Cycle Connect

Molly Burke, CEO and Co-founder of Cycle Connect, has led the company from a student project to a fully operational enterprise supported by over 40 full-time staff. Under her leadership Cycle Connect has grown across two different cities in Northern Uganda, providing over 7,500 farmers with income-generating products that they can pay back for overtime and elevate themselves out of extreme poverty.

Molly’s passion is to push the boundaries of exploration and challenge what's possible to further unleash the potential of smallholder farmers in Uganda. This is why she established Cycle Connect's innovations department to ensure that the organization continuously adapts. Molly's leadership at Cycle Connect led to achievements such as being a 2019 Social Entrepreneur member of the Miller Center's GSBI program, a 2015 SHONA fellow, and National Geographic Traveler of the year. In 2020 she was selected by Mulago Foundation to be a Rainer Arnhold Fellow.

Over 60% of the population in Africa are hard-working small-scale farmers.  Despite being the backbone of the African economy, most small-holder farmers live in extreme poverty (below $1.25). This is due to vast inefficiencies throughout the entire ag-value chain, which means that farmers cannot cultivate their land to its full potential.

 Most of all, farmers don’t have access to the assets that they need to propel forward. Furthermore, smallholder farmers are financially excluded based on both their status as farmers and physical distance from financial institutions. By offering agricultural assets on farmer-centric financing terms, coupled with last-mile access, Cycle Connect is closing the gap. Our scale strategy is built on replicating our model with partner financial institutions so to make systems change in lending operations for farmers across the region. Once solved for, millions of farmers will lead better lives while simultaneously influencing the East African economy.

Over 60% of the population in Sub-Saharan Africa are hard-working small-scale farmers living in extreme poverty (below $1.25).

In Uganda, there are over 8M smallholder farmers in poverty, who struggle to cope with economic shocks. 70% of Ugandans work in agriculture but the sector only translates to a quarter of the nation’s GDP. Farmers do not have the proper tools to increase their farming productivity. More than half of Ugandan farmers hand-till their land, which is highly unproductive. 

Furthermore,  farmers’ inability to invest in necessary farming equipment leads to a 3x gap in agricultural yields. This means that farmers’ actual yield output is only 1/3 of their potential output. Consequently, farmers fail to increase their income and are trapped in the cycle of poverty. 85% of Ugandan smallholders make a daily wage of only $1.50 when they could earn over $4 if they were operating at their full potential.

The situation is made worse since farmers are excluded from formal lending networks (MFIs + banks). Only 4% of Ugandan smallholder farmers borrow from them. With no financing options to reverse this challenge of low productivity and invest in income-generating assets, farmers are left stuck in extreme poverty.

Cycle Connect exists to increase income for smallholder farmers in East Africa. Specifically, we provide productive asset-financing and training to farmers living in deep rural areas, beyond the reach of other financial service providers. Our portfolio of agricultural assets are all tested and vetted for their ability to increase income by 30% or more. Our current offering includes bicycles, oxen and plough, grinding machines, and motorcycles. For many of our clients, increasing income translates to a better livelihood for them, and their children, specifically allowing them to invest in better education. By financing our products on farmer-centric loan terms and offering last-mile delivery, we reduce the barriers to entry and expand access to the millions of smallholders living in rural areas beneath the poverty line.

Through our product portfolio, we can continuously work with smallholder farmers as they invest in tools that will propel them forward. We are focused on scaling by replicating our model through other financial institutions, helping them lend to smallholder farmers through offering productive asset-financing. In turn, through our scale strategy, we are focused on achieving systems change and systemically reaching millions of smallholders in East Africa to move them out of extreme poverty.

Cycle Connect’s project will benefit the millions of smallholder farmers in Uganda that are left off the table by conservative market solutions because of their economic status and their physical distance from financial institutions. CC reaches underserved populations and equips them with income-generating tools on inclusive financing terms. 

100% of our clients are farmers living under the poverty line; with 85% living on less than $2 a day (extreme poverty). Over 50% of clients are female smallholders, who are among the most financially excluded populations. On average our customers live nearly 20 miles from nearest town. 

CC’s customer-centric approach involves regularly listening to smallholders to understand their unique challenges. Our clients are involved in product testing to aid CC in developing products that meet the greatest need and generate the greatest impact. 

To date, CC has increased the income of over 7,500 farmers by over 30% annually, between $100 - $800 per year (depending on the asset). When translated over the uselife of the asset, the overall income gains are $400-$2,000+ per farmer. Clients increase their yield outputs, efficiently access markets, and open up new processing businesses.

