Subsistence farmers in Uganda face an impossible situation: Lacking transportation to get to markets, which are miles away from their villages, the amount of product they can sell is limited. And that means they don’t have the resources to buy farming equipment that could help them produce more.
That’s the issue Cycle Connect targets. The company loans farmers money to buy bicycles they can use to travel to markets, schools or other places, as well as to purchase farming equipment, to help boost their yield. “We’re equipping farmers in Uganda with the tools and knowledge needed to increase their income and lift themselves out of poverty,” says CEO Emmy Okemma.
The enterprise has served around 12,000 farmers who are able to generate 30% more income on average, according to Okemma. She joined as managing director running operations three years ago and recently became CEO.
Life-Changing Impact of Bikes
The enterprise got its start in 2008 when northern Uganda native Dick Muyambi attended college in the U.S. As a child, he had witnessed the life-changing impact bicycle ownership had on families. In fact, his life had been saved when, sick with malaria, a neighbor had pushed him on a bicycle 10 miles to the nearest hospital.
He also saw that many subsistence farmers in remote villages lacked a viable transportation method to get to a market to trade their goods. In fact, they typically carried their goods on their heads and walked to their destination on dirt roads that turned to mud when it rained.
An avid cyclist himself, Muyambi realized that bicycles could go a long way toward addressing that problem. Not long after starting college, he set up an organization called Bicycles Against Poverty to raise money for bikes in Uganda.
Expanding the Mission
Fast forward to 2014, when co-founder Molly Burke moved to Uganda to build out a new social enterprise model and met with villagers to discuss what they needed. It became clear they still faced limited opportunities, even with bicycles. Sure bikes helped them travel to markets, carry more product with them and generate more income. But they were still excluded from the conventional financial system, located far from towns and cities and unable to afford even simple tools that could boost their farm yields.
With that in mind, the organization expanded its focus to include lending farmers capital to buy better agricultural equipment—specifically grinding mills and oxen, with which they could plow more land. Farmers could then also could rent the animals out to other farmers, further boosting their income. In 2019, the organization was renamed Cycle Connect to emphasize that larger mission.
By December, Okemma hopes to add two-wheel tractors and threshers, which they’re testing out with farmers now. Connect also provides training. “We want farmers to thrive, rather than survive,” says Okemma.
Okidi Robert is a typical customer. Two bicycle loans and one oxen loan since 2014 have allowed him to cultivate more land and plant twice as fast in half the time. He also rents the ploughing service out in his village. The result: an 80% increase in income after three years.
Cycle Connect charges interest on the loans, plus application fees of 5% of the loan. Since they lack credit scores, Cycle Connect evaluates potential borrowers by looking at such factors as farming practices and how they’ve fared in previous seasons. Then staff members look at what farmers can afford and adjust the loan tenure accordingly. Loans are $70 up to about $2,000, depending on the assets, with a repayment period of 10 months to 24 months, depending on what the farmer can afford. Interest rates, which are “slightly below market rate,” according to Okemma, are 2.75% per month up to 4.5% month.
After borrowers start using the equipment they’re able to make more income, allowing them to pay back the loan.
Reaching 50,000 Farmers
Cycle Connect has a staff of 60, along with 20 to 30 agents in the field who help train farmers in the use of their assets, including such lessons as how to take care of their oxen if they become ill. And they teach basic financial literacy. Agents also visit with cooperatives and village savings groups. In addition, there are eight offices, six of which are located far from towns in small training centers situated near markets that farmers visit every month.
Funding comes from grants from foundations and high-net worth individuals located mostly in the U.S., along with loans from individuals and other investment partners. Plus it makes money from interest on loans it makes and application fees. Funding this year was $1.6 million, half from grants and half from debt. Ultimately, the goal is to reduce reliance on grants, while expanding its scope to reach 50,000 or so farmers over the next three to five years. (The company also was part of Miller Center for Social Entrepreneurship’s 2019 accelerator cohort).
“These are farmers living in thatched roof huts with one or two acres of farming land and, at the same time, are dealing with the effects of climate change,” says Okemma. “But with simple tools and the knowledge they need to use them, they can improve their yields and grow their income.”