Last Mile Financial Inclusivity For Sustainable Food Systems

Vault263 is an instrument vehicle with a mobile lending-saving technological approach for making easiest access of finance to existing and emerging Micro, Small, and Medium enterprises (MSMEs) especially smallholder farmers for regenerative agriculture and households in last mile communities. Smallholder farmers constitutes a greater number of entrepreneurs in underserved communities. Smallholder farmers, individuals and MSMEs in marginalised areas are financially excluded due to:

• Incomplete or lack of financial records
• Lack of investment in rural areas and smallholder agriculture sector
• Financial illiteracy

Vault263 is one of its kind of instrument that will offer tailor-made credit lines and monitoring to existing and emerging smallholder farmers, entrepreneurs and individuals in order to solve last mile financial exclusion.

Vault263 instrument vehicle will enable the marginalized population to take economic and financial risks so as to build sustainable food systems, create new and future opportunities as well as creating wealth for the community through investment. This is the only instrument vehicle that will be rural areas centred to reduce geographical location bias will not discriminate any human being.

The proponent’s solution is an instrument vehicle – Vault263 which is a start-up to provide customised credit lines to MSMEs and individuals through mobile lending-saving technology (MLST). By the use of mobile lending-saving technology (MLST), the proponent's instrument vehicle would supply MSMEs with tailored credit lines with a focus on smallholder farmers and individuals in unbanked and underbanked communities. With every type of mobile phone in the world, Vault263’s planned Mobile Lending-Saving Technology (MLST) will be used for loan borrowing, saves, transferring, and loan repayment remotely. Blockchain technology, credit worthiness/analysis tools based on artificial intelligence (AI), and mobile device-based platforms will all fuel the mobile lending-saving technological (MLST) solution. The proponent will offer the following 2 portfolios:

• i.            Revolving Funds Facility (RFF)

This facility will consist of funds for loans to regenerative agripreneurs and individuals. This loan portfolio will be managed by proposed third party experts and will have 5 tailor-made credit lines to suit every rural population’s cashflow. The 5 tailor-made credit lines include;

• Vault: This credit bouquet will be available to everyone in the underserved community, including women, young people, people with disabilities, people of color (including albinos and other minorities), people living in displaced communities, and people who lack formal identification to take financial and economic risks.  Unsecured collateral for the Vault Credit Line will range from US$1 to US$499.00, and secured digital collateral will range from US$500 and higher. A 5% interest rate will be applied over a two-year term.
• Forestry and Wetlands Management: This customized bouquet will offer loans to business owners that are interested in revitalizing wetlands and forests for ecosystem protection, carbon sequestration, and lowering global warming. This will be secured for a term of five years at a 7 percent interest rate.

• Soil Healthy and Input Management (SHIM): Secured loan for soil fertility/ enriching through use of organic manure and for hybrid and drought resistant seeds so as to create food security communities. Nine percent will be charged over a period of 3 years.
• Regenerative Agriculture Combo (RAC): This credit line will be for practising 2 or more, or regenerative agriculture in its holistic and will be for 5 years at an interest rate of 15 percent. This will be secured.
• Livestock Management: This credit bouquet will be tailored for breeding, crossbreeding, and raising climate-resistant hybrid cattle over a five-year period at 10%, will be available.

ii. Technical Support and Monitoring (TSM)

The proponent, will be in charge of the Technical Support and Monitoring facility. This portfolio will fund the provision of tailored support, community awareness campaigns, and meetings with smallholder farmers and subsistence farmers. Since smallholder farmers will make up a larger portion of our clients in underbanked communities, this portfolio will also offer customized meteorological data to last mile agripreneurs as part of its technical assistance portfolio.

However, the capitalization for the loan portfolio will be raised by commercial and concessional investors, and the capitalization for technical support and monitoring will be primarily raised by grants from philanthropies and other foundations.