CC is scaling to provide opportunities for the millions of smallholder farmers who are excluded from financial institutions in Uganda--farmers like Lamaro Kevin.

Before working with CC, if Lamaro wanted to borrow to invest in her farm she could go to family/friends or travel far to MFI that would most likely reject her application. Lamaro was stuck. With CC, Lamaro was able to get ag-products, including oxen and plows, on loan with conditions that work for her. Her productivity increased her income creating access to education, healthcare, and the ability to invest in her farm. Lamaro is empowered.

Cycle Connect, formerly known as Bicycles Against Poverty, was co-founded by two university students, American Molly Burke and Ugandan Dick Muyambi. Muyambi grew up on a farm in Uganda, experiencing first-hand the power a bicycle could have in generating access to vital resources, increasing income, and improving livelihoods for rural communities.

CC turned this realization into action in 2014, starting as a lease-to-own bicycle organization, which created opportunity for 2,000 of the most rural families. Over time the leaders heard from clients that they wanted other income-generating assets, also on loan. Recognizing that 100% of clients were smallholder farmers who lacked other basic tools and were being left off the table by conservative market solutions, CC listened and responded with an expanded model. CC grew its portfolio to include more innovative products and inclusive financial services that further connect farmers to opportunity and equip farmers to break out of extreme poverty. CC’s portfolio now includes 4 ag-products that are proven to increase income by >30% annually.

My father grew up on a farm in the American midwest and my uncles grew the farming business even more throughout my lifetime. When I first visited Uganda in 2009, I was in awe of the resilience of the communities and individuals I had the pleasure of meeting. I saw vast farmland, most of which was largely uncultivated. Looking at the arable land in Uganda, I was reminded of my uncles’ farm in Minnesota but it felt like two completely different worlds. 

It wasn’t until much later that I came to recognize that the difference didn’t have to be so stark. With the right tools, and an ecosystem that provides the right type of financing, farmers, and their land, as well as their communities, can be significantly transformed. If there’s anything I’ve learned from living in Gulu for over five years it’s that the recipes for success are largely there: hard-working and resilient communities coupled with vast, rich land and plentiful rain. The key missing parts are what we at Cycle Connect seek to provide- the tools to catalyze the farmer’s potential, along with the financing to enable ownership and long-term growth.

I co-founded Cycle Connect while a college student, along with my friend and our founder, Muyambi. This was one of a few social ventures that I kicked off while on campus, along with an energy revolving loan fund and a housing cooperative. I didn’t realize it at that time, but I was a social entrepreneur who was passionate about impact, sought to build a coalition behind it, and then institutionalize the change. After graduating from my university I worked on public affair campaigns, including working on the media and political consulting campaign to pass marriage equality in NY State in 2011. 

I ultimately decided to leave that job to pursue Cycle Connect full-time and moved to Gulu, Uganda in 2014 to work with the Ugandan communities that I saw significant potential in. 

Over the last six years I have built Cycle Connect to where it is today- a team of over 40 individuals, operations over two branches and six districts, a portfolio of five products offered, and a client base of nearly 8,000 farmers. We have maintained a repayment rate with <4% defaulters. 

In my previous role working on campaigns, I noticed the strength of one’s network. That is why I’ve built a strong network of supporters and advisers with accolades including: 2020 Rainer Fellow at Mulago Foundation, 2019 Entrepreneur with Miller Center for Social Entrepreneurship, 2015 SHONA Fellow, 2013 National Geographic Traveler of the Year, and awarded partnerships with Kiva, Yunus Social Business, and other foundation partners.

In 2016 I hired a Finance Director, who, in his first month discovered that CC’s repayment metrics were significantly worse than we had previously thought. Instead of seeing this as an opportunity to use his skills to improve the situation, he reacted in an explosive manner. On the initial day of discovery, instead of first discussing the issue with me personally, he chose to go behind my back to our board chair. He pursued a path to push me out and even presented our chair with a wind-down plan for CC.

 As a leader I had to remain resilient, unite the organization, improve our portfolio quality, while restoring trust from our board.  I led our team through a challenging six month restructure in which we: paused new loan disbursements, migrated our data to our loan tracking system to ensure a daily data check, and mitigated our write-offs to less than 10%, a significant improvement on our portfolio quality. CC has now come out on the other side of this learning process stronger. Over those four years, we have grown by more than 4x and to this day we have less than a 4% write-off ratio.

When the world was waking up to the reality of COVID and its global ramifications, I was quick to lead our organization to ensure we stayed resilient and strong, both internally and to the communities we serve. We responded in rapid fashion, which was noted by funders and partners who asked us to share about our response as an example. I led our team through the crisis by leaning into our core ideology and our values. CC exists to ensure distance is not a barrier to access; especially during a global pandemic. 

