Emata

We are on a mission to provide affordable digital loans to farmers in Africa. Agriculture is the cornerstone of African economies (22% of GDP), yet receives only a fraction of all lending (4%).

Rather than going to each farmer individually, we partner with the agricultural middleman (cooperatives, aggregators, etc.) to reach farmers at scale. Our model can be broken down into three steps.

First, we provide our software to agricultural middleman to digitise their operations. We provide this for free in exchange for access to their data and farmers. 

Second, we convert data into credit limits tailored to each farmer using our alternative credit scoring algorithms. 

Third, we provide digital loans that we disburse instantly via mobile money using our microfinance institution license.

Thanks to our loans, farmers can finally make productive investments in their farms. As a result, rural families can achieve prosperity and unlock Africa’s vast agricultural potential.

We are solving a big problem. According to Dahlberg data, there are 450mio smallholder farmers financially underserved globally that collectively represent a $450bn financing need. This problem is particularly poised in Africa with 250mio smallholder farmers with a collective financing need of $240bn.

Banks essentially do not lend to smallholder farmers. At the root of this problem is that many banks in underdeveloped countries struggle with manual processes, high operating costs, and lack the innovation for effective last mile distribution in rural areas. In fact, the cost-to-asset ratio of African banks is more than twice the global average, based on McKinsey data. This is particularly bad for farmers, who often need small and quick loans to be ready for the next season. In practice, farmers have no other option than to borrow from informal moneylenders that charge exorbitant rates up to 20% p.m. 

At such high rates, investments in productive farming assets do not make economic sense. As a result of this, farmers struggle to achieve prosperity and Africa’s vast agricultural potential remains underdeveloped.

We provide affordable digital loans to farmers. We do this by combining our financial technology with a model in which we partner with ‘agricultural middleman’ like cooperatives, aggregators, and off-takers. Our process can be broken down into three mutually reinforcing steps.   

 First, we provide our software to agricultural middleman to help them to digitise and better run their operations. We provide this for free in exchange for access to their data and permission to lend to their farmers. The latter creates strong synergies as it allows our partners to reward loyalty of their farmers with loans at lower rates then they can get elsewhere.

Second, we convert the data into credit limits that are tailored to each individual farmer. We use our alternative credit scoring algorithms that leverage machine learning and clustering analysis.   

Lastly, we provide digital loans that farmers request using our user-friendly whatsapp bot. Whatsapp is very popular in Africa so this eliminates the hurdle to install a separate app. We disburse our loans instantly via mobile money. We hold a microfinance license and fund our loans using affordable debt from impact funds.

We serve farmers which in Africa are among the most vulnerable and economically marginalized groups in Africa. Over 90% of our farmers earn less than 5 $/day and 60% less than 2 $/day. One of the main reasons why farmer income is low is their inability to access financing. Agricultural financing is not available or too expensive to make economically sensible investments.

Our solution provides them with access to affordable loans so they can finally make productive investments in their farms and achieve prosperity. We lend to the full range of farmers with loans starting at $25. This may sound insignificant, but in rural areas this makes a big differences in paying school fees, buying seeds, and invest in a better life.

We have intensively engaged with our users since the start of our journey in 2017. Drawing on countless user research, co-design sessions, and client feedback we e.g. made our technologies offline first, very user-friendly, and allow for temporary pauses in repayments.

Emata is trying to ensure the financial inclusion of 80% of Africa's employed population: farmers. Africa's small-holder farmers are among the most vulnerable and economically marginalized groups in the world. Using technology the farmers are already used to, like USSD and WhatsApp, we ensure that digital financial inclusion includes everyone. We have designed the solution according to realities on the ground, enabling offline updates when needed due to bad connectivity in rural areas. Our Impact Team works on the ground, fluent in the local languages, ensure that our farmers understand how they can use Emata's services to increase their prosperity.

