VBank Boosts Alternative Credit Evaluation Scoring System With $100,000 For Qualified Farmers
VFD Microfinance Bank (V Bank) confirms 100,000 USD for smallholder farmers' alternative financing through the Zowasel Alternative Credit Evaluation Scoring System (ACESS), a comprehensive risk assessment model and ethical loan calculator.
The ethical credit scoring methodology utilizes AI-powered, predictive dynamic system (PDS) and human-powered dynamic variable system (DVS) to determine credit risk and bridges the GAP between financial institutions and farmers interfacing organizations, startups, co-operatives, and SMEs to unlock alternative financing across the agricultural value chains.
The software enables farmers’ interfacing organizations to digitize farmers’ data and automate various value chain processes, encompassing cultivation practices, farm details, farmers’ profiles, behavioural biometrics, harvest, income, and sales records, as data points.
According to the Food and Agriculture Organization (FAO), there are approximately 600 million smallholder farmers globally. Despite their essential role in providing affordable and nutritious food to communities, smallholder farmers often encounter difficulties accessing financial credit due to limited credit history and lack of collateral. A study conducted by World Development Sustainability reveals that many smallholder farmers lack formal credit histories required by financial institutions. This creates significant barriers to accessing financial services, hindering their ability to enhance their agricultural productivity.
Commenting on the bank’s commitment to the initiative, Gbenga Omolokun, the Managing Director of VFD Microfinance Bank, said: ‘’With a deep understanding of the pivotal role of smallholders in Nigeria’s economy, the partnership seeks to democratize access to bottom-of-the-pyramid financing, thereby empowering smallholder farmers, agricultural cooperatives, and SMEs by providing them with enhanced access to finance resources.’’
The VBank is known for its alternative digital banking solutions supporting individuals and fueling the growth of businesses in Nigeria. The Bank is part of the VFD Group, a proprietary investment company with a diverse portfolio that includes banking, non-banking financial institutions, market infrastructure, technology, real estate and hospitality, media, and entertainment, creating innovative products and solutions for the African market.
The technology calculates the farmers' working capital to determine repayment capacity and recommends loan limits through the computerization of cultivation loan requirements such as farm size, potential crop yield, projected harvest, crop types, market forecast, historic sales data, and agricultural activities. The system then assigns credit scores and grades to potential borrowers, utilizing a weighted attribute score calculation from all data points.
Furthermore, ACESS advises on optimal maturity and repayment schedules for each crop or activity. This enables immediate responses to market changes or events.
Presently, ACESS offers tailored loan options catering to smallholder farmers and merchants. The options include Farm Input Loans, Mechanization Loans, Bundle Services, and Trade Finance. Borrowers with favourable credit scores (segments “A,” “B,” and “C”) gain access to loans for purchasing farm inputs or mechanization services through the user-friendly Marketplace platform or nearby Crop Centers. These loans can be utilized for mechanization services, farm inputs, or a combination thereof, aligning with farmers’ preferences. Specialized loan choices are also extended to merchants engaged in commodity aggregation and delivery.
Zowasel’s Director of Partnerships, Mr. Anietie Bassey, expressed enthusiasm for the partnership, emphasizing VFD’s steadfast support and belief in the Zowasel project. The collaboration aims to construct a robust alternative scoring system by harnessing extensive data from Zowasel’s Marketplace, remote Crop Centers, and a vast network of smallholder farmers, cooperatives, and extension officers across Nigerian farming communities.
The ACESS aims to alleviate challenges faced by smallholders in securing formal credit and affordable financial services. By leveraging cutting-edge technologies, including AI-driven algorithms and data analytics, ACESS streamlines the credit evaluation process, enabling financial institutions to make well-informed lending decisions.
For media inquiries and additional information, please contact:
Media: work@zowasel.com
Partnerships: partners@zowasel.com
