90957 FOCUS NOTE Serving Smallholder Farmers: Recent Developments in Digital Finance A n estimated 500 million smallholder farming families (representing more than 2 billion people) rely to varying degrees on agricultural production for chain. The tight link with the market served as a collateral substitute, thereby helping to address one of the primary barriers to private-sector credit to smallholders: lack of their livelihoods.1 As the largest global segment by physical collateral such as a land title deed. However, livelihood of those living on less than US$2 a day, the advances in value chain finance2 are estimated to smallholder families are central to global financial reach only 7 percent of the world’s smallholder farmers, inclusion efforts—but reaching smallholders with the vast majority of whom remain noncommercial or financial services is challenging. only loosely connected to value chains (Christen and Anderson 2013). The focus on agricultural credit Most agricultural production is by nature seasonal, also obscures the fact that smallholders have various with time passing between cash outflows and inflows. financial needs as consumers and often have diverse Farming depends on the quality of the resource nonagricultural revenue sources—giving rise to a wide base (such as seeds and fertilizers); it is vulnerable range of required financial services, including insurance, to pests and spoilage; and it is exposed to volatile savings, and payments. weather and prices. Financial service providers face liquidity management and concentration challenges A number of private-sector actors and other due to covariant risks—farmers in the same area stakeholders are experimenting with digital financial generally borrow at the same time and often engage services (DFS), particularly those enabled by mobile in the same activities, and are therefore exposed phones, to overcome the specific challenges of serving to the same risks. Providers often require greater smallholder farmers and their families.3 Buoyed by the incentives to work in remote rural areas, where sparse relative success of DFS in the nonagricultural context,4 populations with low financial capability and weak a range of DFS deployments has been launched in infrastructure result in higher transaction costs. recent years aimed at going the “last mile” to extend financial services to smallholders.5 The efforts are still Conventional approaches to financial services for nascent and the challenges plentiful—but there is smallholders have historically focused on one product widespread commitment to exploring the potential of (credit) for one purpose (agricultural production). DFS to overcome a number of traditional “pain points” Agricultural credit is gradually evolving from supply- that currently limit smallholder use of formal financial driven, subsidized credit provided by public-sector services. (See Figure 1 and Figure 2 for examples of institutions to demand-driven credit supplied by a range how DFS can help meet smallholder financial needs). of providers. This evolution began when processors started providing credit for production and subtracting This Focus Note introduces some recent No. 94 repayment from the purchase price of the product. developments in this rapidly changing space. The June 2014 Over time, this developed into a more comprehensive featured case studies (i) identify traditional pain Jeremiah approach encompassing the entire agricultural value points in serving smallholder farmers (such as the Grossman and Michael Tarazi 1 Includes crop, livestock, and fisheries. IFAD’s 2010 estimate of holders of less than 10 agricultural hectares, based on FAO World Census of Agriculture and UNDESA Rural Population data. An estimated 446 million holders had less than two agricultural hectares. 2 Value chain financing encompasses “any or all of the financial services . . . flowing to and/or through a value chain to address the [financial] needs and constraints of those involved in that chain . . . .” Value chain financing can be internal (such as the provision of credit to farmers by commodity buyers) or external (such as bank loans offered on the strength of warehouse receipts). For a broad discussion on value chain finance, see Miller and Jones (2010). 3 See, for example, Statham, Pfeiffer, and Babcock (2013). See also CTA Technical Center for Agricultural and Rural Cooperation (2014). 4 A recent GSMA survey found that the largest mobile money service providers recorded over 58 million domestic person-to-person (P2P) transfers valued at over US$2 billion in June 2013. See http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/02/ SOTIR_2013.pdf. In Brazil in 2012, financial services agents processed 2.4 billion bill payments and over 670 million deposits or withdrawals. See Banco Central do Brasil website at http://www.bcb.gov.br/?SPBADENDOS. And in Kenya, a recent survey estimated that 62 percent of adults actively use mobile money services. See InterMedia Kenya FII Tracker survey (preliminary results from survey conducted from September to October 2013, results not yet validated). 5 CGAP maintains an online database of selected examples of DFS deployments in agriculture and other development sectors. See https:// docs.google.com/spreadsheet/ccc?key=0AmLodop1Cr1ldDdiUGFjRG44d2V1Y0VBWVdVM0IyNnc&usp=sharing#gid=0. 2 Figure 1. How DFS could improve smallholder access to inputs Smallholder DIFFICULTY FINANCING INPUTS LEADS TO LOW PRODUCTIVITY YIELDS Challenge Access to Subsidized Inputs Ability to Save to Purchase Access to Credit to Purchase Potential Solution (e.g., Nigeria GES Scheme, Inputs (e.g., mVISA, Tigo Cash) Inputs Rwanda mFarms and mVISA) GOVERNMENT IMPORTER/DISTRIBUTOR/ FINANCIAL SERVICE LENDER NEEDS NEEDS AGRODEALER NEEDS PROVIDER NEEDS Examples of Stakeholder • Low-cost method to reduce risk of Needs • Method to ensure • Prompt reimbursement • Cost-effective method agricultural lending such as (i) Potentially that subsidies are of inputs sold on credit to facilitate low-value mobile-enabled transaction history Addressed going to deposits and withdrawls to permit credit analysis (e.g., by DFS smallholder EcoFarmer, AgriLife) and (ii) farmers insurance • Tracking of SMALLHOLDER NEEDS SMALLHOLDER NEEDS • Reduce transaction costs of distribution of providing smallholder farmers with inputs • Method to access • Cost-effective, safe, and credit (e.g., Century Bank) subsidized inputs convenient method for • Verification of saving, perhaps transactions prior • Access to savings and/or committed