ditor’s note: This is the final post in a three-part series that began two weeks ago, laying out three steps for embedding mobile money into agriculture development at the BoP. Click here for part one and part two.
The first and second blogs respectively introduced the need to conduct behavioral research into how people use cash as a preamble to forming strategic alliances, and some suggestions on how to form and manage those partnerships. The third step, as I detail in this post, considers the need to overcome illiteracy, financial illiteracy and, perhaps most importantly, a lack of trust by embedding mobile payments by large buyers to farmers into agricultural value chains.
Farmers are often unable to read and/or are unfamiliar with the numerous forms required to open bank accounts. They usually live nowhere near a financial institution and, in many other respects, have been otherwise disenfranchised from formal economic activity for generations. Nevertheless, research has shown a consistent pattern of interest on the part of farmers to learn how to receive and send mobile money. Herein lies an opportunity for the agricultural partner in a strategic alliance to leverage its status as a trusted intermediary to promote awareness and education about the features and benefits of mobile finance.
Those that work to develop agriculture (e.g. the private sector, foundations, governments, donors, NGOs, implementers, etc.) already transfer knowledge about production, post-harvest handling, marketing, farmer group formation and much more. They are well-positioned to integrate knowledge transfer regarding mobile finance as well.
DEMAND SIDE (FARMERS USING MOBILE MONEY)
Agriculture knowledge is typically transferred by convening farmers and other stakeholders on demonstration farms and/or conducting workshops, training sessions and tradeshows. These gatherings provide multiple and on-going touch points throughout the value chain that can be leveraged to promote awareness of, and education about, the features and benefits of using a mobile wallet.
SUPPLY SIDE (CASH-IN/CASH-OUT MOBILE MONEY AGENTS)
Meanwhile, in collaboration and coordination with the mobile payments alliance partner, the agriculture partner can work to identify, develop, train and even finance the network of independent agents. These agents are tightly aligned along the targeted value chain where the farmers live and work. Additionally, agents can come in the form of input suppliers, cooperatives, equipment vendors, traders, processors, warehouse operators or any other value chain stakeholder that might be ideally located and compliant with the selection criteria of the mobile financial services provider.
At the same time, behavioral research into cash usage to identify potential agents inside the value chain can also identify the larger network of merchants accepting mobile payments. These can be the same types of value chain stakeholders (in fact, an agent can also be a merchant) but can comprise a wider net that includes kiosks, schools, utilities, pharmacies, retailers and other actors in the village-based economy.
TRAINING CURRICULA FOR DEMAND AND SUPPLY
Many practitioners of finance for agriculture value chains – such as foundations, development companies or NGOs – currently engage in the creation and delivery of financial literacy curricula. While done on a somewhat limited scale to date, farmers’ need and desire to learn about mobile money presents the opportunity to significantly scale up financial – and specifically mobile financial – literacy training. The “high touch” nature of exchanging knowledge across the agricultural sector presents a tremendous opportunity for agriculture developers to help facilitate mobile money ecosystems in rural, agricultural value chains and communities by leveraging their status as trusted intermediaries.
The GSMA, hub organization for 850+ mobile network operators worldwide, has already identified the business opportunity in transitioning large buyers’ payments to farmers from cash to mobile money. Meanwhile, at the Technical Centre for Agricultural and Rural Cooperation’s (CTA) recent Fin4Ag conference in Nairobi there was a good deal of discussion about expanding the traditional definition of value chain finance by explicitly including mobile payments and mobile finance.
As mobile money providers and the agriculture sector continue to align, we will realize the potential of mobile finance to do for the base of the pyramid what commercial banking did for the industrial revolution.