Capital Markets

Kenyan start-up in Sh1bn pact with US-based financier for farmer loans


Nairobi-based financier Apollo Agriculture Limited has secured a Sh1.07 billion ($9.5 million) loan from the United States International Development Finance Corporation (DFC) for onward lending to smallholder farmers in the country.

While announcing the 10-year loan, the DFC said the facility would help improve food security in Kenya by boosting Apollo’s ability to support smallholder farmers.

Last year Apollo also raised about $6 million in another round of funding for onward-lending to farmers.

“Investments approved by the Board this quarter include…a $9.5 million loan to Apollo Agriculture, Inc. a financial vehicle making small microloans and inputs available to smallholder farmers in Kenya,” said the DFC in a statement detailing $1.13 billion (Sh127.6 billion) worth of new global investments.

Founded in 2016, Apollo Agriculture offers a mobile-based product loan package for farmers that includes working capital, data analysis for higher crop yields and options to purchase key inputs and equipment.

The start-up began operating in 2017 to deliver bundled packages of financing (tied to crop cycles), agricultural inputs (seeds and fertiliser), crop insurance and digitally delivered information services directly to smallholder farmers in Kenya.

Apollo says it uses Safaricom’s #ticker:SCOM M-Pesa mobile money, machine learning and satellite data to guide the credit and products it offers farmers.

The company generates revenues on the sale of farm products and earning margins on financing, and has served more than 100,000 farmers since its inception, with 70,000 of those paying relationships coming in 2021.

Small-scale farmers produce up to 80 percent of the food supply in Africa and Asia and face a 90 percent chance of crop loss due to factors outside of their control, such as pest outbreaks and severe drought.

Tech start-ups have, therefore, taken an increasingly bigger role in the sector, offering platforms that facilitate access to market and inputs, extension services and payment services.

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