We are in our pilot stage. Our product is actively used by one community: dairy cooperatives and dairy farmers. We signed up eight dairy cooperatives in the Central region of Uganda with an aggregate 2.000 farmers. We have paying customer and expect to give out our 100th loan in June 2021. We have good traction and are in the process of scaling up to serve 35 dairy cooperatives with an aggregate of 10.000 farmers before the end of 2021. We also plan to launch our product for additional communities in 2H-2021 by expanding into crop farmer financing. We raised less than USD 2mio in institutional capital. 

As a tech company, we are proud of how we leverage complex software to serve in rural areas for clients who normally do not get to reap the benefits of the digital era. We leverage data science for credit scoring, have a first-of-its-kind WhatsApp bot for loan applications, and our UX is designed for rural users with an offline-first approach. However, our most significant innovation is merging technology with physical touchpoints to deliver services in a remote, low-tech setting effectively.  

Our technology ensures the efficiency needed to deliver loans as small as $25 and still make a profit. We achieve this by automating the entire loan process from credit scoring to loan disbursement. We build our physical touchpoints through partnerships; we sign cooperatives, aggregators, and the likes. Our partners collect KYC and data because most African farmers do not have smartphones. They perform these tasks because we solve some of their biggest problems. We provide our partners with software to digitise and simplify their operations. We provide this software for free in exchange for permission to use their data and lend to their farmers. We also solve their issue of side-selling. Side-selling happens when farmers need a loan and sell their produce to a moneylender in exchange for a loan rather than to their cooperative or aggregator. Emata rewards loyalty by giving farmers loans instead.

This model is a novelty in agriculture and thus allows us to make a decisive impact by providing affordable financing to millions of farmers.

Our solution is used by eight dairy cooperatives that collectively serve over 2.000 farmers per May 2021. We are growing rapidly and on track to reach 35 dairy cooperatives with an aggregate of 10.000 farmers by Dec-2021. On top of this, we plan to finance crop farming in 2H-2021 in partnership with a large aggregator that works with 50.000 farmers in Uganda.

We are solving a pan-African problem. As a result, we plan for and design our solution to reach millions and millions of farmers in the coming years. In our home market Uganda, we estimate our model can reach about 1 million farmers over five years across dairy, coffee, and other crops.

Realistically, we will start our expansion into Africa in 2023, starting with neighbouring countries in East Africa where crops and the organization of agricultural value chains are similar. We plan to roll out Emata in three to four other East African countries to reach an additional two to three million farmers in dairy, oilseeds, coffee, and grain crops.

We create and measure our impact via several metrics.

First, we track how many farmers we onboard, how many farmers we can make lendable, and how many we provide with our affordable loans. We analyse the averages, median and range of our credit limits and loan amounts. This ensures we steer towards helping all farmers, not just the large ones that arguably also have access to other sources of financing like banks. This contributes to the 10th Sustainable Development Goal: Reduced Inequality.

To give an example, we often provide loans that are as small as $25. Even though we earn only a few dollars on such a loan, giving these to farmers make us very happy. For us, it might seem like a small loan. For financially excluded smallholder farmers, it allows them to pay for medical emergencies, better inputs and set them on a path to a better life.

Second, we measure productivity increases. How much is an individual farmer producing, how much produce are our partners collecting, and how are our loans and other inventions impacting this. This contributes to the 2nd Sustainable Development Goal: Zero hunger.

Third, we track how we improve livelihood by calculating income and how this develops after we provided a loan. This contributes to the 8th Sustainable Development Goal: Decent Work and Economic Growth. 

Full-time: 12

Part-time: 4

Our core team is an excellent combination of international expertise and deep knowledge of the local market. The majority of our team worked together at Laboremus Uganda to design and develop financing technology for East Africa banks.

While digitising banks, we were frustrated with the lack of innovative drive to service rural areas. We realised that advancements in technology and data science could solve one of Africa's biggest blockers to development: lack of financing in rural areas. 

Our CEO (Bram) worked for 7 years in finance with large institutions like UBS and ING, including 4 years of agricultural financing. Before Emata, he was the MD for a Ugandan fintech.

