Nigerian agricultural technology startup UfarmX has facilitated more than $6.8 million in commercial transactions across Nigeria, Senegal, and Liberia, using blockchain-based records to connect smallholder farmers with supply markets and financial services.

The platform currently supports more than 17,000 farmers who have been assessed through its credit-scoring system, alongside a network of retail partners. UfarmX provides farmers with operational data that can help them manage agricultural activities, obtain farming inputs, and access credit without relying on conventional collateral requirements.

The company has built a model intended to address limited access to formal agricultural financing in African markets, a longstanding challenge in a region where smallholder farmers produce a large share of food output yet frequently lack documented credit histories or titled collateral that formal lenders require. Rather than depending primarily on traditional banks, UfarmX works through insured retailers that extend credit to farmers based on data generated on the platform. According to the company, the retailer-based lending system has recorded a net default rate of 1.17%. UfarmX initially used direct lending to test its underwriting technology before shifting to the current model, in which local retailers serve as the direct providers of credit.

UfarmX Builds Data-Based Lending Infrastructure

Chief executive Alexander Zanders said the initial lending experience showed that farmers were capable of repaying financing while improving yields and increasing revenues. He added, however, that the traditional banking system was too slow and cumbersome for UfarmX's intended business model.

The startup subsequently moved to work with local retailers, allowing them to use UfarmX's data and credit assessments when providing financing to farmers. This structure reduces the need for a bank to participate directly in individual transactions while maintaining a data-driven approach to evaluating borrowers.

UfarmX plans to launch a credit-scoring API by the end of the year, enabling banks and other financial institutions to use its agricultural underwriting infrastructure when assessing farm loan applications. The API is expected to broaden the company's role beyond direct agricultural commerce and retail-based lending. UfarmX has compared the proposed system to the role played by major US credit bureaus such as Equifax and Experian, though its focus will be specifically on agricultural borrowers and the data needed to evaluate their financing needs.

The company is already engaging with financial institutions and agricultural input producers ahead of the API's release. Selected partners are expected to receive early access as UfarmX prepares the infrastructure for broader commercial use. For lenders, the appeal of such infrastructure lies in filling an information gap: agricultural borrowers in these markets are often thin-file or invisible to conventional credit bureaus, which historically has constrained the supply of formal farm credit.

Expansion Into East Africa

UfarmX is also preparing to enter Kenya in the fourth quarter, marking its first expansion into East Africa. The company previously expanded outside Nigeria by entering Senegal in 2023, while Liberia is also part of its current commercial footprint. The Kenya launch would extend the company's agricultural credit and data infrastructure into another major African farming market, and one of the region's most established mobile-money and digital-lending ecosystems.

The expansion comes as financial technology companies increasingly seek to use alternative data to serve customers with limited access to conventional banking services. UfarmX's approach centers on converting transaction and farming data into credit information that can support lending decisions. The model could give financial institutions greater visibility into smallholder farmers whose financial histories may not be adequately captured by conventional credit systems.

Agriculture Viewed as Commercial Opportunity

Zanders has positioned UfarmX's data infrastructure as a tool for attracting commercial investment into African agriculture rather than depending primarily on philanthropic funding. The company argues that agriculture across the continent represents a substantial, underdeveloped credit market, and its strategy is based on demonstrating that agricultural financing can be assessed, managed, and scaled as a commercial activity when lenders have access to more detailed information about farmers and their operations.

By combining farmer credit scores, retailer networks, and transaction data, UfarmX aims to build an infrastructure that connects agricultural borrowers with commercial capital while giving lenders additional tools to evaluate credit risk. The planned API represents the next stage of that strategy, potentially allowing UfarmX's underwriting technology to be integrated directly into financial institutions' agricultural lending processes.

As per reports, the startup's expansion and technology development reflect a broader effort to formalize agricultural credit markets in Africa, where smallholder farmers often face significant barriers to obtaining financing. Key markers ahead include the API's rollout and early partner adoption, whether the reported 1.17% default rate holds as the network expands, and how the Kenya entry performs. UfarmX's ability to maintain low reported defaults while expanding its network will likely be central to determining whether the model can scale across additional markets.

Source: CoinTrust