Nigerian rural farmers yet to explore mobile money through SMS

Industry watchers have noted that the inability of Nigeria’s regulatory authorities to allow telecom operators lead the mobile money revolution in the country has hindered its wide acceptance, especially in the rural areas. This has resulted in the country losing transactions worth trillions of naira annually, which would have further boosted the Gross Domestic Product (GDP).

According to World Bank data IBRD – IDA, as of 2014, the number of people living in rural areas in Nigeria is about 54 million. This rural population is higher than the total of rural and urban population of Kenya and Uganda. But in these countries, mobile money transactions run into over $29 billion and $8 billion, respectively, compared with Nigeria with annual mobile money transactions of less than $2 billion annually.

The success of mobile money operations led by telecom companies in these East African economies is driven predominantly by usage of large proportions of the rural populace who are mainly farmers. It has helped to reduce the incidence of robberies and violent attacks that often take place when rural dwellers have to carry cash from one place to another to perform transactions.

Working with a leading telecom operator in their country and microfinance banks, two young Ugandans – Gerard Otim and David Opio started Ensuibikko, a mobile money platform for rural dwellers about three years ago. Ensuibikko is a management tool for savings and credit cooperatives where most smallholder farmers belong. It enables them to use phone SMS to register to their cooperatives, apply for loan, receive and pay the loan, while also sending their savings by mobile money and at the same time, the system helps them to track their savings, credit and repayment.

Just as in Nigeria, many rural dwellers in Uganda find it difficult to operate individual bank accounts due to distance. This leads to excessive use of cash in transactions resulting in robbery, violent attacks to those carrying cash and sometimes officials of cooperatives handling the cash engage in fraudulent practices.

So, about three years ago, the Ensuibikko team began to get cooperatives usually of farmers to subscribe to the platform, but there are also traders and shop owners and anyone interested in spending money mobile in the villages who can also come on the platform, but through a cooperative.

Ensuibikko also works with microfinance banks (MFBs). These MFBs collect the funds from the cooperatives, noting what each individual member has contributed and all these are entered into the cooperative’s online account on the Ensuibikko platform.

Based on how much they have on their accounts, the cooperative members can make purchases by transferring money with SMS on their phones to the seller if the seller is on the platform, and can also receive payment from others on the platform using the same process. They type their names, the amount, the transaction purpose with few words and the unique code or password that they have been given. Each individual cooperative member can also send in their savings to the cooperative account using SMS on their phones.

When the cooperative members need a loan, they also make the request through SMS using the same process. The administrator of the online account who may be an official of the cooperative or the MFB, sees the loan applications of members on accessing the online platform. If guarantors are needed, they must be members of the cooperative and they can also send in their guarantee using SMS and their unique code or password.

If the loan is approved, the cooperative member is also sent the funds through SMS. If at any point, the members on the platform need cash either from the funds they gave the MFB or from the loan they have received through SMS, they can cash all or part of the money in their accounts with mobile money agents resident in the rural community representing the telecom network. These agents would simply verify their accounts and make the necessary deductions from their account based on the amount they want cashed.

Though the rural dwellers pay for every SMS, they do not pay any additional charges for the transactions. Ensuibikko is powered by a telecom company the team pays. The team makes profit from the subscription of the cooperative to the platform and from commissions from the MFBs.

Gerard Otim, co-founder, Ensuibikko, says: “We have a team of 10 people, some are contractors – agronomists, financial experts, extension service providers. They are not salaried staff, they also get commissions.”

On challenges, he says: “We have competition from some telecom networks in Uganda such as Grameen and Airtel who have come up with similar solutions. But we still have a very strong network of loyal customers, over 1,000 people. In addition to this service, we connect buyers and sellers of agricultural commodities. In fact, that is how we started the business. Along the line, we now discovered that it was difficult carrying out cash transactions and we came up with this solution working with telecom operators and MFBs.”

OLUYINKA ALAWODE