 In mid-March, we rapidly moved our team to work remotely and transitioned our field team into a remote call center to collect data from our clients. We work with some of the most vulnerable communities and knew they would be hit the hardest. 

 Our team is data and client-centric, as well as highly adaptive. After reaching out to 3,000+ clients we built a three-tiered response focused on mobilizing healthcare workers, communicating critical information to the last mile, and preventing hunger for rural families. Our response has reached 1,000+ households and our team is continuing to scale our response to support our community at this difficult time.

No one else offers smallholder farmers inclusive financing for mechanization and market access in Uganda. Traditional financial institutions are focused on urban lending. If these institutions reach out to smallholder farmers, they apply the same terms and conditions as they do for urban/peri-urban clients, despite being a completely different customer group. This does not work for smallholder farmers with seasonal income flow. 70% of the Ugandan population are smallholder farmers and CC is 100% focused on this group. We not only offer the financing, but we go further to offer asset-specific training to allow for full utilization and opportunity of the solution. 99% of the products we offer are completely innovative and unique to CC; they are not available at other companies. 

Trending solutions in the social enterprise space have primarily revolved around financing seeds and fertilizers for farmers. Cycle Connect is looking at mechanization--improving productivity through financing assets with added efficiencies, such as oxen/ plow, tractor rentals, and ag-processors.

As CC prepares for scale, we are designing a replication strategy that will work with local financial institutions to implement our model. CC is focused on achieving systems change of local financial institutions to systematically provide productive asset financing to millions of smallholders in East Africa to move them out of extreme poverty.

The Need: The majority of Uganda’s small-holder farmers are deep rural and often disconnected – physically distant from essential services and far removed from economic systems and the global marketplace. Consequently, 96% of farmers are excluded from accessing credit to buy the agricultural tools needed to increase their income and elevate themselves out of poverty. 

Mission: The mission of Cycle Connect is to increase income for East African smallholder farmers through farmer-centric loans for income-generating assets and training in deep rural areas (last mile). An in-depth global literature review conducted by CGAP (Consultative Group to Assist the Poor) concluded that inclusive asset financing with responsible scaling would elevate individuals out of poverty.

Activities: CC designs and tests a range of productive assets (bicycles, oxen and plow, grinding machine, motorcycle). CC provides loan terms designed to meet the needs of smallholder farmers enabling them to invest in these products. CC’s field officers travel to the last mile to deliver products, conduct training and ensure a high loan repayment rate (95%).

Outputs: Productive assets delivered to deep-rural farmers. Farmers trained on proper product usage to generate the highest level of productivity, as well as financial literacy and how to generate savings.

Short-term Outcomes: Farmers engaging in income-generating activities with increased productivity and time savings. E.g. With an Oxen and plough clients can till one acre of land in 3 days compared to 4-6 weeks by hand. Additionally, >40% of clients started a new business, and 74% who started a new business used a bicycle. Farmers costs are reduced due to usage of the asset. Farmers have >45% greater market access- bikes enable farmers to travel x4 further with x5 as much goods to markets, gaining increased sales volume as well as more competitive pricing in different locations. Motorbikes are even more impactful. 

Long-term Outcomes (Impact): Farmers income increased by >30% within the first year ($100 - $800 depending on the loan). Farmers’ income gains reach up to 65% over time with the continued usage of income-generating assets, enabling them to elevate themselves out of extreme poverty.

To date Cycle Connect has provided over 7,500 farmers with loans to buy income-generating tools. This has translated to impacting >37,500 Ugandan lives due to clients sharing their assets among neighbors and family members. 

 In FY2020, CC experienced rapid growth, serving >3,300 clients, representing a 75% increase from the prior fiscal year, despite COVID-19 business disruption which hit our team at the end of our third quarter and hit hardest in our fourth quarter. Over the next twelve months, despite COVID disruptions, CC plans to grow by 30% and disburse over 4,200 loans. 

 As CC prepares for scale, we are designing a replication strategy that will work with local financial institutions to implement our model. By the end of five years, by FY25, we will be serving 50,000 users per year, across multiple regions in Uganda and into another country in East Africa. All of these users will be farmers living in poverty, and we’re committed that of the 50k, over 75% of those served will be in extreme poverty. Through our systems change approach, CC is on a path to catalyze the movement of 1M smallholder farmers per year out of extreme poverty by 2035.