The mobile lending-saving technological solution will benefit unbanked or underbanked micro, small, and medium enterprises (agripreneurs), particularly smallholder farmers who make up the majority of business owners in rural areas, as well as individuals, discriminated people, landowners, women, youths, undocumented, and disabled citizens, such as those who were impacted by the Gukurahundi genocide between 1982 and 1987 in Matebeleland Province and those who were displaced and affected by cyclone Idai in 2019

The last mile population is most affected—at least 76% of whom live on less than $1.50 per day as a result of financial exclusion and inefficient conventional methods of food production—the proponent's creative solution focuses on helping them so as to build sustainable food and nutrition security. Vault263 will have a considerable opportunity in this market given that 7.7 million people in Zimbabwe face severe hunger as a result of lack of access to financial resources, climate change, and the emergence of pandemic diseases. With a population of over 15.2 million people, Zimbabwe's total addressable market is anticipated to be around 10 184 000 individuals, or 67.7% of the country's total population

This instrument vehicle's emphasis on last mile financial inclusion and regenerative agriculture as climate wise farming will help agripreneurs reduce carbon dioxide emissions over the long term, after effective implementation, by about 250tCO2e yearly. This solution will have an influence on beneficiaries' lives by enhancing vegetation and soil fertility as well as productivity, which will raise household income for MSMEs and smallholder farmers by up to US$ 150 annually and lead to the development of environmentally friendly, sustainable food systems.

Presently, Mr. Learnmore Tiringindi, Mr. Prosper Tiringindi, and Mrs. Paidamoyo Mapanga are members of the Vault263 team. The team is ideally situated to launch and provide the solution's outcomes in at least five years. In his position as a competent and seasoned Human resources and administration officer for Regal Insurance Company in Zimbabwe, Mr. Learnmore Tiringindi has six years of practical expertise and a deeper knowledge of how these instrument vehicles operate.

Since graduating from York University in the United Kingdom, Mr. Prosper Tiringindi has been working as a social worker in Zimbabwe. Working with many populations from various communities comes so naturally to him and has a great connection. Mrs. Paidamoyo Mapanga is a holder of Diploma in Information Technology and is an IT guru who teaches Information Technology at all levels at Masunda High School in Zimbabwe and has 5 years hands-on experience.

Our complementary skill set, knowledge base, and attitude make us the ideal key team members for this breath-taking solution. As a team, we understand the significance of developing a strong instrument vehicle and structure that can support the image of a world-class business for the good of people through hiring well-qualified and experienced personnel.

However, the organisation will set up Implementation and Coordinating Committee for overseeing the day-to-day activities of the instrument. 

Vault263 is on ideation stage with proof of concept, so instrument vehicle is currently not yet serving its solution to any client but we aim to serve a huge number of MSMEs (Agripreneurs) and individuals up to last mile.

Vault263’s objectives in applying to MIT Solve is to acquire more knowledge, guidance and support from financial capital expert from MIT Solve for this instrument to be a success in Southern Africa - Zimbabwe. Furthermore, this instrument vehicle applied to Solve to get endorsements and assistance in launching this solution and to continually get some assistance inform of bespoke analytical support and connection from Solve investors network.

This solution is more competitive than other existing instruments due to the mobile lending-saving technological (MLST) strategy used by Vault263 to assist individuals and MSMEs, with a special focus on smallholder farmers who are adopting regenerative agriculture as climate wise farming. This solution is distinctive in that it allows customers to take economic and financial risks in pursuit of wealth creation by allowing them to borrow, save, transfer, and repay their loans utilizing mobile phones of any kind via USSD or App. This unique tool will assist existing and aspiring micro, small, and medium-sized businesses (Agripreneurs) in underserved communities in making the full transition from conventional farming to regenerative agriculture for increasing productivity and value addition. It will do this by providing mobile device-based loans, technical support, and monitoring.

This is the sole instrument vehicle that will prioritize financing to smallholder farmers and individuals while focusing on marginalized areas more than any other instrument now in use. The credit portfolios of Vault263 will be backed by collateral in the form of movable or immovable property, joint liability, or unsecured debt, depending on the amount. Our lending approach and channels, in contrast to currently available instruments, will be novel and include:

a) Community-based Financial Service Officers (CbFSOs)

b) Direct to customers;

c) Information and Communication Technologies (mobile lending-saving technology)

Existing lending institutions in Zimbabwe are urbanites centred, uses conventional ways of lending and prefer formal working class, do not offer technical expertise and have little or no access to last mile population.

Vault263’s solution will make it considerably simpler for MSMEs and people in marginalized communities to accumulate wealth and develop new business prospects with our mobile lending-saving technology. The following metrics will be used by the proponent to track its progress toward its impact objectives:

a) Total number of mobile lending-savings accounts (MLSA) opened

b) Clients who have been accepted for loans

c) The amount of loans that have been successfully repaid

d)The quantity of MSMEs and private applicants for loans

e) The area covered by regenerative agriculture

And our expected impact goals are:

• a)Bolstering productivity and value chain
• b)Creation of wealthy communities.
• c)Financial literacy to individuals, MSMEs (smallholder farmers)
• d)Full adoption of climate smart farming – regenerative agriculture
• e)Unfettered access to finances by last mile population
• f)Food and nutrition security

For this game-changing solution to be successful, a number of actions will be taken. Community meetings, modular distribution, campaigns, online and offline media plays, and stakeholder meetings will be used as the vehicles for public awareness campaigns to inform the public about Vault263's mobile lending-saving technological facility as well as the technical support and monitoring facility offered by the proponent for easy financial access, creating community wealth, and bolstering productivity and value chain.

