Cropa - Micropayment through AgriFinance

1. Problem

In subsahara Africa and specifically in Nigeria, people in rural communities are mostly smallholder farmers with lack of access to inclusive financial technology. These unbanked and underserved smallholder farmers are usually not able to access credit from banks and grantors to boost their crop production output which requires modern agronomic practice, improved seed, agrochemicals and mechanization services. Lack of reliable telecommunication infrastructure, low-value transaction which can't be charged, discourage banks from providing PoS in rural communities. Because smallholder farmers production capacity is low, banks find them unattractive for credit facility. 

2. Solution

Cropa is adopting an integrated approach of providing micropayment solution through agriculture finance to a clusters of smallholder farmers over a minimum of 250Ha of land through incentivized extension workers we call aggregators.

3. Impact

Because the majority of people in rural communities are smallholder farmers, providing inclusive financial solution to smallholder farmers will reduce poverty.

Cropa is solving the problem of poverty, financial exclusion in rural communities and global food security. Commercial and microfinance banks have no incentive to provide financial services in rural areas because of inadequate infrastructure and farmers low production capacity which is unattractive for credit facility. So, farmers lack access to timely credit which could help them get improved seed, agrochemical and reliable farm mechanization services.

Extension workers have never been provided a sustainable incentive to continuously support farmers with appropriate training on best agronomic practice. This limit smallholder farmers access to technology and knowledge to increase production capacity. 

In Nigeria alone, more than 70% of rice consumed are imported which put pressure on government spendings. It's known from various statistic that Nigeria increasing population require commensurate local food production by smallholder farmers that need to be increased. 

Another issue is the lack of agriculture finance for the farmers. Farmers small scale production is considered not to be attractive for credit by commercial banks

--Cropa team will seek various sources of credit and grant to be used in financing crop production by farmers. 

--Hire and train extension workers known as aggregators to go aggregate smallholder farmers in rural communities into clusters of 250Ha farmland at minimum and help them form cooperative with appropriate governance structure.

--Aggregators to Capture farmers biodata and help farmers develop appropriate financials and budget per hectare required for agriculture finance.

--Aggregators help all farmers and retailers in rural communities to create bank accounts with data capture with Cropa app.

--Aggregators will train retailers, incentivized with small business term loan, to use Cropa app to accept micropayment from farmers and other member of rural communities. Retailers are provided Blockchain-enabled-PoS and store-value-cards which customers are to pay for to make purchases.

--Aggregators Submit credit or grant application request through Cropa App based on cost of production per hectare onbehalf of the farmers. 

--If Financing is approved by Cropa, inputs/mechanization services are paid for and delivered to combination of farmers and Aggregators.

--Aggregators train and supervise farmers to adopt modern crop production practice during cultivation, planting, maintenance and harvest.

--Aggregators are provided 5% of total harvest with six month stipend from Cropa 

Cropa is to help people, especially smallholder farmers in rural communities, gain access to inclusive financial technology through crop production financing. By provision of inclusive financial solution to people in rural communities, they generate financial data which could be used by credit and grant institutions to have a deep understanding of their earning and spending history with potential for worthy credit facilities. 

Since most rural dwellers are mostly smallholder farmers, so supporting smallholder farmers with agriculture finance is providing cover for 70% of rural people. So, through our trained aggregators or extension agents, we engage directly with farmers and rural retailers to capture all their challenges before grouping them into serviceable clusters of farmers in order to them attractive for funding. 

Cropa micropayment is able able to deliver inclusive financial technology with low cost transaction because of blockchain enabler which support 100k transactions at $0.10. So, rural people can afford cashless micropayments without the burden of high cost transaction offered by commercial banks.

Our solution align with the Challenge objectives in many ways. We create a new way of helping people in rural communities gain access to inclusive financial technology by provision of finance and training to smallholder farmers. We also help reduce unemployment through our aggregators and other support services to farmers. Now, extension workers now have a sustainable 12 months employment opportunity as aggregators in two planting a season per annum. 

Since we are helping farmers to increase crop production, it means we are also helping to solve poverty, global food security and nutrition problems.

There has been attempts by government and small business to provide inclusive fintech solution to rural dwellers. There has also been several attempt to support small holder farmers with finance for increase production output. However, non of the attempts demonstrate the understanding of the importance of integrating both. Adoption of technology for micropayment, credit application, agronomic practice and farm management by smallholder farmer with limited education is a challenge. Adoption needs to be driven through farmers existing needs which is financing.

Competitor's approach like that of FarmCrowdy lack sustainability plan as it tries to directly engage farmers without an independent handlers like our aggregators. Our incentivized aggregators are driven and motivated to achieve set goals based not only on monthly earnings, but also 5% of farm yield. Micropayment adoption by farmers is driven by incentives provided to retailers and aggregators. Buyers also know they save a lot making micropayments.

Other competitors like Cellulant and FarmerLine fail to adopt the integrated approach. Farmerline provides data to smallhoder through feature phone based on the assumption that farmers are literate to interpret data provided.  