Our CDSO (Dario) has 13 years of experience in Data Science, incl. leading roles in Accenture and Deloitte, and published research on Quantitative Risk Analytics. He leads a data scientist and data engineer to design and run our alternative credit scoring algorithms.

Our CTO (Davis) has 10 years of experience in software, including 6 years in financial technology. He's Ugandan and leads an engineering team of five software developers that combine front-end, back-end, DevOps, and mobile.

Our Product Manager (Lillian) has 6 years of experience in developing software and a keen talent for user research, design, and UX. She's supported by a scrum master to ensure smooth technical execution. 

Lastly, our impact team consists of two impact officers that onboard and support our cooperatives and farmers on the ground.

Except for our CDSO, our entire team is based in Kampala, Uganda.

Our approach is to be intentional about building a diverse, equitable and inclusive workplace in general. All employees, from junior to senior, receive mentorship and support for continuous career development. We are working towards a 50/50 gender balance in both our leadership team and the company in general. We aim to achieve this, and further inclusion, by striving for a company culture where critical feedback and suggestions are encouraged and where all employees feel like they can and should contribute. We ensure that more reserved employees are recognized as much as the extroverted ones and promote knowledge-sharing to boost self-confidence as much as the knowledge base. 

As a result, identifying leadership talent becomes easier as people can – and do – step up to the challenge. Our entire leadership team, except for our CDSO, comes from the company that gave birth to Emata: Laboremus Uganda. Once in a leadership position, we employ both praise and accountability to encourage responsible leadership.

Our 5-person leadership team includes 3 people of colour, 2 nationalities, and 1 woman.

Finally, our solutions are created using human-centred design, which naturally involves a close working relationship with the end-users: the staff of the aggregators and cooperatives, and the farmers.

Referring to barriers that may slow down our progress towards our goal of providing loans to millions and millions of farmers, we believe the MIT Solve can support us in many areas.  

First and foremost, MIT can provide us access to talent and mentors and exchange experiences with fellow Solvers. MIT is unrivalled in developing talent that is at and we would love to engage with MIT staff, mentors and solvers to further strengthen our capacity. We believe this community builds life-long relations that are invaluable as we continue to grow.

Second, MIT Solve will further develop our investor readiness and provides a platform to present us to potential funders - as evidenced by the impressive track record of follow-on funding of MIT Solvers. Among MIT's Solve Members are many potential funders such as the Bill & Melinda Gates Foundation, Leap ventures, KSF Impact, and many others 

Thirdly, we do not expect MIT legal and regulatory experts to help us convince regulators when we apply for additional regulatory licenses to expand into other countries. However, support from strong institutions like MIT and other Solve Members give credible signals towards regulators to support rather than obstruct financial innovators like us. 

• Human Capital (e.g. sourcing talent, board development, etc.): we are always looking to access exceptional talent. We believe MT Solve is an exceptionally place to widen our reach to talent and find mentors in the areas of Product Management and User Experience, learn how to compose a board and meet potential board members.  

• Technology (e.g. software or hardware, web development/design, data analysis, etc.): we believe there is a strong fit because our company and MIT has a strong technology and data science engineering mindset. We are always looking for opportunities for our talented team to further develop themselves through training, self-study materials and access to exceptional mentors in their field.   

• Financial (e.g. improving accounting practices, pitching to investors): MIT Solve is an excellent opportunity to further develop our investor readiness. There is no better way to do this than by interacting with critical expert and peers as the one MIT Solve presents. It is also a great platform to present us to potential funders and follow up with potential funders, as evidenced by the impressive track record of follow-on funding of MIT Solvers. 

Potential partners could include organizations, MIT faculty or initiatives, or Solve Members. If you have specific names in mind, please list them. How can they help advance your solution? 

We are keen to engage with MIT faculty and members in areas of software engineering, product development and data science like the MIT Statistics and Data Science centre to help optimize and improve our existing models and the MIT D-lab to help us in product design and development. 