In our  2021 fiscal year, which began in July 2020, we will issue >4,200 loans among five product categories. The resulting income gains for the farmers impacted include >$450k on an annual basis and, spread over the useful life of the asset translate to over $2.4M in life-time income gains. 

Over the next fiscal year CC will pilot its partnership strategy with financial institutions, which is ultimately how CC will scale over the next five years and move from reaching 3-4k users per year to 50k per year and growing. Current financial institutions exclude 96% of rural customers due to using the same appraisal process for rural and urban clients. MFIs have proven to be largely ineffective in increasing customers' income due to providing cash loans (no supply of assets), weak financial advice and after-sale support. CC has developed, proved, and scaled an innovative appraisal and loan repayment system to serve deep-rural clients with productive-asset financing and training proved to increase clients' income over time. 

At the same time, MFIs have voiced an interest in reaching smallholder farmers as well as offering asset-financing, though do not have the research and experience to reach them immediately. That’s why CC is interested in creating systems change among financial institutions to partner with them and enable them to unlock the farming lending market.

Over next year:  

1. Technical barrier-  The Cycle Connect model currently relies on >10 in-person meetings with CC officers per client in deep-rural areas. This is a barrier particularly in light of COVID, but also the high operation costs of multiple in-person meetings is a challenge to financially sustainable scaling. CC must replace some of the in-person client meetings with technological communications without decreasing results, particularly the strong repayment rate.

2.  Market barrier- CC needs to continue reaching new clients with less face-to-face networking in light of COVID, but also because personal, individual client acquisition is a barrier to operational efficiency.

3. Incomplete data- CC does not have complete data and analysis for clients at each notable point of the loan process. Consequently, business decisions are not as informed as they could be.

Over next five years: 

 4. Market barrier- The in-person nature of customer acquisition and service provision is an operational barrier for CC to exponentially scale due to being both financially and time intensive.

 5. Market and financial barriers- CC needs to increase its access to   farmers across East Africa and global markets, whilst decreasing       the unit costs of acquiring and serving each client.

Over next year:  

1. Technical barrier- CC will use technological solutions to reduce in-person meetings, such as improved SMS communication, increased use of mobile money, and training deployed virtually (through features such as voice recorded messages sent to feature phones, and SMS training). To ensure that CC’s impact results don’t decrease, particularly the current strong repayment rate (>95%), CC will use behavioral science to test and deepen their understanding of what incentives and nudges encourage people to continue to repay even when an officer isn’t physically showing up. 

2.  Market barrier- To efficiently acquire clients CC will work with more distribution partners, such as agribusinesses and off-takers, who have networks of farmers that they work with.

3. Incomplete data- To improve client data and analysis and increase productivity, CC will roll out a more advanced CRM system and hire a data analyst. This will be combined with better training for staff on monitoring effectiveness.

Over five years: 

4. Market barriers - CC will open up markets and decrease costs of client acquisition by engaging customers through a digital platform.

5. Market and financial barriers- CC will try to partner with local financial institutions (MFIs) to cost-effectively replicate the model at scale, access new markets, and change financial systems for the rural poor.

Cycle Connect uses pipeline partners for our go-to-market strategy. A pipeline partner is typically either a neighboring NGO or an agribusiness also working in the area with last-mile clients. The pipeline partner introduces Cycle Connect to their clients, seeing the value in our work as we increase their desired outputs (i.e. either impact creation or outgrower productivity). Cycle Connect picks up where their intervention leaves off. Partners can serve their clients (either program participants or outgrowers) to help achieve their own impact goals. Cycle Connect can assist in areas they cannot and simultaneously help deliver results to their stakeholders. 

Our sales partners have a strong buy-in to ensure our productive assets get into the hands of their recipients. The partnership complements their work and improves their recipient’s long-term outcomes. These partners are strong brand ambassadors due to their trusted relationships with the community. These free sales agents mean extremely low customer acquisition costs for Cycle Connect as well as strong brand equity within the communities we operate. As we look to scale our model, partners will be crucial to our success.

Cycle Connect’s model connects smallholders with productive assets, financially includes them through farmer centric financing, and provides training on product use & financial literacy. Our team travels to the true last mile to do this-- going where no one else goes by meeting our clients in the most rural areas. We turn a profit via the interest rates & mark-ups that are applied during asset sale & financing. Our assets range from $70-$2k in price.

Cycle Connect’s model is currently built on working directly with farming clients. However, to replicate at scale over the next 5 years Cycle Connect plans to form partnerships with local MFIs. Cycle Connect will support local financial institutions to replicate their tested rural financing model across East Africa and provide income-generating tools to millions of farmers, while simultaneously achieving systems change across financial institutions to financially include smallholder farmers.

