Chomoka: access to finance for smallholder African farmers

The app developed by CARE makes it easier for members of VSLAs to borrow, save and invest. This in turn improves their farming practices and their livelihood. CARE has turned Chomoka into a social enterprise that is working with Rabo Foundation to reach even more farmers.

“African farmers – often smallholder farmers or fishermen – are incredibly enterprising. About 37% of these are women. They work hard to provide their families with enough food and a better future. The best way to achieve this is to grow their business, but that often doesn't work because they need more financial resources than they can save themselves or borrow from fellow villagers. Chomoka helps them formalize their savings to position them for a successful integration into the formal economy,” says Zuabida Bai, Managing Director, CARE Social Ventures.

Chomoka (Swahili for “rise up”) helps farmers in Tanzania gain access to that credit. “Because banks have traditionally wanted guarantees against loans” Zubaida explains. “These farmers do not have access to land that can serve as a collateral for financial institutions.”

How does the app work? “It’s specifically intended for the members of VSLAs who pool their savings and give each other small loans from that pool. This enables them to buy new hoes, plows or fishing nets, for example. Prior to Chomoka these transactions were manual and prone to errors and inconsistencies, there was also a fear of loss/damage of the physical paper records. There was no backup,” says Zubaida. “Chomoka allows them to enter the date into the app through a smartphone or feed data via SMS into the app. The app not only creates ease of transaction and storage of data for reference in the future, but also allows the group to harvest the power of this transaction history. The groups and individual members can use these digital records to access loans from banks or microfinance institutions.”

The digital record enables greater transparency about the resources that the VSLA has, and reduces the likelihood of errors. Perhaps most important of all, it helps farmers to build a digital credit history. They can then share this digitally with banks and insurers, so that they no longer need to make long trips to the city to apply for credit. Financial services and products have therefore literally become accessible.

Increasing numbers of farmers now use the Chomoka app – in Tanzania, where it was launched in 2017, at least 10,000 VSLA members are using the product. “There is clearly an excitement around the usage of the app,” Zubaida says. “The Chomoka app helps them save time and transaction errors, it also gives them hope that the usage of the app will help them get integrated into the formal economy, through access to bank and microfinance credit.” Chomoka has recently launched versions in local languages in Ghana, Ivory Coast and Uganda. “These countries are strategically chosen as expansion countries because of CARE’s longstanding activities in these regions.

The establishment and expansion of Chomoka is due in part to strong support of CARE. “As a global development organization, we are committed to fighting structural poverty and social injustice,” says Richard Kooge of CARE . It makes sense to him that CARE turned to the Rabo Foundation for support. “Our vision is in line with that of the Rabo Foundation: to fight poverty and inequality through innovation, and facilitating entrepreneurship.”

It was this vision that has motivated CARE to develop Chomoka and turn it into a social enterprise. “It encourages entrepreneurship with the help of innovation, so that small businesses start earning enough to grow sustainably. In addition, we have been helping to set up VSLAs in Africa – the Chomoka app’s exact target group – for many years. We also encourage women to become members as it gives them a better social position; they are often more responsible with loans as well. In this way, Chomoka and CARE’s activities reinforce each other.”

Chomoka hopes to reach at least 7,500 VSLAs in Uganda in the coming years. “We collaborate with Rabo Foundation and its allies on the ground in achieving this,” says Zubaida. “Rabo Foundation’s investment in terms of capital and access to networks has positioned Chomoka for scaling and success. We are confident that we will be able to scale, and with that increase the impact on the lives of un(der)banked population in Africa.”

When CARE told Rabo Foundation about the Chomoka app, Julia Peters, innovation manager, and her colleagues at Rabo Foundation quickly became enthusiastic. “Chomoka is helping a hard-to-reach part of our target group with this app. That’s why we are now funding their activities in Uganda and putting them in touch with our local network,” says Julia. “We also share our financial expertise with Chomoka, for example in the area of credit scoring. This is all aimed at helping them to move forward, so that more farmers can access financial products and services.”