SINGAPORE – In the two years since Grow Asia was established, our priorities have been focused on laying the foundations and cultivating partnerships to help us meet our goals. Now, with over 300 partners, five Country Partnership Secretariats in operation and 46 projects being designed and implemented across the region, the Grow Asia Secretariat has pivoted its attention to two critical areas – financial and digital solutions. Both were identified as core themes for action at this year’s Grow Asia Forum, and have the potential to become game changers in reaching vast numbers of smallholders and transforming the way they operate.
Addressing the constraints of agricultural finance can enable small-scale producers to pre-finance high quality targeted inputs. Meanwhile digital tools can provide extraordinary new opportunities for all stakeholders in the value chain and overcome the difficulties that agribusinesses face interacting with smallholders on a large scale. Grow Asia’s newly launched Digital Program is being led by Paul Voutier, Mobile Agriculture Manager, and he has already observed an overwhelming level of interest from our partners who would like to know more about how technologies can be used to build trust, improve traceability and reduce transaction costs.
How can digital unlock credit for farmers?
Answering this question was the focus of the first session in our new Digital Learning Series, hosted in Singapore this month with Grow Asia partners. The series will be a mix of online and in-person events to help partners explore the digital landscape and learn how we can leverage digital solutions. In this first session, we looked at digital tools to improve farmers’ access to credit.
Participants heard from four speakers and took part in breakout sessions to discuss the topics in detail. The day began with Paul Voutier drawing attention to the fact that while digital information cannot materially alter the level of natural risks in farming, it can help lenders gain insight into a farmer’s income, education, personality and productivity levels. Together, this data can provide an accurate credit score at a lower cost than traditional methods.
Manfred Borer, Chairman, PT Koltiva, joined us to share how the company’s traceability system provides a holistic package of benefits for buyers, financiers and farmers. The system improves productivity; maps land area; provides crop traceability; and supports farmer certification. Koltiva maintains a database record of the sales (income), training attendance and farming practices of over 75,000 farmers in Indonesia. The company’s software calculates a credit score based on this data and also allows farmers to submit a digital loan application.
Patrick Tan, Business Development Director, EFL, presented on EFL’s psychometric scoring product. This technology allows a lender to survey farmers to determine phycological factors including decision making, social connection and demographics. He showed that EFL have developed tools to convert this data into predictive credit score. EFL’s tool has been used to assess over one million applicants with over $1.5 billion lent on the basis of their assessment.
Florentin Lenoir, Marketing and Business Development Director, Lenddo, added another insightful dimension by sharing how his company uses big data assessment of cell phone usage. He argued that a farmer’s usage pattern could indicate attention to detail, trustworthiness and consistency of behaviour – traits which suggest a higher likelihood to repay a loan.
The discussions highlighted the power of new technologies in better identifying credit worthy farmers. This means loaning can be increased, while at the same time non-performing-loaning (NPL) can remain at feasible levels. Furthermore, these tools can reduce the cost of acquiring new borrowers.
These tools are one part of the solution to the emergence of a more professional cadre of profitable, smallholder farmers capable of partnering with agribusinesses. Grow Asia is excited about the evolving agricultural digital landscape and its potential to transform the industry. Over the coming months we will continue to proactively consult and involve partners in sharing learnings and developing plans to implement digital credit scoring solutions across the region. Look out for more information about the next Digital Learning session soon.