How African Banks may benefit from satellite imagery analytics solutions

Agriculture in Africa has the utmost importance for the region’s economy. The agri sector accounts for up to 40% of the continent’s GDP, engages more than 70% of the population, and is expected to reach $1 trillion by 2030. The World Bank estimates that African agriculture needs $80 billion annual investments to improve productivity and meet food demand. Thus, financing is a key to unleashing the continent’s agricultural potential.

However, granting loans can be challenging for both smallholding farmers and banks. Insufficient information for farmlands assessment and lack of transparency in submitted documents, questioning landowners’ payability, provoke a chance of credit default risk that banks want to avoid.

The satellite-driven crop monitoring solutions EOS Data Analytics, a global provider of AI-powered satellite imagery analytics, offers can help agribanks obtain accurate data to facilitate loan risk assessment by evaluating farms’ yielding ability. Since numerous individual farmers and farm-owned cooperatives in Africa have already benefited from AI-powered precision agriculture tools, it’s time for agricultural banking to experience the value of space-based technologies. 

“Utilizing crop monitoring analytics powered by satellite imagery can now replace the traditional approach to loan risk assessment and management and streamline complex, time-consuming processes of information gathering and analysis. Whereas landowners employ satellite technology to achieve high yields, banks, providing farmers with financing, will harness it to make sure farms’ yielding capacity is enough to get a loan paid back”, says Mohammed Altaqatqa, Partner Sales Manager at EOS Data Analytics.

The most challenging part of a loan approval process is a credit default risk assessment. Before agribanks provide a landowner with financing, they need to analyze all farm-related documentation and evaluate a deal from a gains and losses perspective.

Sometimes, due to the lack of reliable data for proper analysis, loan officers may have difficulties granting loans to smallholding farmers, being uncertain about farms’ profitability and cropping power. Put it in another way, they can’t be sure a borrower will have sufficient revenue from crop yields to pay off the debt. If this is the case, banks may require additional data from farmland or even send scouts to make an on-site investigation and verify the information provided in the documents — and all that results in a longer and more complex loan approval process.  

The pivotal issues banks face are the following:

• Credit default risk — the possibility that a grower will break payment obligations due to low or no revenue from crop yields;
• Lack of reliable data for loan risk assessment — insufficient or inaccurate farm-related information complicates the decision-making process; 
• Questionable documents authenticity — the chance a farmer provides false documents always should be minded; 
• On-site fields’ investigation — sometimes, to gather reliable information, banks need to send scouts that may be a costly and time-consuming task;
•  Yield prediction — banks need the fact-based projection of a farm’s future yields to have grounds a loan will be eventually paid back.

The good news is satellite-based field management tools can considerably reduce risk assessment workload giving financial specialists immediate access to farm data for in-depth analysis. EOS Crop Monitoring is an online software leveraging satellite imagery and mathematical algorithms to retrieve valuable information on crops. This AI-powered solution enables loan officers to acquire fields’ near real-time analytics or check past trends to get a coherent farmland’s picture just with a couple of clicks.

The platform’s user interface is pretty self-explanatory and easy to use, making it a no-brainer to navigate the tool and quickly get desired insights. For example, field leaderboard functionality displays all fields at once, showing the main parameters and performance indicators to immediately grasp the important information.

Field leaderboard in EOS Crop Monitoring software by EOS Data Analytics. Image: EOS Data Analytics

As for the features, the EOS Crop Monitoring capability to gather and process the historical data on weather patterns, crop rotation, soil moisture, and overall fields’ productivity can be of the greatest value to risk assessment experts. Moreover, upon the necessity, we can also do custom yield prediction projects to supply banks with the best insights for credit risks evaluation and mitigation. 

Historical weather trends generated by EOS Crop Monitoring. Image: EOS Data Analytics 

In terms of the partnership, EOSDA offers agricultural banks two options. One is the out-of-the-box platform for monitoring 5,000 ha and more. Or, a partner can choose the EOS Crop Monitoring white label allowing for full platform customization — changing of domain name and logo, applying branding, and getting its own feature set. 

Additionally, by joining the EOS Data Analytics Partner Program, banks can offer their clients access to crop monitoring analytics as a value-added service enabling farmers to make informed decisions.

Implementing EOS Crop Monitoring platform or White Label will help agri-oriented banks:

• Make loan risk assessment process more transparent and effective;
• Mitigate credit default risk by getting reliable data on farms’ yielding ability;
• Reduce loan processing time; 
• Streamline workflow and save time on scouting tasks;
• Accomplish custom projects on yield prediction, crop types classification, etc.

Here is what one of our clients, a climate risk management consultant Wiingou, says about using the crop monitoring tool:

“Thanks to satellite-driven analytics, we can compare data from fields with weather station data, estimate the risk of extreme weather events, and project how they may affect a farmer’s ability to pay a loan back.”

EOS Data Analytics is looking forward to expanding into African agribusiness banking to introduce more banks to satellite-based technology and boost the region’s agricultural potential.