In 2019, UNCDF in partnership with SIDA, supported Dimagi - a technical provider based in Senegal to deploy a digital solution for smallholder farmers (SHF) to increase their chances to financing.

Half a year later, producers of selected cooperatives active in the banana value chain in the remote area of Tambacounda have accessed their loans through the platform CommBanane and have been financially included.

Tambacounda, a region 500 kilometres away from Dakar with minimal infrastructure or services, hosts 80 per cent of the local production of banana. The banana sector has great potential as banana is grown on a rolling basis, independent of seasonal variations that often affect agricultural production. Although the sector has been expanding over the last years (with an increase of 21 per cent from 2005 to 2008), producers still lack access to adequate financing to improve their activities.

According to a market study conducted by UNCDF partner Baobab Sénégal, the banana value chain financing is limited and mostly focuses on production. The sector is dominated by commercial banks and informal lending is prevalent . Clear barriers to formal financing include the lack of guarantees, visibility on demand needs and lack of access to high-quality information, which result in increased credit risk.

CommBanane offers a digital platform that integrates a data tracking system on agricultural production and a loan application module that is directly linked to the financial provider partner of this project – Baobab Sénégal. The platform allows the SHF cooperatives to apply for loans directly from the mobile app. Portfolio managers can then review and analyse the loan application before submitting it to the loan committee that approves or denies the loan.

“CommBanane gives us the visibility over the business information of this underserved market. This is needed to mitigate the risk of lending for financial institutions interested in serving the most vulnerable” -Cheikh Tidiane GUEYE, Head of Development and Innovation at Baobab Sénégal.

UNCDF supported the deployment of CommBanane in the region and piloted the solution with ten cooperatives, representing almost 500 SHF. UNCDF also provided financial and technical support to Baobab Senegal to conduct the market research and adapt its offerings to the needs of the targeted clients. With its loan product specifically developed for that value chain, Baobab has approved loans valued at US$42,000.

The results of the pilot demonstrate the opportunities of going rural for dynamic institutions like Baobab Senegal, who are willing to test digital solutions that allow them to decrease the risk of lending while improving access to finance for underserved segments, such as smallholder farmers.

For a more in-depth study, download the full case study here.