Thoughts from the first event in the #DataHacks4FI meet-up series in Nairobi

In Kenya, agriculture is the second largest contributor to GDP and the largest supporter of livelihoods. 75% of the labour force in Kenya is employed in agriculture and 33% of all adults derive their main source of income from it. But agriculture remains largely out of reach for the financial sector. Only 4.3% of private sector credit goes to agriculture and farmers are amongst the least served by financial services in the country with even casual labourers reporting higher usage of mobile and banking services.

Agriculture and farmers are hard business for the financial sector. They are often beyond the reach of formal providers, perceived as a high-risk sector for lending and have a unique set of financial needs unfamiliar to most FSPs. But as noted above, they are also one of the groups that can benefit the most from financial services. Donors, FSPs, FinTech and data scientists are exploring how data and analytics can be used to address these challenges and the initial results are exciting.

For example, we recently teamed up with KCB Bank Kenya Limited (KCB) to help them use their existing transaction and account data to identify clients that are involved in agribusinesses. KCB is the largest indigenous bank in East Africa and has partnered with MasterCard Foundation on a programme to extend financial services to two million small-holder farmers in Kenya and Rwanda. The programme provides small-scale farmers access to financial services, such as insurance, credit and savings through their mobile phone via KCB’s M-Kulima platform.

We connected KCB with Pula Advisors, a data analytics provider in Kenya, who segmented their existing database of accounts and transactions to identify farmers that they can already target with these services. Before Pula Advisors went to work analysing their database, KCB had identified 187 clients involved in agribusinesses. After the analytics were conducted, Pula Advisors had identified more than 300 000 existing clients that were involved in agriculture related activities!

By using their existing transactional data, they were already able to address one of the biggest challenges to delivering financial services to farmers, being able to link farmers to appropriate financial products. Going forward they will be able to build on this database and supplement it with other sources of data to improve their business models and test whether these products are meeting the farmers’ needs.

At i2i we are working with partners like KCB and Pula Advisors to drive this type of behaviour in the market for financial services, particularly where data can be used to reach un and underserved consumer segments. While these examples provide demonstration cases for the potential of data and analytics, work needs to be done to mobilise the market around these examples and drive further adoption.

We are teaming up with financial intermediaries, datahubs, Fintechs, FSPs, innovators and data enthusiasts in eight African countries to take aim at this through our DataHack4FI innovation series. The competition brings these actors together to crowdsource data-driven solutions to address real-world challenges in the financial sector. Winners of each country level competition will be invited to attend the Transform Africa Summit in May and pitch against other country finalists to secure funding to implement their idea.

But it’s not only about the competition. In the process, we are building skills and crowding-in interest in this space.

In Kenya, we are running a four-part meet-up series on the theme of unleashing the power of data for financial inclusion with Brave Venture Labs and Financial Sector Deepening Kenya (FSDK). Our first meet up was on Feb 28th in Nairobi and consisted of lightning talks by five speakers from financial service providers, ranging from start-ups to established institutions, to share their experiences and challenges using data and analytics for financial services:

• Patrick Huang, head of financial services at Umati Capital, an innovative start-up that uses technology to finance businesses without collateral, shared their experience using data to finance SMEs with strong growth prospects, positive cash flows and supplier relationships with larger business partners.
• Leo Mutuku, co-founder and CEO of Intelipro, a boutique data science consultancy based in Nairobi, shared their experience helping SACCOs formalise and structure their savings and lending to members using technology.
• Elvis Bando, data scientist at FarmDrive, shared their experience using mobile phones, alternative data and machine learning to close the critical gap that prevents financial institutions from lending to creditworthy smallholder farmers.
• Anthony Mabonga, data scientist at M–KOPA, shared their experience delivering “pay-as-you-go” energy for off-grid customers.
• Reginald Kikwai, head of strategy at KCB Bank shared an example of how and where they are using data within the bank to drive decision making.

While the speakers represented institutions on, or ahead of, the data analytics adoption curve they still identified key challenges that they were looking at each other and other data enthusiasts to help solve: poor data quality, limited access to data sources and a lack of skills available to turn the data into actionable insights.

To begin addressing these challenges, we will be hosting three more events as part of the DataHack4FI Meet-up series in Kenya: the data science masterclass (this evening), the data competition launch (March 15th) which will focus on how to best leverage external alternative data sets to gain further insights into internal data, and the data competition finale (April 12th). If you are interested in participating, please email comms@cenfri.org.

In the short term, we hope these DataHack4FI competitions kick-start ecosystems of innovation around data and how it can be used to expand access to financial services that truly meet consumer’s needs. In the long term, we hope to build market capacity and skills for data science and communities that connect FSPs with data challenges and data enthusiasts to address real-world problems in financial inclusion like access to finance for smallholder farmers in Kenya.

We hope you join us on the ride!

Krista is an associate in the Client Insights team at the insight2impact (i2i) data facility.

insight2impact (i2ifacility) was funded by Bill and Melinda Gates Foundation in partnership with Mastercard Foundation. The programme was established and driven by Cenfri and Finmark Trust.