We also look forward to engaging with MIT Solve Members who include many potential partners for collaboration in terms of funding and knowledge. These include the Bill & Melinda Gates Foundation, Leap ventures, KSF Impact, Foundation for Food and Agricultural Research, and many others. 

We provide affordable digital loans to farmers in Africa. Farmers are among the most vulnerable and economically marginalized groups with 90% earning less than 5 $/day. One of the main reasons why farmer income is low is their limited access to financing. Only the largest farmers can access bank loans. Most farmers fall short of documentation, collateral and minimum loan. This creates a financing need of USD 450bn globally and 240bn in Africa.

We solve this problem by providing affordable digital loans to farmers. We achieve this by combining our financial technology with physical touchpoints needed to effectively deliver services in rural Africa. Our alternative credit scoring and loan technology ensures our process is so efficient we can deliver a loan as small as $25 and still make a profit. We get physical touchpoints by partnering with the "agricultural middleman" like cooperatives and aggregators, solving challenges around last-mile distribution and data collection.

Male or female, small or large – we provide loans to any farmer that delivers crops reliably. Our loans are as small as USD 25 to over USD 1.000. This may sound insignificant but in African rural areas, this makes a big difference in paying school fees, buying quality inputs, and investing in a better life.  

Our team will leverage The HP Prize for Advancing Digital Equity to enrich our credit scoring algorithms for additional agricultural value chains, accelerate our rollout to more farmers, and design a specific product to include more female farmers.

Data Science and Machine Learning are key enablers to achieve our financial inclusion mission. They allow us to price and manage credit risk where loan underwriting models of conventional banks are unsuitable. By automating the entire credit risk process, we deliver efficiencies that allow us to service even the smallest smallholder farmers, reduce our interest rates and offer instant feedback rather than months of uncertainty, countless forms, and cumbersome visits to faraway bank branches.

Conventional credit risk methodologies rely on substantial amounts of data in order to be effective. The availability and quality of data is a challenge in rural Africa. Most banks compensate this via many physical visits and countless forms. The visits are not possible in rural settings due to the distance covered and farmers often do not have information such as audited accounts, land title documents, etc.

We establish behavioural profiles leveraging machine learning and match farmers to established behavioural profiles. Our credit risk analysis is grounded in option pricing theory and relies on ensemble estimators to evaluate the eligible loan amounts for different repayment horizons.

A credit analyst supervises the output of our algorithms, especially when new farmers are onboarded. We are currently developing a prescriptive model that learns from decisions made by the credit analyst and set parameters to trigger the need for human supervision of potentially tricky cases. This sets us on our path to full automation that allows us to scale our portfolio of 2.000 farmers to millions of farmers.

We provide affordable digital loans to farmers in Africa. The unmet need for farmer financing is a USD 450bn globally of which USD 240bn in Africa. Banks do not lend to farmers because of a mismatch between how bank’s manual processes, stringent document requirements and slow response time and what farmers need.

We are disrupting the market for farmer financing by providing affordable digital loans to farmers. Rather than going to each farmer individually – which would be too costly – we partner with ‘agricultural middleman’ like cooperatives and aggregators. 

Our solution consists of three steps. First, we provide software to the agricultural middleman to help them digitise and better run their operations by registering farmers, crop deliveries and calculating payments. We provide our software for free in exchange for permission to use their data and lend to their farmers. Second, we convert the data we collect into credit limits tailored to each individual farmer using our alternative credit scoring algorithms. Third, we provide digital loans to farmers that we disburse via mobile money, i.e. bank accounts linked to a mobile phone number.

Our model creates synergies between partners, farmers and us. Our farmers get access to affordable, reliable and instant loans they can’t get anywhere else. Our loans strengthen the loyalty between them and their farmers and our partners get great software for free. As such, we create additional value beyond loans by nurturing accounting and digitization skills that help people be ready for the digital age.