Financing agribusinesses: Mobile money shows more viability
As a result of mobile money financing schemes, farming businesses, most of which are in rural areas in Africa are able to enjoy agritrade financing in form of loans, subsidies and free inputs facilitated mainly through phones. The main advantage of mobile money financing for agriculture is the elimination of cash handling by other individuals during the transfer of the money from the financing individual/organisation to the farmer or agribusiness operator. This reduces or eliminates corruption, outright theft or violence that could result when individuals have to carry cash around.
It has been proven that mobile money financing option is the most viable means for governments and private investors to release funds to farmers or other agribusiness operators if agriculture in Africa is to experience the much needed significant development.
Last year in Nigeria, millions of registered farmers were reported to have enjoyed financing in form of fertilizer subsidies and free inputs through an e-wallet scheme that eliminates middlemen by sending personified electronic subsidy coupons to farmers’ phones.
Akinwunmi Adesina, Nigeria’s immediate past minister of agriculture said last year November, “We are now able to reach 92 percent of the farmers registered in our farmers’ data base with fertilizer, seeds and other essential inputs because the identification of the farmers enabled us to initiate an electronic wallet system through which all farmers in the data base are sent their farm subsidy coupons which they then redeem at the point of purchase of farm inputs from the private suppliers.
Annually, since 2012, each farmer enjoys about US$30 fertilizer subsidy, excluding subsidies for other inputs through an electronic coupons sent to their phones. In 2014, based on reports, with about 92 percent of 14million registered farmers said to have got access to two bags of fertilizer each, which costs N5,500 to N6,000 at 50 percent of the price, this means about 12.8 million farmers received N38.4billion financing in form of fertilizer subsidies in Nigeria in 2014.
Agritrade financing is being enhanced through telecom companies as farmers feel more secure using mobile phone services than going directly to banks.
Other examples of mobile money abound in Africa, most of these involve private sector investments in agriculture. For instance, two tech-entrepreneurs in Uganda provide a lesson for other African countries with their teeming bright young techy populations. These Ugandan youths developed Ensuibikko, an online platform that enables over 1,000 farmers in rural communities to send their savings to their cooperatives, get loans or make purchases through phone SMS. Ensuibikko works in collaboration with telecom companies, Microfinance Banks and Farmers’ associations.
Zoona eVouchers platform is another agribusiness financing mobile money option operating in Zimbabwe, Mozambique Zambia and Malawi. This enables government agencies and other organisations to give development grants, agricultural subsidies and various incentives to enhance farming practices and other small businesses.
Through the Zoona eVouchers platform, government agencies and other organisations are able to make bulk payments for specific non-cash purposes to give as grants, agricultural subsidies and other forms of incentives for farming and other developmental operations. Chrissy Martin, Zoona’s global partnerships manager stated, “eVouchers are much easier to track than cash vouchers, and they also help to avoid fraud, which is a common problem with paper vouchers.”
According to reports, Zoona has processed nearly 1 million vouchers for a wide range of clients, including the World Food Programme, the governments of Malawi and Zambia, and FAO since 2009. A pilot programme in Malawi for example is using eVouchers for a farm input subsidy programme. It reached 60,000 farmers, enabling them to buy hybrid seed from local dealers.
In Kenya, M-pesa and Tangaza Pesa are the two largest mobile transfer services in the country. Tangaza Pesa has a large platform which gives farmers opportunity to register with financiers, apply for loans and credit and make offers money transfers, voice calls and access to the Internet and data across multiple channels. The service works across all networks, and can be accessed with any SIM card, using mobile phones. Gichane Muraguri, Tangaza Pesa director stated, “We believe that we provide the best levels of security.” Tangaza Pesa also has a solution that helps to link buyers and sellers along the value chain.
The Musoni cloud-based management information system is specifically designed to improve the efficiency and reduce the operating costs of microfinance institutions and saving and credit cooperatives. Cameron Goldie-Scot, chief executive operator described Musoni as the next generation of microfinance. “You can apply for a loan today, and get it tomorrow,” he stated.
The system integrates mobile money transfer services, and incorporates a system which automatically sends SMS reminders to clients, for example about repayment dates.
Telecom companies are able to achieve more success in rural communities and thereby with farmers because they already have much wider reach in rural communities than banks even before the advent of mobile money. Also, farmers feel more secure using services of telecom companies than banks in mobile money financing/transactions.
OLUYINKA ALAWODE