive, are also investing in the sector, using machine learning, alternative data, and mobile technology to optimize the agriculture supply input in a bid to raise profits for farmers and vendors. But even as the conversation around these new technologies changes, there’s still some skepticism. Andrew Kinai, the lead research engineer of the food project at IBM, says it was “challenging to convince industry partners to explore new possible business models since there is always adoption risk with any new technology.” Kinai says they are making iterations to the platform based on feedback from retailers and were taking “considerations around loan size and terms that need to be optimized.” Quartz
