CGAP and Harvesting Explore Use of Alternative Data in Credit Scores

Harvesting Partner and CGAP logos

CGAP and Harvesting Partner to Develop Agricultural Credit Scores Using Alternative Data

WASHINGTON, D.C., January 23, 2018 – The Consultative Group to Assist the Poor (CGAP) and Harvesting Inc., a California-based financial technology firm, are partnering to develop a new credit scoring mechanism for smallholder farmers in Uganda to improve their access to loans.

Smallholder families are the single largest group by livelihood in extreme poverty, living on less than $2 a day. Without access to credit to buy inputs such as seeds and fertilizer, they have limited ability to improve their output and raise their incomes. An estimated 475 million farmers worldwide live on smallholdings of less than 2 hectares, and they are central to efforts in financial inclusion.

“Smallholders have limited access to timely credit products for agricultural inputs, which affects their crop yields and productivity. CGAP is exploring how to use alternative data to address this challenge and enable financial service providers to deliver financial services at scale,” said CGAP CEO Greta Bull.

In Uganda, only 10 percent of smallholders have an account with a formal financial institution, and access to credit remains low. Many financial service providers see smallholders as risky partly because they lack the data or other sources of information needed to identify high potential customers and their borrowing capacity. As a result, financial institutions are unable to make lending decisions at scale and hence much-needed credit is restricted. The CGAP National Survey of Smallholder Households in Uganda found that only 7 percent of smallholders have access to some sort of credit that allows them to pay for their inputs later.

Under the CGAP partnership, Harvesting will support Pride, Uganda’s largest microfinance institution, to leverage traditional and alternative data sources to develop a credit scoring mechanism. The aim is to improve Pride’s decision-making capability, lower the cost of reaching smallholders and drive scale. Harvesting will analyse the existing lending data from Pride and study which alternative data sources, such as value-chain transactions and MNO records, could improve the predictive power of lending decisions. Based on the results of the data analytics, Harvesting will build a credit scoring model, and Harvesting and Pride will develop a pilot to make new loans to Ugandan coffee farmers using the new algorithms.

“To understand the financial needs of farmers you need to understand their cash flows, and to do this you need to understand their agricultural activities and what is happening on the farm. We are very excited that we will able to leverage our Agricultural Intelligence Engine to enable lending for farmers in Uganda” said Ruchit Garg, Founder and CEO of Harvesting Inc.

Ultimately, by leveraging enterprise and other transactional payment data, this project is expected to enable cash-constrained smallholders to buy much-needed inputs at the start of every season.


About CGAP

CGAP (Consultative Group to Assist the Poor) is a global partnership of more than 30 leading development organizations that seek to advance financial inclusion. CGAP’s mission is to improve the lives of poor people by spurring innovation and advancing knowledge and solutions that promote responsible and inclusive financial markets. Housed at the World Bank, CGAP combines a pragmatic approach to responsible market development with an evidence-based solutions that increase access to and usage of financial services the poor need to improve their lives.

About Harvesting

Harvesting Inc is a fintech social enterprise that is re-imagining the way that financial institutions make and manage loans to farmers. Based in Silicon Valley, California, and working across five continents, Harvesting has built an Agricultural Intelligence Engine which leverages remote sensing satellite data, historical yields, transaction data and machine learning techniques to provide a new way of analysing the creditworthiness and financial behaviours of farmers. Harvesting was recently named Best Fintech for Financial Inclusion by the Dutch Development Bank at African Microfinance Week.