Cropa's solution to poverty in Nigeria rural communities and food security is a combination of enhanced new business model and technology. The business model makes no assumption about the knowledge of farmer and ability to use new agriculture technology and improved agronomic technique. We are deploying aggregators, with sustainability as a goal, to continuously help farmers adopt the implementation of modern agriculture techniques. Aggregator team also help rural retailers for widespread of cashless micropayments. In doing this, Aggregators earn a living and strongly motivated to continue to engage and improve the services provided to farmers and retailers in rural communities.

Cropa micropayment solution, through its store-value-card and PoS is enabled by stellar Blockchain which supports 100k micropayment transactions costing $0.10. This provide great deal of opportunity to do micropayment in rural communities with high volume of low value transactions. The reliable nature of blockchain is another advantage. Cropa store-value card which require few steps of data collection in an enrollment process works without the bottlenecks of traditional payment cards.

Stellar for international payment is proven and tested blockchain technology that has been used in production by various commercial banks and FinTechs companies to deploy affordable money transfer paltform. Stellar blockchain uses a protocol known as Stellar Consensus Protocol. According to official whitepaper; 

"We need a worldwide financial network open to anyone, so that new organizations can join and extend financial access to unserved communities. The challenge for such a network is ensuring participants record transactions correctly. With a low barrier to entry, users won’t trust providers to police themselves. With worldwide reach, providers won’t all trust a single entity to operate the network. A compelling alternative is a decentralized system in which participants together ensure integrity by agreeing on the validity of one another’s transactions. Such agreement hinges on a mechanism for worldwide consensus."

However, blockchain-enabled Point of Sale, PoS terminal is first of the its kind. So, on a low latency network, transaction can be done in rural communities at a fraction of what has been, hitherto, paid on traditional payment network.

Here is a link to the official whitepaper of Stellar Blockchain: https://www.stellar.org/papers/stellar-consensus-protocol

And another here: https://www.scs.stanford.edu/~dm/home/papers/lokhava:stellar-core.pdf

Our project objective is to create wealth for smallholder farmers, provide inclusive financial services for the people of rural communities while creating decent and value-adding employment for youths working as aggregators. To achieve our objective, we have had to engage actors in agriculture value chain and creditors.

Our project is currently at pilot stage. We have initial set of 5 member aggregators that have enlisted 120 farmers and profiled by capturing their biodata and register the cluster of farmers as a cooperative. We have also signed up a farm mechanization service provider. About 40% of the enlisted farmers are having a bank account for the first time. This is the immediate impact of our project. 

We have currently enlisted 120 smallholder farmers and 8 retailers for our pilot phase in Ibwa I, Gwagwalada, FCT Abuja, Nigeria. We intend to achieve minimum of 1000 farmers in every rural communities. We have profiled a total of 63 additional rural communities to extend our service. In the next five years, we have a total of 63,000 smallholder farmers and about 500 retailers enlisted on our project.

The goal for the next one year is to complete the development of all the technology we are deploying including a mobile app and blockchain-enabled PoS which will enable us sign up more aggregator to enlist for smallholder farmers in more rural communities. Thereafter, we will be able to extend our services in more rural communities in around Nigeria and subsequently, outside Nigeria.

We are currently self funded and lack enough cash to hire more programmers and electronic design and development engineers. We have projected to need a total of 11 software and electronics design and development engineers in the next one year and 34 on the five years.

We intend to raise grant capital whenever possible.

We currently have a team of five members consisting of two engineers.

We are highly committed team of engineers and business developers. We have deep understanding of challenges faced by smallholder farmers haven also invested in agriculture for the past three years. Our commercial agriculture experience with 42 years of combine experience of our founders in IT, Engineering, Business Development and Finance provide an enormous advantage.

We currently have official partnership with NIRSAL(www.nirsal.com) to provide a credit of about $88k for the initial set of our 120 farmers to cultivate 252Ha farmland for planting Sesame in August, 2020. We also have an official partnership with Ajogbe Group(www.ajogbe.com), an off-taker and food processor.

Cropa business model is for community-based high impact and sustainable food/cash crop production strategy through smallholder farmers and Agriculture Extension Workers known as Aggregators. To achieve Its overall objectives, CROPA provides, at no cost to the smallholder farmers, and through the supervision by aggregators, a continuous support in form of credit/grant, farm inputs, mechanization services, training on the best agronomic practices, improved processing capacity and access to market at best prices. For 50% of the yield, farmers' contribution is optionally farm maintenance and harvest labor cost. If the farmer has limited or no commercial agriculture experience and perhaps, not having a farmland, our Economic of Production budget still suffice. So, land lease or rent, maintenance and harvest operation are done under strict supervision and guidelines by aggregators. Land preparation, planting and pre-emmergence herbicides application are fully mechanized activities. Though, CROPA app is primarily designed to aid aggregators digitize farmers’ data in order to access financing, improved seed, quality agrochemicals, fertilizers and
reliable mechanization services; Aggregator will also aggressively drive the adoption of modern agriculture technologies and practices by the use of CROPA by farmers.

We will continuously seek various sources finance to support small holder farmers. Here in this link is the summary of our financial model and how we intend : https://go.aws/37G5b0l