Agricultural lending and other financial services ranging from saving, insurance, and money transfer are faint among most farming communities. Credit and Insurance service providers find it hard to trust smallholder farmers, leaving them [farmers] unable to upgrade and produce for commercial purposes.

The risks in lending the farming community can be attributed to a number of factors mainly the:
→ lack of collateral;
→ high transaction cost and costs associated with locating members in a wide geographic spread for small credits;
→ production that is entirely characterized by rain fed agriculture and susceptible to adverse weather; and
→ seasonal price fluctuation that downplays profitability of smallholder farmers.

To enable farmers, get credit support and benefit from other financial services from the financial institutions, there is need for innovative ways of assessing a farmer who relies on his farm as a source of income. This farm is usually not considered as a financial asset that would be leveraged as collateral to get a loan.

Progress Out of Poverty credit scoring (POP).
POP credit score is a model aXiom Zorn developed and uses as an alternative assessment of the un-banked farming community for financial inclusion to support their productivity needs. The needs such as inputs, equipment, commercially viable labor etc. require finances that the communities are unable to raise.

Our POP Credit Score not only reduces on the COST AND RISK associated with agricultural credit and insurance services but also supports the decision making processes of the service providers.

Some of the areas of assessing the farmers include:
→ Verifying the borrower’s (farmer’s) identity (“Know Your Customer”).
→ Understanding their productivity, the respective needs that require credit support and constraints of production.
→ Knowing the resources at their disposal including land, labor and others that they exploit for their productivity.
→ Understanding how the borrower will earn money through their agricultural production to pay back the loan.
→ Mitigating loss if the borrower is unable to earn money as planned.
→ The location of the farmer and his farm.

At aXiom Zorn, we offer farmer profiling services that not only aid in identifying various farmer attributes as desired by our clients but also provide supportive information regarding the farmers areas of operation, for example soil mapping.

Our Offering at aXiom Zorn for financial inclusion.
aXiom Zorn provides the following solutions to financial and insurance service providers:
A pool of clients.
aXiom Zorn will leverage their existing data base to provide a pool of clients for agricultural credit and insurance services.

Assessment of the viability of the clients.
aXiom Zorn continuously builds and updates profiles on all the clients in their data base including GPS, Bio data, land tenure and land usage productivity and financial information.

Selection of clients that fit within the service provider’s portfolio.
aXiom Zorn has built a non-financial credit score called the PROGRESS OUT OF POVERTY (POP) Credit score that uses the data collected and brings percentage that will measure data points like land ownership, labor, education, production, size of land and other variables.

Mitigating risk of weather loss.
aXiom Zorn has a satellite weather index insurance loan to all farmers that will get access to credit as a requirement to enroll any of the clients from our database.

Verification of client location.
aXiom Zorn clients are all Geo-tagged. A GPS point is part of the profile of the farmer and land tenure and house hold ownership are part of the attributes that are collected.

Identification of a secondary guarantor.
aXiom Zorn data has got a next of kin who is also profiled and hence the client can be easily reached using the peer-to-peer search.

Reduction in overall cost of service.
By providing advisory services to the farmer, aXiom Zorn ensures that the farmer makes the right decisions on choice of crop for a particular location, timing of planting season, market and other extension related practices that ensure profitable farming.

Enhanced KYC.
Knowing your consumer is usually attributed to the amount of micro-data and update systems put in place to keep the data relevant and accurate. The core database boosts of over 160 data points gathered across individuals and households to offer a comprehensive profile of the unit. The micro-data collected constitutes potential customers for financial products being developed or for existing products in new markets. This data provides insights into patterns and consumer habits that are critical in making decisions

Credit score points.
The credit worthiness of these farmers and small-scale agribusinesses and the breadth of their risk is assessed based on non-financial assets and parameters customized in a local context.

Some of the parameters and assets of a digital farmer profile include:
→ Land and ownership;
→ Productivity of the farmer (agronomic data);
→ Household economic status;
→ Household labor;
→ Financial history, client reputation;
→ Social and economic belonging (Farmer association /SACCOs, VSLA);
→ Mobile money transactions and Airtime; and
→ Farmer social reputation; among others.

The parameters and non-financial assets are run through computer algorithms and the farmer’s liquidity, solvency, efficiency and repayment capacity determined as a percentile of their profile that we call POP credit score.

This offers an entry for financial institutions to know who to lend to with a great guarantee of repayment. The other benefits to the financial institution and avenues of spreading the risk include:
→ a huge client base to work with;
→ easily find their clients by leveraging the GPS locale;
→ reduction in cost and time for canvasing and looking for clients;
→ a Mandatory satellite crop insurance to further cover for the un-manageable agricultural risks; and
→ allows for design of other community services such training in financial literacy and many more.

Data collected from farmers is Geo-tagged, enriched with soil map overlays and basic fertilizer recommendation from Fertilizer Optimization Tools (FOT) which provides information on the farmer’s potential productivity.

Our last-mile agent network is at the disposal of our clients to accomplish any last-mile assignment that the financial institution may require.

Mobile transactions for Financial Inclusion.
With digital financial inclusion, aXiom Zorn believes that mobile transactions will build an electronic expenditure path and transaction history which will build an even better credit score for the beneficiaries. aXiom Zorn has working mobile numbers that are collected as data is collected and since we acquire consent from the beneficiaries for their phones to be used a medium payment then this would be the gate way for loan disbursement and repayment.

Mobile phone number (as an account identifier) will be used for:
→ loan disbursement; 
→ loan repayment; 
→ loan repayment reminders; 
→ bank SMS communication (blast SMS alerts); 
→ insurance premium payment deduction; and 
→ insurance payout to the beneficiary.

This will allow the financial institution to maintain an account of the beneficiary at a low cost and low risk as all the transaction are done on mobile and mobile banking is one of lowest cost models financial institutions can adopt.