Zowasel Introduces Alternative Credit Evaluation Scoring System To Bridge The Gap Between Financial Institutions & Smallholder Farmers
Zowasel, an agricultural technology company dedicated to enhancing farmers’ productivity, sustainability, and profitability through technology and data science, has officially launched the Alternative Credit Scoring System (ACESS). ACESS is a comprehensive risk assessment model and an alternative credit measurement tool designed to revolutionize the way creditworthiness is evaluated.
The proprietary ethical credit scoring technology utilizes AI-powered, predictive dynamic system (PDS) and human-powered dynamic variable system (DVS) to determine agricultural credit risk. Its primary goal is to bridge the gap between financial institutions and organizations that interface with farmers, including startups, cooperatives, and SMEs. This innovative approach unlocks alternative financing opportunities across agricultural value chains.
The software development was supported by the Japan International Cooperation Agency (JICA), the Office for Nigerian Digital Innovation (ONDI), and Mitsubishi Corporation, Nigeria to enable farmer 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.
By transforming these data into actionable insights, ACESS provides these data to financial institutions with little or no agricultural knowledge to access farmers’ data conveniently, conduct creditworthiness checks, and verify KYC to make quick lending decisions in a low-risk, cost-effective, and efficient manner.
The technology’s core functionality involves calculating farmers’ working capital to determine their repayment capacity and recommending loan limits. This is achieved through the computerization of cultivation loan requirements, including factors such as farm size, potential crop yield, projected harvest, crop types, market forecasts, historic sales data, and agricultural activities.
ACESS assigns credit scores and grades to potential borrowers by calculating all available data points using a weighted attribute score calculation. In essence, ACESS empowers financial institutions to grow their assets while effectively managing risk, attracting and retaining a more diverse pool of profitable agricultural borrowers, and promoting financial inclusion in remote communities.
What sets ACESS apart is its utilization of high-frequency and recent farmers’ attributes to make more accurate predictions regarding a borrower’s ability and willingness to repay a debt. Notably, the model operates using anonymized credit bureau data, eliminating the need to transfer personally identifiable information or proprietary data sets from institutions to ACESS.
Here’s how it works:
1. Farmers’ interfacing organizations digitize farmers’ data and automate their value chain processes on the Zowasel platform.
2. Farmers interfacing organizations run credit scores and apply for loans on behalf of qualified farmers.
3. Zowasel anonymizes all data points, conducts automated computerization, generates and returns credit scores and grades, and provides information on farmers’ working capital requirements while recommending loan limits.
4. Financial institutions can then access individual farmers’ data with ease, conduct creditworthiness checks, and verify KYC details to make prompt lending decisions, all in a low-risk, cost-effective, and efficient manner.
5. Approved alternative loans can fund the acquisition of agro-inputs, mechanization equipment, or bundle services based on farmers’ specific requirements.
In a recent pilot, Zowasel collaborated with VFD Microfinance Bank (VBank) to provide qualified smallholder farmers with good credit scores access to $100,000 in alternative agricultural loans. Presently, ACESS offers customized loan options tailored to the needs of smallholder farmers and their interfacing organizations. These options include Agro-Input Loans, Mechanization Loans, Bundle Services, and Harvest Finance.
Farmers falling within the favourable credit score segments “A,” “B,” and “C” can access loans for purchasing farm inputs or mechanization services through the Zowasel Marketplace platform, nearby Crop Centers, or licensed agents.
“The driving force behind ACESS is to increase economic opportunities for hardworking smallholder farmers who would otherwise be unfairly overlooked and underbanked,” said Jerry OCHE, Founder and CEO at Zowasel. “Now that the model has a proven track record of performance over the last season, I am thrilled to share ACESS with more financial leaders looking to implement a next-generation alternative credit scoring solution.”
While traditional credit reports remain valuable indicators of credit history and financial reliability, ACESS utilizes alternative credit data throughout the agricultural value chain to responsibly expand farmers’ access to credit opportunities and contribute to a more inclusive economy.
ACESS is open to farmers’ interfacing organizations, startups, cooperatives, and SMEs interested in unlocking alternative financing options across agricultural value chains. The software will be available through API to financial institutions and farmers’ interfacing organizations by December 2023.
For media inquiries and additional information, please contact:
Media: work@zowasel.com
Partnerships: partners@zowasel.com