The result of the aforementioned activities will be the accumulation of knowledge regarding credit and technical support for MSMEs and last-mile individuals to improve the value chain and systems of food production. The public will then show a change in attitude by participating in the creation of modular programming, producing vernacular radio plays, and volunteering to serve as village-based advisors to inform locals about the value of switching to climate-smart farming and regenerative agriculture.

Large borrowing by underbanked or unbanked communities will happen if the public and business sector accept it. After the target beneficiaries have fully accepted the initiative, the end results will include better food and nutrition security, increased fertility, reduced carbon emissions, financial inclusive (financial literacy) and reduced global warming.

Mobile device-based platforms, blockchain technology, and credit worthiness/analysis tools powered by artificial intelligence (AI) will be the foundation of Vault263's mobile lending-saving technological (MLST) solution. The core technology of this solution will be Unstructured Supplementary Service Data (USSD), a global system for mobile (GSM) communication technology. Clients will use networked mobile devices to remotely interact with this instrument vehicle for activities such as opening a Mobile Lending-Saving Account (MLSA), borrowing money, saving money, checking balances, sending money, and repaying loans. Since USSD doesn't need internet access and can be used on low-end mobile phones, it will be utilized to give unbanked and underbanked people access to money easily and seamlessly.

In this solution, blockchain technology will be applied in this solution to safeguard client data and store it in a blockchain database for more straightforward and impartial transactions than are possible with traditional methods. . Blockchain technology is an advanced database mechanism that allows transparent information sharing within a business network (https://aws.amazon.com/what-is/blockchain/). Vault263’s AI credit worthiness/ analysis tool will be used to accurately assess MSMEs and individual’s’ credit-worthiness to reduce borrower selection bias. This tool uses machine learning algorithms (MLA) to assist us to make data-driven decisions. 

The proponent's mobile lending-saving technology (MLST) is a novel method for facilitating easy access to finance for MSMEs and last-mile persons, with a special focus on smallholder farmers, who make up a significant portion of entrepreneurs (agripreneurs) in rural and underprivileged communities. . The smallholder farmers will range from commercial, semi-commercial and with the extension to subsistence farmers. Vault263 instrument will target individuals willing to take risks and every smallholder farmer with atleast 50 hectares for shifting from conventional farming to regenerative agriculture and its principles in order to build sustainable food systems that protects the environment and create new business opportunity for youths and women.

Our business model will consist of Revolving Funds Facility (RFF) and Technical Assistance and Monitoring (TAM) facility as the two main facilities for this instrument vehicle. Revolving Funds Facility (RFF) will fund for loans to individuals and MSMEs and will have 5 tailor-made credit lines. The borrowed money will be repaid into the facility at a predetermined time and at a predetermined interest rate, making it revolving money. This lending, saving, transferring and repaying using mobile lending-saving account (MLSA) will be done via USSD or mobile App. The loan portfolio will be managed by proposed third party experts.

Technical Support and Monitoring facility is going to be managed by the proponent – Vault263

.  This portfolio will fund the provision of tailor-made support, community awareness campaigns and training to individuals and smallholder farmers for full transition and adoption of regenerative agriculture. It will involve Monitoring the implementation and adoption rate by farmers.

The capitalization for loan portfolio will be mobilized through concession and commercial investors whereas technical assistance and monitoring (tam) will be largely capitalized through grants from philanthropies and donors. Concessional investors will assume a first loss tranche.

Initial capitalization for this mobile lending-saving technology will be mobilized through concession and commercial investors whereas technical support and monitoring (TSM) will be largely capitalized through grants from philanthropies and donors.

And the envisioned sources of cashflows for Vault263's instrument vehicle's financial viability will be through imposing time limits and repayment schedules, as well as charging lenders a reasonable interest rate. The tool will also take into account non-credit items including interbank transfers, providing livestock insurance, remittances, and selling insurance products for commission as a source of cashflow while addressing the financial needs of MSMEs (smallholder farmers) and individuals