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December 11, 2018

Juhudi Kilimo: Finance to farmers with a difference

nat and cows
nat and cows

AT the CIO 100 awards held last month in USA, one company stood out. It was not out of popularity or size but the work it does preceded its name.

Amid other 2013 winners, giant and renowned brands like AT&T, Boeing and FedEx Corp. among others; Kenya's Juhudi Kilimo was the only one from Africa and farmers who have benefitted from its service know why.

The CIO 100 awards recognize companies that have cleverly leverage on technology to improve their efficiency and business operations.

It all started in 2009 when Juhudi Kilimo chief executive Nat Robinson was invited to Kenya on a consultancy job for K-Rep bank to review some of its loan products and projects to see whether they can be span-off from the bank to stand on their own.

One such project was a loan facility for farmers where they would be funded to buy farm inputs to improve  production and boost their agribusiness.

"Seventy five per cent of the workforce in Kenya is involved in agriculture, so it means a lot of people are involved either directly or indirectly but productivity is generally very low," notes Robinson.

He adds that it is even harder for this group of people to raise funds to improve their production as banks perceive them to be risky borrowers since they lack a steady source of income.

"Juhudi Kilimo is different because it creates a way for farmers to generate that steady income and that is why we give them assets to help them get quality produce and boost their quantity also," explains Robinson.

Giving the example of David Tarus a Kitale, Robinson says that the Juhudi Kilimo customer had been farming since 1991 but due to unpredictable weather and lack of the right equipment to help his operations he made several losses year after year until he got the right assets from Juhudi Kilimo.

"He (Tarus) took a first loan of just Sh17,000 which he used to purchase a water pump to help him irrigate his fields during the dry season. After completing the loan, David then took a second loan of shillings 40,000 with which he purchased a dairy cow and sold the milk for a regular monthly income. Once he had a more stable income, David took a third loan for Sh60,000 to purchase seeds and fertilizer to grow additional maize in his irrigated field," says a customer profile brief on Tarus published by Juhudi.

 It adds:  "With the new higher production from his maize fields, David took another loan of Sh90,000 which he used to purchase a posho mill to grind his maize into flour for higher income.  His fifth loan was for Sh150,000 which he used to diversify and invest in a new horticulture project of tomatoes in 2008.  For the sixth loan of  Sh250,000, David purchased two additional high-yield grade dairy cows and constructed a dairy unit. "

"With another round of funding from Juhudi Kilimo, he decided to adopt the greenhouse technology and purchase a greenhouse for Sh150,000 to improve his horticulture yields."

According to Robinson, today most people in Kitale are eating tomatoes from Tarus' farm. He is one of the main and biggest suppliers of tomatoes and other vegetables; thanks to use of better inputs. Previously he had been reinvesting in his farm by buying more land but was still in losses. It was not until he got the right assets and training from Juhudi Kilimo that his fortunes changed.

Robinson says, Juhudi which he helped start up, was very keen on being a different type of financier. Financing that changes its clients fortunes for the long term.

"We give farmers assets that they need for their operations. In case of any defaults we only take back the asset that we gave the client such that we leave them in the same position that we found them in, not worse off like most financing institutions," explains the young CEO.

Even so, Robinson says, repossession of the loaned items takes place as a last resort as the company takes many things into consideration including impact of weather changes on production.

Aside from the friendly loan terms, it is the efficiency of disbursing them that got the company the recognition from CIO 100.

"We have equipped our loan officers with Samsung tablets and developed a farmer leads management system that they can log into to get background information on a farmer which is keyed in when they inquire from us about the services available," explains Robinson.

Before this IT system was developed, Robinson says the loan officers used to talk to many clients at a time but only 10 per cent or less were successfully converted to clients.

"We found out later that it was not that the farmers were not interested in the loans but the loan officers were overwhelmed and were finding it difficult to follow up on most of the inquiries we received," adds the Juhudi Kilimo co-founder.

After the system was set up and field officers from Juhudi started using it, client conversion has increased from less than 10 per cent to 20 per cent and the company notes its increasing gradually every week.

There are 40 loan officer serving about 300 clients at a time. This means the system has allowed the credit company to handle more clients but still assure them of quality in terms of speedy loans and handling their cases appropriately.

And speaking of speed. Time is everything to a farmer who relies on weather for his operations. The company is testing yet another system whereby a farmer's documents and details are scanned and uploaded on its data base and when he applies for a subsequent loan, the field officer does the scanning and uploads the data which is sent to the Juhudi office, a loan officer can then peruse through the electronic documents and give approval.

In its pilot phase, Robinson says, one farmer got his loan approved in just four hours after application.

"I think we can do more, what is holding us back is that in Kenya, a signature for an agreement has be physical for the agreement to be valid. We are yet to recognise digital signatures in official documents."

For Robinson who grew up in a small town somewhere in Colorado, his job at Juhudi is not only thrilling to him because of the difference its making in farmers' lives but is also adventurous.

"I have milked a cow during one of my field visits," he says while laughing.

"Being a farmer is tough. You get up early maybe around 4am and you work so much throughout the day. I have got a lot of respect for farmers."

Juhudi raises funds through various donations for on lending to farmers and getting enough funds was previously a challenge to Robinson because it was new and he was still in his 20s when it started.

"Not anymore," he says. "They (financiers) can now see the kind of good work we are doing."

 

 

 

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