Providing digital and affordable financial solutions to East African farmers

Providing digital and affordable financial solutions to East African farmers

Bram van den Bosch, Co-founder and CEO of Emata, a company dedicated to providing digital and affordable financial solutions to East African farmers, shares the remarkable journey of the organisation, from its inception to a recent successful seed fund raise of $2.4 million.

Can you tell us more about Emata’s journey from its inception to this recent $2.4 million seed fund raise? What were the key milestones along the way? 

Emata was created in a hot car on a dusty road while returning from visiting farmers’ cooperatives in Southwestern Uganda. 

Our founding team met while working at a Ugandan FinTech digitising banks. While there, we were increasingly frustrated that banks hardly service farmers, Africa’s most underserved yet economically important sector. Impatient with the banks’ slow progress, we decided to rethink and revolutionise farmer financing. 

In March 2020, we set out to solve agricultural financing. In December, we received our Microfinance License in Uganda and started lending in February 2021. We started our journey in dairy (our name comes from the Luganda word for milk, ‘amata’). Over the last few years, we have partnered with 57 agricultural partners, impacting the lives of 43,000 farmers and growing. 

Last year was pivotal for us. We scaled from one to four value chains: dairy, coffee, oilseeds and maize. These are four of the five largest agricultural value chains in East Africa.  

Key significant achievements encompass our swift expansion, which multiplied sevenfold in 2022, disbursing loans worth more than $1 million and successfully running numerous pilots that shaped our offerings. This recent $2.4 million seed fundraiser is a testament to the market’s belief in our vision and will allow us to scale-up and expand to more countries in East Africa. 

The agri-finance sector in Africa faces significant challenges. How does Emata’s digitised lending process address these challenges and benefit African farmers? 

Agriculture is the cornerstone of the African economy. It accounts for a staggering 70% of the population and 30% of GDP, yet it receives only a fraction of all lending. Formal financial institutions do not lend to smallholder farmers because they struggle with slow and expensive manual processes, lack efficient last-mile distribution and prefer lending to borrowers with substantial collateral. 

Emata’s approach is a game-changer in this space. 

Our unique partnership model directly taps into existing agricultural ecosystems, ensuring we can reach farmers at scale. Instead of reinventing the wheel, we team up with those already on the ground, amplifying our impact. 

But the real magic happens with our WhatsApp lending platform. Given WhatsApp’s widespread use in Uganda, we’ve transformed it into a gateway for farmers to access loans easily. No jargon, no complex procedures – just a familiar app that farmers already use daily. 

To ensure that funds reach farmers swiftly and securely, right in the palm of their hands, our loans are paid out using mobile money. No travel to a bank branch, no hefty transaction fees, nor the insecurity of cash. 

Finally, our repayment model benefits us and the farmers. We’re not just handing out loans and hoping for the best. A farmer repays when they have money: At harvest. Our partner deducts the money, before they pay the farmer, meaning the farmer never has to send us money directly. This model not only protects their financial health but also builds a trust relationship. 

Could you elaborate on the unique features that make Emata’s lending rates five times more affordable than traditional, informal loans in Africa? 

Emata’s affordability advantage over traditional loans stems from a synergy of Smart Tech and strategic partnerships. 

Firstly, our tech-first stance is a game-changer. By automating everything – from farmer onboarding to credit scoring and loan disbursement – we’ve slashed operational costs. This efficiency doesn’t just make our system fast (farmers get loans when needed, in time for the season), but it also brings down the costs. 

Our AI-powered tailored credit scores allow us to trust our farmers more and this confidence gets passed down as savings to the farmer. 

But it’s not all algorithms and automation. Our unique partnership model bridges the digital with the tangible. While our tech platform is streamlining processes in the background, our collaborations with cooperatives and aggregators ensure we have a physical presence in rural areas. This dual approach is critical. It means farmers, even those without smartphones, have a tangible point of support when they need a loan. Moreover, these partners play a pivotal role in data collection via the Emata MIS and facilitate loan repayments. 

Compared to the more traditional avenues like banks, MFIs and SACCOs, our approach is refreshingly inclusive. Even the smallest farmer finds a financial ally in Emata. 

In short, our blend of innovative tech and on-the-ground partnerships means Emata loans aren’t just faster or more convenient; they’re a breath of fresh financial air for African farmers. 

Emata was voted the world’s ‘Best New Startup’ at the 2023 Global Startup Awards. What do you believe sets Emata apart from other FinTech startups in the industry? 

First of all, it was an enormous honour to be named ‘Best New Startup’ and a validation that our work makes sense globally. It shows that what we are working to do has a real, tangible impact on an underserved and ignored part of the global population. More importantly, the world needs more food and Africa is uniquely positioned to provide it. Our impact is not just local or regional; it’s global. 

The jury said the following about our victory: “Emata offers a compelling and scalable solution to some of the world’s most underserved demographics. It seeks to disrupt and retake a broken financing system, to support both cooperatives and farmers and already boasts massive growth. It helps all sides and there’s nothing not to like about this initiative.” 

Expansion plans in East Africa, particularly in Tanzania and Uganda, are on the horizon. What strategies does Emata have in place to navigate and succeed in these markets? 

Expanding in East Africa, we’re leveraging our core strengths while adapting to each country’s nuances. 

1. Partnerships: We’re growing our partner network across agricultural sectors. These alliances aren’t just for reach—they help us understand local intricacies, ensuring our solutions are tailored right. 

2. Proven success: Our blueprint in Uganda, especially from our strongest value chains, serves as our primary guide. We’re replicating our most successful strategies, fine-tuning them to local realities. 

3. Leveraging similarities: East Africa offers familiar terrain with its crops, climate, farmer group structures and National ID systems. This familiarity means we can roll out our services faster, without reinventing processes. 

Our strategy is simple: adapt our successful Ugandan model to the shared agricultural landscape of Tanzania, all while fostering essential partnerships. 

In the context of the broader FinTech industry, how do you see Emata’s role in driving financial inclusion and economic empowerment in Africa? 

Unlocking eligibility: Most farmers do not meet the eligibility requirements of traditional financial institutions. Emata revolutionises this with AI-driven alternative credit scoring, turning the ineligible into the bankable. Our tech identifies potential where traditional systems fall short. 

Farmer-first approach: We’re not just a lender; we’re a partner to our farmers. Our offerings are tailored around the season, with the flexibility to adapt to weather changes, intricacies in value chains and changes in harvest time. And, recognising the unpredictability of farming, we’ve built in insurance against unforeseen events, further securing our farmers’ livelihoods. 

Genuine affordability: Unfortunately, the FinTech world has its fair share of high-interest rate offerings, preying on desperation. Not us. We embed ourselves in the agricultural value chain, minimising risks to offer genuinely affordable rates. For us, loans aren’t a trap; they’re a tool for prosperity. 

With your background in FinTech and Emata’s mission, how do you envision the future of agri-finance in Africa and the impact it can have on the continent’s agricultural sector? 

Agriculture in Africa has enormous potential. For far too long, the focus has been on the size of the farm rather than the farmer’s potential. Our commitment at Emata is to recognise and empower the best, not the biggest, farmers. Providing these deserving farmers with the right financial tools enables them to invest, innovate and grow professional farms. Such a paradigm shift from a smallholder-centric mindset to a professional approach can transform the agricultural landscape. 

The world needs more food. With Africa housing 60% of the world’s untapped arable land and boasting a staggering 90% yield potential, there’s an incredible opportunity on the continent. By marrying finance with farming, we’re not just boosting individual prosperity but setting the stage for Africa to emerge as the world’s leading breadbasket. 

Click below to share this article