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Traction and reversed gains: Financing smallholder dairy farmers through a tech - based real economy innovator.
May 27th, 2025
In the ever-evolving landscape of agricultural finance targeted at smallholder farmers, and especially women and MSEs, ag-techs/fin-techs stand as a testament to resilience and innovation. A previous blog highlighted the complexities in delivering commercially viable and value-adding financial solutions for small holder dairy farmers.
This is a sequel delving deeper into specific experience with Myfugo, shedding light on the progress and performance since the onset of implementation. It draws on available data, examines emerging challenges at varied intersections with other actors, and remarks on insights picked from the journey.
Tech-based real economy innovators continue to play a pivotal role in advancing financial inclusion for underserved populations by challenging business as usual models with innovations at various nodes of the financial services value chain. Approaches that blend human and digital interactions offer new value propositions- this may include flexible product and product features, and more socio-culturally aligned engagements, due diligence and appraisal processes- that more appropriately address challenges faced by small holder farmers, especially those faced by women. A key enabler of such transformation is the creation of digital trails through collaborative data sharing amongst varied parties in areas such as digital identity, verifications, and payments. This foundational infrastructure has potential to catalyse a host of financial services. In the case of Myfugo, mobile based banking, an interactive digital interface, digital record-keeping, leverage of social trust networks, has been harnessed in a bid to exemplify possibilities in support of smallholder farmers. However, fragmented and uncoordinated interdependencies amongst stakeholders, constrains the full potential of such innovations, and a more directed and collaborative ecosystem is essential for sustainable and impactful outcomes.
An analysis of loan disbursements in 2024 revealed a fourteen-fold growth in number and value over the year but with noted fluctuations on non-performing loans (NPLs). Target products related to the dairy value chain include dairy cows, chaff cutters, cargo tuktuks for transport of agricultural-produce, construction of cow sheds, irrigation equipment and climate smart technologies such as solar irrigation equipment. Over 50% of these being to women, reinforcing the strategic focus, for the varied loan products
Below are select visualisations based on data in 2024 by gender, providing a clear picture of how the financial solutions have been distributed among different asset types and gender, highlighting areas of success and opportunities for improvement.
Figure 1: Loan uptake by gender
Figure 2: Loan types by gender
Figure 3: Loan size by gender and type
This trajectory, while promising, masks a myriad of hurdles that Myfugo, as many other real economy tech-based innovators must navigate.
Myfugo Innovations Ltd has had to invest time to deliberately build and negotiate key partnerships and collaborations to deliver a comprehensive set of solutions. Partnerships and collaborations that offer relevant suite of services, bridging gaps in financial literacy, enhancing efficiency to work with fragmented value chains and vastly dispersed smallholder farmers, and averting/reducing risks in dealing with a population segment without matching collateral and credit history against which to base lending and pricing of loans. These include partnerships with financial institutions, agricultural extension services, and technology providers, development, debt and equity finance partners, creating a robust support network for the farmers.
Inevitable disruptions in partnerships, alongside changes in the funding landscape has compelled Myfugo to adapt to resultant challenges. Myfugo continues to make strategic adjustments and consider active fundraising to ensure business continuity, sustainability and growth of its initiatives. Myyfugo continues to consolidate valuable insights on the role of diversity in livelihood strategies amongst smallholder farmers. A journey marked by mixed results and that continues to develop. Collaboration, innovation, and adaptability among a wide range of actor can drive meaningful, lasting impact in transforming agricultural finance and rural livelihoods.
