Watson Matsa, founder of eSusFarm Africa, says the company is using agricultural data and technology to address gaps in financing for smallholder farmers.
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Matsa, speaking in an interview held on July 26 at the Somerset Westview Hotel in Nairobi, described how his background in economics, accounting and credit analytics shaped the company’s approach to agriculture.
He studied economics and accounting at Rhodes University in South Africa before joining FNB, where he worked as a project manager in credit analytics on initiatives intended to improve credit scoring.
Matsa said he and his unnamed co-founder initially considered using data to direct capital towards small businesses. The idea later shifted to agriculture after his co-founder asked, “What if this applies to agriculture? Money isn’t flowing to small farmers because there isn’t enough information.”
Adapting finance to farming cycles
According to Matsa, conventional banking often assumes that customers receive a regular monthly salary. Farming, by contrast, can generate income according to seasonal, daily, weekly or longer production cycles.
He said smallholder farmers and other participants in the informal economy may earn smaller amounts consistently rather than receive a fixed monthly income. That difference, he argued, can make existing financial products poorly suited to agricultural households and businesses.
Matsa also said insurance or another form of assurance is important if banks are to lend to largely unsecured agricultural portfolios. He recalled advice from Benny van Rooy, the former CEO of Grobank: “Watson, you’ve got enough data, and I like calling you a data company. But what you need to understand is that banks can’t lend if there is no insurance.”
eSusFarm Africa assesses agricultural risk using soil, climate, farmer-reported and crop information, Matsa said. Its backend can incorporate artificial intelligence, blockchain, credit scoring and insurance, while services are delivered through channels such as USSD, mobile money and WhatsApp.
“We don’t want to build an app. We want to be involved in what people are already using,” he said, describing the company’s preference for integrating with existing infrastructure.
Connecting information with incentives
Matsa said the company had to change its approach after discovering that some farmers did not see an immediate reason to report operational information. Farmers, he said, asked: “Why should I report? If I report, what’s the immediate benefit?”
eSusFarm Africa subsequently connected reporting to the possibility of accessing finance. Matsa said additional information could help the company monitor and score risk, potentially allowing farmers to receive financing.
He said the company had profiled about 380,000 smallholder farmers across Uganda, South Africa, Zimbabwe and Eswatini, with approximately 20,000 actively using its solution. The figures were provided by Matsa and were not independently documented in the supplied material.
In-person training has also supported user growth, according to Matsa. He said trained farmers became community ambassadors and helped bring additional farmers into the system through word of mouth.
Partnership-led expansion
Matsa said eSusFarm Africa follows a partnership-led growth strategy and identified MTN, Sanlam and Microsoft among its partners. He did not specify the exact products or services provided through each partnership.
He said the company may need larger teams as it expands into more countries and could use grants and other sources of capital to build for future growth before becoming profitable.
Matsa also argued that agriculture can have a broad multiplier effect. In his view, one successful farmer can generate activity across areas including seed, fertiliser, transport, labour, machinery, packaging and distribution.
He advocated combining grants and debt to finance young people producing crops that could replace imports, including rice in countries with large import bills. At the same time, he cautioned that agriculture is a slow industry, requiring investment in training and change management before income begins to arrive.
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