Kenyan start-up Apollo Agriculture in US$9.5m pact with DFC for farmer loans

KENYA – Apollo Agriculture, a technology company that works with small-scale farmers to boost their profits, recently agreed to borrow US$9.5 million for up to 10 years from the government-backed US International Development Finance Corporation (DFC).

While announcing the 10-year loan, the DFC said the facility would help improve food security in Kenya by boosting Apollo’s ability to support smallholder farmers.

In 2020, Apollo also raised about US$6 million in another round of funding for onward lending to farmers.

“Investments approved by the Board this quarter include…a US$9.5 million loan to Apollo Agriculture, Inc. a financial vehicle making small microloans and inputs available to smallholder farmers in Kenya,” said the DFC in a statement detailing US$1.13 billion (Sh127.6 billion) worth of new global investments.

Founded in 2016, Apollo Agriculture offers a mobile-based product loan package for farmers that includes working capital, data analysis for higher crop yields, and options to purchase key inputs and equipment.

The start-up began operating in 2017 to deliver bundled packages of financing (tied to crop cycles), agricultural inputs (seeds and fertilizer), crop insurance, and digitally delivered information services directly to smallholder farmers in Kenya.

Apollo says it uses Safaricom’s  M-Pesa mobile money, machine learning, and satellite data to guide the credit and products it offers farmers.

The company generates revenues on the sale of farm products and earning margins on financing and has served more than 100,000 farmers since its inception, with 70,000 of those paying relationships coming in 2021.

Small-scale farmers produce up to 80 percent of the food supply in Africa and Asia and face a 90 percent chance of crop loss due to factors outside of their control, such as pest outbreaks and severe drought.

Tech start-ups have, therefore, taken an increasingly bigger role in the sector, offering platforms that facilitate access to market and inputs, extension services, and payment services.

DFC was launched in 2020 to “help businesses expand into emerging markets, foster growth and improve lives in the developing world while reinforcing US foreign policy and national security interests.”

The organization has an investment cap of US$60 billion to deploy in forms such as equity placements, insurance, technical assistance, and research. DFC focuses its efforts on low-income and lower-middle-income countries in areas such as “energy, healthcare, critical infrastructure and technology.”

Upon its founding, DFC took over the work of the Overseas Private Investment Corporation as well as the Development Credit Authority of the US Agency for International Development.

In 2020, DFC’s net cost of operations was US$232 million.

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