For AgroMall, Extending Credit to Women Requires First Convincing Men

Victoria is one of AgroMall’s more than 3,500 field extension agents who visited rural communities across five states (Oyo, Kwara, Niger, Gombe and Kaduna) in Nigeria this year as part of a pilot to make it easier for women to obtain agricultural finance. Victoria’s job was to go into the villages and encourage smallholders, especially women, to participate in the pilot.

In some ways, this should have been an easy sell: when women have access to credit, it benefits both men and women by increasing the financial mechanisms available to a household and, potentially, economic activity and income streams.

Yet, again and again, she encountered the same barrier: Most men in the communities did not support women’s participation. As a result, she engaged far fewer women than hoped.

Victoria was not the only agent to encounter this challenge. In fact, many field agents reported similar situations. AgroMall’s goal was to enroll 750 smallholder farmers and ensure that 60 percent were women. But due to constraining social norms that limit women’s use of financial services, women only comprised about 25 percent of the pilot. The experiences of agents like Victoria underscore the challenge that providers everywhere face in trying to advance women’s financial inclusion.

So what exactly happened, and what can we learn from it?

A promising technical solution to help women obtain agricultural financing

Restricted rights to land ownership are a major obstacle to women’s access to agricultural finance in most parts of Nigeria. As Nigeria’s former Minister of Agriculture and Rural Development, Audu Ogbe, pointed out in 2018, there is a paradox in Nigeria’s smallholder agricultural sector: “Nigerian women account for 70 percent of agricultural labor, despite challenges of having access to only 20 percent of productive resources.” Women constitute only a small proportion of all farm-holders in Nigeria. Even where they do own farmland, they typically hold smaller plots than men.

In March 2021, AgroMall realized that it had a unique opportunity to help women obtain credit, even when they did not own land. By that time, AgroMall had supported over 1.3 million smallholders in Nigeria using its mobile and web application, AgroMall Digital and Agriculture Platform (ADAP). The app helps farmers obtain economic identities and agriculture finance. It also helps them to leverage agronomic information and produce aggregation services and to access markets.

AgroMall’s journey toward helping women obtain credit began when it realized that just 23% of its app users were women.

AgroMall’s journey toward helping women obtain credit began when it realized that just 23% of its app users were women. This was despite the company’s gender transformative approach, which aims to expand women’s access to employment opportunities within the company and, among its users, increase women’s engagement with the app and expand their access to credit.

To better understand the reasons for this low number, AgroMall conducted a field user survey using part of its network of field extension agents. In speaking with female app users, they learned that although there was a clear demand for the app’s credit service, most women were ineligible for bank loans because they are restricted by land rights.

Financial service providers and lenders generally require loan applicants to present a confirmation of right to farmland as a form of collateral for agriculture financing. However, social norms dictate that men, not women, own or inherit land in most communities. As one of the app users put it: “...we only get support and land from our husbands.”

In effect, this restricts women’s ability to access credit to finance their agricultural activities.

AgroMall thought it saw a way around this problem. Since women had been using its digital profiling, agronomic information and aggregation services, the company had a trove of demographic, production, transactional and financial data on its female users, including information about farming experience, income and non-documented assets. AgroMall reasoned that it could use its customer data to develop an alternative credit scoring model that might give banks the confidence to lend to women through the platform, regardless of whether the women held land rights.

AgroMall reasoned that it could use its customer data to develop an alternative credit scoring model that might give banks the confidence to lend to women through the platform, regardless of whether the women held land rights.

As a result of these findings, AgroMall developed the concept for “Transform Score” — a way of assessing customers’ creditworthiness by going beyond traditional credit scoring and accounting for their adoption of agronomic practices, production outcomes and transaction histories. Transform Score removes the need for traditional forms of collateral like land that exclude women and allows for unsecured lending based on alternative forms of data to assess willingness and ability to repay.

To develop, test and scale the digital scoring component, AgroMall partnered with Mercy Corps AgriFin and CGAP. Together, the organizations designed a pilot that would enable AgroMall to refine the scoring algorithm by testing four types of loans with 750 smallholders: input loans, mechanization loans, labor loans and small amounts of unspecified working capital.

