Technological innovation for 1 million farmers in Myanmar

Their farms measure anywhere from 5 to 50 acres, growing rice, sesame, mung beans, vegetables and other pulses. A successful harvest will be just enough to support the entire family. That’s the life of many smallholder farmers in Myanmar. Building a toilet or buying a motorcycle are dreams that seldom come true, much less sending a child to study at university. ‘To raise their incomes, they have to increase the productivity of their land’, Matteo explains. ‘Smarter agricultural methods make that possible, but first they need the money to pay for them so they can plan their future accordingly.’

Borrowing money for investments is difficult for smallholder farmers in Myanmar. ‘They’re too risky for ordinary banks, and loan sharks and informal moneylenders charge highly exorbitant interest rates’, says Matteo. ‘Licensed Microfinance Institutions like MAHA offer a great alternative. We offer loans for an average amount of 800 euros for a term of six months. They can then use the money to buy machinery and products like seeds, fertilizers and pesticides. We charge low interest rates that are capped by the Ministry of Planning and Finance, which makes it easier to pay back their loan. Plus, the farmers can also take out insurance with us, so in the event of an accident or death the family doesn’t have to pay back the loan. That gives them peace of mind.’

MAHA, a customer centric financial institution, works hard to help as many farmers as possible grow. Matteo: ‘Three years ago, only 5,000 farmers borrowed money from us, and it would take us up to 14 days to disburse a single loan, but now we serve over 85,000 and our turnaround time has dropped from 14 days to 72 hours. By 2030, we aim to finance 1 million smallholder farmers. But we can’t do that the way we’re doing it now. Today, farmers have to go to one of our 37 locations. They’re spread around the country, but it’s often still a long distance for a farmer to travel. So, we want to offer loans via parties that are closer to the farmers, such as small family businesses in the villages.’

‘We also hope to transition to e-money - paying out loans via smartphones - within the next two years. That will greatly expand our reach, and it will make it easier and less time-consuming for farmers to borrow money from us. Ideally, we combine our brick and mortar model with a digital, cashless, branchless model, and the two must go hand in hand’

MAHA not only wants to finance more farmers; they also want to make the smallholder farmers’ lives easier by offering a variety of banking services. ‘They usually don’t have access to that’, Matteo adds. ‘Things like savings products, insurance and money transfers to family abroad. This group still puts their savings under the mattress and sees the purchase of gold jewelry as an investment. We teach them about interest, saving and insurance, so they can use their capital to truly improve their lives.’

Cordaid, Rabo Rural Fund and Rabo Foundation help MAHA achieving its ambitions. ‘With loans totaling three million euros, we can reach more farmers than ever before’, Matteo adds. ‘And Rabo Foundation has donated 15,000 euros for us to set up a credit scoring pilot project. It’s a method to quickly and efficiently assess farmers’ creditworthiness. We enter their income, other loans and the amount of land the farmer has into our model, and out rolls a credit score. It’s fast and simple, and that helps us serve more farmers.’

MAHA and Rabo Foundation are currently investigating the further innovation of their credit scoring model: ‘We want to use agricultural data, like soil fertility and the health of crops, to better assess the farmer’s situation. We aim to do that with the help of remote sensing via satellites. Rabo Foundation has therefore introduced us to an Indian agritech company that helps us with the technology. Thanks to Rabo Foundation’s brain power and network, we can move beyond what we could have achieved on our own.’

Matteo aims to use the technology behind the credit scoring model in other ways to help farmers get ahead. ‘We want to share the knowledge gained with remote sensing with farmers, for example by identifying the effects of drought and advising them on how to deal with it. Or by informing them about crop diseases so that they can prevent them in time. We also want to use drones to help farmers with fertilizing; that not only saves them time, it will also give them better harvests. Every technological innovation we implement is to the farmer’s advantage: technology is there to serve humanity.’