The agribank of the future runs on satellites and cellphones

Scalable banking for smallholder farmers

Apollo Agriculture aims to boost agricultural productivity in Africa by combining satellite data, machine learning, mobile phones and digital banking. “We are in the business of helping smallholder farmers make more money,” says the founder.

When Eli Pollak set up Apollo Agriculture in Kenya in 2015, he brought with him a wealth of knowledge about how to drive up yields with data. Pollak had worked previously at the Climate Corporation, a US company that uses data to provide customized growing advice to farmers. The service was soon being applied to 28 million hectares.

Despite that success, Pollak got the sense he was working on the wrong problem. “When I looked at sub-Saharan Africa, I saw they were planting as many hectares of maize as in the States, but harvesting just 10 or 20 percent of US yields,” he says.

“Sub-Saharan smallholder farmers harvest just 10-20% of US yields”

- Eli Pollak, Apollo Agriculture

The simple tools that increase productivity

“The tools to increase yields are simple,” says Pollak. “Good seed, enough fertilizer and access to water. Above all though, farmers need credit so that they can invest in their farms.”

Pollak was frustrated to see that most of Kenya’s poor small-scale farmers did not have access to affordable financing, mainly because they are widely distributed over very rural areas, and – because their production is small – they have relatively low lifetime value to banks and suppliers.

The Apollo team set out to make it economically viable to provide this group with credit. “To make the process scalable, we’ve rethought the entire customer experience. From how to acquire customers and how to underwrite loans, to how we distribute our products and provide training. We’ve essentially automated serving customers.”

Hi-tech makes it scalable

“When we started Apollo, we got excited about technology changes that put us in a different position to create these solutions,” he says. The game-changers include access to high-quality satellite data; improvements in machine-learning tools; and broader access to mobile phones and mobile money.

The company harnessed these tools to create its first product: a customized package of seed and fertilizer, bought by customers on credit at favorable terms. Crucially, the package includes weather insurance, so that the farmer is protected if his or her crop fails.

The Apollo team

Targeted loans meet satellite monitoring

Apollo puts up the capital to back farmers’ loans, which are made in kind, not cash. Once a customer is approved for a loan, he or she receives a voucher code redeemable for a tailored package of seeds and inputs at a supplier in their village. They make small repayments through the growing season until they realize the remaining value of the package at harvest time.

There is little or no systemized information available for these farmers: for example, how successful their farms are, or how strong their credit is. To help it make good credit decisions, Apollo analyzes satellite data to generate insights into how much farmers produce on their field, how it compares to their neighbors’ production, or if they have livestock which could provide more consistent income than maize farming alone.

Building an accurate model

Thanks to financial backing from funds including Rabobank Foundation and FMO, Apollo has been able to make loans to groups seen as extra risky, including women and young people. This ensures that the company gets data from a representative sample of the target group, which in turn makes its models more accurate. “We’ve been very fortunate in having backers who believe in us,” says Pollak. “They have given us the opportunity to build our models and ensure our products really serve our customers.”

Albert Boogaard, Head of Innovation at Rabobank Foundation, explains why they are working with Apollo: “Apollo’s state-of-the-art technology and a data-driven business model help to reduce the costs and risks of loaning to smallholder farmers. You could call it the agribank of the future. In partnership with FMO, we provide Apollo with working capital which goes directly to farmers, many of them previously unbanked. This is the exact aim of our innovation strategy.”

“You could call it the agribank of the future”

- Albert Boogaard, Rabobank Foundation

Future opportunities

“Basically, we are in the business of helping smallholder farmers make more money,” reflects Pollak. “Finding further opportunities to expand and achieve higher returns for our customers and our company is core to our vision.”

One priority is ensuring more farmers have access to irrigation water to increase their resilience in the face of drought. Another product will encourage growing higher profitability crops and help farmers access the right markets to sell them.

A question of trust

Learning where the company could add the most value is a slower process than Pollak expected. “The pace of learning is necessarily tied to the growing cycle. What’s clear though is that farming is a tough business and asking someone to change their methods requires trust. We spend a lot of time with our customers before asking them to make major changes.

“We’ve also learned that many farmers are highly sophisticated about the tools they wished they had. We’ve seen really strong interest in our product, with farmers saying, ‘I wanted to apply more fertilizer or afford this seed, and now I can.’”