To help ensure the algorithm was optimized to identify female borrowers most likley to repay their loans, AgroMall, AgriFin and CGAP wanted 60 percent of  pilot participants to be women. The pilot was designed to offer all female participants loans, regardless of their risk profile. This ensured the experiences of all women helped finetune the credit scoring tool while testing the predictive model.

“If we are serious about ending hunger, then we must begin with gender lens investment initiatives — first by removing all restrictions to the land rights of women,” said Patrick Obodoekea, head of transformation at AgroMall.

Social norms present challenges from day one

The first major challenge in implementing the pilot came as AgroMall tried to secure a bank partner to underwrite loans. Despite the potential for the algorithm to leverage alternative data sets to inform smart lending decisions and open wider access to credit, as well as to increase lending and outreach to new customers for bank partners, there was limited commitment and appetite for this data-driven innovation. The main worry of the banks was the risk profiles of the farmers.

Yet AgroMall eventually secured a partner. In May 2021, the company launched its pilot in Oyo, Gombe, Kwara, Niger and Kaduna states. These states are representative of areas from different geopolitical zones that have a variety of planting cycles and the highest concentration of farmers in Nigeria. They were ideal for implementing the pilot and finetuning the credit scoring algorithm.

But as Victoria’s story illustrates, the rollout of the pilot uncovered additional challenges. AgroMall’s extension agents witnessed many instances of men attempting to use their wives as a front to secure loans, though men seemed uncomfortable with the idea of women obtaining loans for their own use. Across their interactions with men, the agents heard some common concerns. Many concerns were rooted in the fear that if women became financially empowered and independent, household dynamics would change, men would have less influence, and women may even leave their husbands.

Many concerns were rooted in the fear that if women became financially empowered and independent, household dynamics would change, men would have less influence, and women may even leave their husbands.

AgroMall offered guidance to field agents on how to have conversations with men and advocate for women’s participation in the pilot. However, it became clear that social norms restricting women’s land rights and access to financial services were deeply entrenched in most rural communities. At the end of the first phase of the pilot, only 419 farmers had received loans — and just 25.6 percent were women, far short of the 60 percent target.

Deeper than a technology challenge

AgroMall’s story illustrates why advancing women’s financial inclusion can be so difficult, and not just in Nigeria.

The company has a rich array of data and is developing a non-traditional digital credit scoring tool that could help many female smallholders to access credit. From a technological standpoint, it is developing a promising solution and continues to enhance digital literacy through its agent network. However, at nearly every step in its journey to expand women’s access to credit, AgroMall encountered challenges that run much deeper than technology.

The reality is that around the world, social norms limit women’s ability to benefit from innovations like Transform Score. These social norms can be deeply entrenched and take a long time to address.

However, AgroMall is pressing on. This initial phase provided useful insights into levels of uptake of unsecured loans by women farmers. In response to the  pilot results, it has adopted a two-pronged approach aimed at accelerating participation of women.

First, AgroMall is integrating more advocacy into its community and farmer engagement strategy. Its advocacy approach centers on winning the support of community and religious leaders, family heads, husbands and other men through focused community outreach, enlightenment programs and partnership with community-based women’s organizations.

Second, the company is launching new loan products designed to help young farmers, especially women, to lease land. Leasing land enables women to cultivate crops and earn income, which among other things, can make it easier for them to access other credit products in the future. The company plans to work with local women’s groups to advocate for women’s ability to take out the loans. AgroMall intends to deploy its extensive agent network to attend women’s farmer group meetings and share information about how to access unsecured loans that simply require borrowers have the right to land.

“There’s a popular African proverb: ‘If you want to go fast, go alone. If you want to go far, go together.’ This sums up why it’s important to win men as partners,” said Patrick Obodoekea.

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Patrick Obodoekea is head of transformation at AgroMall. Folasade Agbejule is a financial sector specialist at CGAP. Oludolapo Olusanmokun is a program engagement consultant for MercyCorps AgriFin in Nigeria.