At nearly USD 150 billion, the gap in smallholder financing remains wide, and financial institutions by and large continue to find smallholder farmers a difficult and costly segment to serve. The result is that far too many smallholders remain without access to the finance – particularly credit – they need to obtain critical inputs, make long-term investments, increase their productivity and ultimately improve their income and livelihoods. The narrative typically goes that the business case to serve smallholders is limited, driven by factors including a poor understanding of their needs and the economics of their farming activities, high costs to serve, and small transaction size and volume.
There are ways to transform the underlying economics to serve farmers profitably and at scale – and that data and technology could be fundamental drivers of this shift. There is already a lot of buzz about whether data analytics will be a game changer. Innovation has been taking place for several years, so this learning brief tackles the question “Is data analytics the game changer we need?” As this brief explains, early signs are good, but we are not there yet.