By Mark Kawalya
Cycle Connect is a startup that furnishes rural communities with assets that they can leverage to lift themselves out of poverty and improve communal standards of living. The firm is driven by the vast numbers of smallholder farmers in rural Uganda who, despite working very hard, continually live below the poverty line. Tilling their land and dabbling in small businesses does little to enable them secure basic necessities of life, like decent healthcare and education for their offspring.
Currently, more than 80% of small-holder farmers that apply for Cycle Connects services have earnings of about $1.50 per day, a classification that places them as living in extreme poverty.
The persistent bottlenecks that limit small-holder farmers’ access to low-interest credit are one of the major barriers that keep them in a state of perpetual scarcity. Farmers, therefore, are not able to acquire the necessary technologies and farming tools that would improve their productivity while also saving them time and energy.
In a nutshell, this is the small cycle that keeps farmers poor.
Cycle Connect is making it easier for rural farmers to access productive tools by offering low-barrier loan terms that, more importantly, have last-mile accessibility. All that farmers need to do is make a small deposit on the asset they wish to acquire and pay off the outstanding cost in bite-sized amounts over a period of time.
The firm is disrupting traditional financial institutions’ modus operandi that require borrowers to provide additional collateral, which is a barrier that keeps farmers from accessing loans. Not only is it an excluding factor, but it prevents a risky situation in the event of payment failure. Cycle Connect achieves this by using the asset as collateral, so borrowers do have to fear losing their land or home due to repayment defaulting.
Farmers who have acquired the necessary assets to increase their productivity can increase their earnings by thirty percent or more, improving their standard of living.
Financing is given for a variety of tools, which include oxen and plows, agro-processing equipment, bicycles, and motorcycles. The firm’s differentiated portfolio of assets allows farmers to take out loans based on their repayment ability without becoming over-indebted. This also gives them the impetus to afford more expensive wealth-generating assets over time.