Cycle Connect generates revenue in the form of sales directly to low-income farmers (B2C), with a revenue model that is embedded with our impact model. Our margin exists from the interest, fees, and factory discounts on the asset-loans provided to smallholder clients. This current fiscal year, loan repayments will cover 44% of CC’s overall budget. The other 56% of the budget is covered by philanthropy as well as debt that CC borrows for working capital needs. Our financial position has improved over time as we’ve become more efficient, improved our economies of scale, and added bigger ticket assets to our portfolio. 

As Cycle Connect scales, we will focus on a B2B revenue model through partnering with local financial institutions to replicate our model, positioning them to better reach last mile clients in Uganda. In such instances, we will receive a percent of the gross profit of the successful loans that we help the partnering institutions book. This replication strategy will enable Cycle Connect to deliver our solution to the millions of smallholders who are traditionally left off the table by these very institutions, while simultaneously achieving systems change across financial institutions to financially include smallholder farmers.

Cycle Connect has three streams of revenue: philanthropic donations, debt, and portfolio revenue via the interest and fees collected as part of Cycle Connect’s loan process.

Philanthropy: Raised >$800k in the last twelve months alone, with support from: Peery Foundation, Pace Able Foundation, Segal Family Foundation, Issroff Family Foundation, and individual donors. After completing the Rainer Arnhold Fellowship we will add Mulago Foundation to this list for 2020. 

Debt: $250k in the last twelve months from: Yunus Social Business, Kiva, and Segal Family Foundation.

Generated revenue:  >$234k in the last twelve months from Cycle Connect’s portfolio revenue. In our current fiscal year, which started July 2020, we are expected to receive over $640k in repayments throughout the year.

In Cycle Connect’s current fiscal year (starting 1st July 2020) the organisation has $450k committed in grant funding and is working to raise another $100k over the next 12 months. Additionally Cycle Connect is raising $480k in debt. Both of these funds are to distribute >4,000 assets and train >3,000 individuals throughout the year, leading to a >30% income increase bringing in over $450k into the communities we serve in the first year, and over $2.4M over the useful life of the asset.

Cycle Connect’s budget for 2020 is $1.4M. Half of this budget is allocated to purchasing income-generating assets in bulk and creating a reliable supply chain that transports the products to Northern Uganda. The other half of the budget is allocated for Cycle Connect’s expanding operations, including our growing team, improving our services including for training, and field expenses that enable our officers to travel to the true last mile to reach smallholders in the most remote areas of Uganda.

Winning the Elevate prize would mean that Cycle Connect will be in a position to achieve our systems change strategy which is focused on replicating the model at scale through partnering with financial institutions. 

 We have the bold objective of catalyzing the movement of millions of smallholder farmers in East Africa out of extreme poverty. We know that we cannot achieve this level of systems change alone and are looking for partners to aid in amplifying our mission. The Elevate prize will enable Cycle Connect to mobilize more partners in the community and catalyze positive systemic change. 

 The funding will be used to pilot  the partnership replication model proof of concept in year one, followed by a bigger roll-out in year two. The funding will also be allocated to improving the organization’s systems and data-collection methods, enabling stronger analysis of financial and impact metrics. This will advance Cycle Connect’s internal systems as well as catalyze our movement to scale our model and change the way that financing is done so that it can reach smallholder farmers. For Cycle Connect, winning the Elevate prize would translate to a pathway out of extreme poverty for millions of families in East Africa--elevating humanity at all levels.

Cycle Connect needs partners to aid in diversifying our board, expanding our M&E, and advising our scaling strategy. 

• Board/Advisors- As CC expands, we are looking to diversify and grow our board. We are looking for board members and advisors who can provide support on our replication strategy and pathway to scale. 

• M&E- CCis in need of support from either internal or external data analysts to strengthen the process of collecting and analyzing client’s data to ensure CC’s decisions are always data driven. This is vital in expanding our operations, replicating our model, and adding new products to our portfolio.

• Replication and Scale Strategy- CC’s replication strategy is designed on partnerships. We can deliver our solution to millions of smallholders through partnering with local MFIs to provide a playbook on the best products, financing, and delivery options to better reach last mile farmers.

• Spring Impact- CC would like to learn from Spring Impact, experts in scaling proven social impact solutions.

• BRAC and/or other financial institutions with global reach- CC aims to partner with global finance institutions, such as BRAC, to replicate the CC farmer-centric finance model across East Africa and beyond. This would provide income-generating tools to millions of farmers, while simultaneously achieving systems change across financial institutions to financially include smallholder farmers