Digital savings
A new mobile app is enabling people across Africa to save money to invest in agricultural production and build up interest on their savings, whilst providing loans for smallholder farmers.
In Nigeria, 3,000 smallholder farmers have been provided with loans through a new financial e-wallet app, known as Extramile Africa. Investments are used by the farmers to pay for leasing equipment, inputs or investing in growing their farming activities. The app developed by fin-tech start-up – also called Extramile Africa – is a first-of-its-kind innovation in Nigeria to use blockchain technology, which enables the platform to securely store smallholder financial and transactional information
Over 25,000 smallholder farmers have registered with the platform since its launch in 2018. In order to provide loans to farmers, Extramile uses GIS, geographical data analytics and other data-oriented technologies to capture useful details such as farm size and location. The technologies also help to provide a detailed examination and assessment of a farmer’s activities and credit history to assess their creditworthiness.
To enable farmers without smartphones to use the app, the company has created electronic identity cards linked to the farmers’ e-wallet accounts. The cards have a unique number, and can be used by smallholders to access the money in their accounts to carry out transactions with merchants in rural areas.
Also registered with the e-wallet are 1,650 individuals in Nigeria and across Africa, who provide the investment available for funding farmer loans on the platform. Extramile provides a ‘save to invest’ feature to enable investors to reserve a minimum of US$2.5 (€2.26) on which to build upon by adding money each month until they reach a US$50 (€45.15) investment bench mark. This US$50 investment then automatically moves from the platform’s ‘savings’ wallet to the ‘investment’ wallet, which can then be used towards funding loans. These investors benefit by building up interest on their savings, which would not be possible through regular banks without providing collateral or a guarantor. “Using the app, you can access your money in the mobile wallet and get a 25% return on investment,” says Bankole Olalekan, CEO at Extramile, who explains that the returns can be withdrawn at any time, or reinvested into different production activities.
Since its launch, Extramile has gathered significant support, winning a grant of US$2million within its first few months through EFInA, a financial development organisation in Nigeria, and with support from DFID and the Bill and Melinda Gates Foundation. Most recently, in 2019, the Tony Elumelu Foundation provided the company with a grant of US$5,000 (€4,550) to scale up the business. “In the next 5 years, Extramile Africa hopes to have empowered 5 million farmers across Africa and to bring structure to the informal market,” says Olalekan.