savings SMALLHOLDER NEEDS to reimbursement credit to purchase inputs vehicle only for inputs of subsidies • Affordable credit for investment • Minimization of (e.g., Kilimo Booster, One Acre administrative Fund) costs • Affordable method to insure against loss of crops/livestock due to natural disaster, such as mobile-enabled agricultural insurance (e.g., Kilimo Salama, Juhudi Kilimo) Figure 2. How DFS could mitigate smallholder liquidity challenges Smallholder LIQUIDITY SHORTAGE AT HARVEST LEADING SMALLHOLDER LIQUIDITY MANAGEMENT Challenges TO LOWER EARNINGS, DECREASED WELFARE Potential Mechanisms for Maximizing Income Mechanisms for Smoothing Consumption Solution Ability to borrow against value of stored crops and to Ability to save harvest payments for future sell such crops at higher prices in the future (e.g., consumption (e.g., Tigo Cash, Zoona, E-Warehouse). SmartMoney). Examples of LENDER NEEDS WHOLESALER/BUYER NEEDS Stakeholder Needs • Ability to identify crops to serve as collateral. • Ability to disburse large amounts of money to Potentially many smallholder contract farmers over a short Addressed period of time. by DFS SMALLHOLDER NEEDS • Reduce risk from carrying large sums of cash. • Ability to borrow against present or future value of • Reduce transaction cost of payments to stored crops. smallholders. SMALLHOLDER NEEDS • Ability to safely and conveniently store funds and access when needed in the future. 3 cost and risk of making payments to farmers and lack access to formal financial accounts and services, delivering subsidized credit), (ii) discuss how DFS are they are typically paid in cash. This system has a number being used to overcome these pain points, and (iii) of weaknesses. From the perspective of the buyer, highlight some initial obstacles and successes. distributing cash payments to thousands of unbanked farmers is costly and dangerous. Cash disbursement Given the embryonic and rapidly developing state also poses security and liquidity management problems of DFS for smallholders, it is too early to draw for the farmers. They typically receive several months’ clear conclusions from the examples to date. Initial worth of income (and possibly more) in one day. Since evidence suggests, however, that while DFS via these funds often are stored at home, farmers run the mobile channels offer great promise for improving risk of being robbed or losing the money in the event the lives of smallholders and their families, significant of a fire or other disaster. In many rural communities challenges remain. One key obstacle is the lack of cash payments are typically made publicly in front of mobile phone penetration and network coverage, the entire community, so everyone knows how much suggesting that different forms of technology also each family has earned. This lack of privacy makes it should be considered. Furthermore, smallholders’ even more difficult for low-income farmers to smooth receptiveness to DFS via mobile channels in the case consumption and save, since an expectation to lend study countries appears to vary depending on their financial support to relatives may be part of the local experience with mobile phones in general and with culture. (See Box 1.) mobile money services in particular. This suggests that the success of mobile-enabled DFS may depend Efforts at digitizing financing for inputs are being tested in large part on factors such as nationwide mobile around the world, including in Ghana where migrating money adoption and smallholders’ experience using low-income farmers to traditional bank accounts has mobile phones for services such as voice, messaging, proven challenging. With only five commercial bank and agricultural information. branches per 100,000 Ghanaians, access to banking institutions is limited, particularly in rural areas.6 As of In addition, early evidence suggests that DFS innovations tailored to the agricultural context—while benefitting smallholders—often are driven by the interests not of Box 1. Smallholder Challenge: Liquidity smallholders but of other parties, such as governments Management seeking to reduce costs of cash subsidies or commodity Potential Solution: Mechanism for Smoothing buyers seeking to reduce costs and risks associated Consumption with cash payments. Future efforts should focus on complementing current DFS innovations with other Ability to save harvest payments for future innovations that are based more solidly on the financial consumption. needs, behaviors, and aspirations of smallholder families. WHOLESALER/BUYER NEEDS 1. Crop Payments in Ghana: Ability to disburse large amounts of money to many smallholder contract farmers over a Reducing Cost and Risk, short period of time. Improving Smallholder Reduce risk from carrying large sums of cash. Liquidity Management Reduce transaction cost of payments to smallholders. Many smallholder farmers around the world have SMALLHOLDER NEEDS relationships with buyers who provide credit to purchase Ability to safely and conveniently store funds inputs (and sometimes labor) in exchange for a promise and access when needed in the future. to sell their crops upon harvest. Since most smallholders 6 See World Bank, Global Financial Inclusion (Global Findex) Database. 4 2011, only about 25 percent of rural Ghanaians and 15 farmers in the cocoa pilot elected to set up a Tigo Cash percent of low-income Ghanaians maintained accounts account. In addition, the cocoa pilot demonstrated in formal financial institutions, according to the World that most farmers do not withdraw 100 percent of Bank Global Findex. the funds immediately, instead choosing to use some of their Tigo Cash for airtime top-ups and person-to- Commodity Payments in Ghana person (P2P) transfers. For example, in one payment Using Digital Financial Services to cocoa farmers, approximately two-thirds sent a P2P payment, while only 10 percent cashed out Tigo, a mobile network operator (MNO), is working immediately. Furthermore, over 85 percent of these with commodity buyers and nonprofit organizations farmers eventually cashed in, suggesting that Tigo Cash to use Tigo Cash mobile wallets to tackle the wallets could help fulfill latent demand for more formal challenges of cost and safety in making payments savings services. However, in the rice pilot, use of Tigo to smallholder farmers—while helping smallholders Cash was mixed—with rain-fed rice farmers largely manage their liquidity. cashing out while irrigated-rice farmers did not. The critical difference is that payouts for rain-fed rice were Tigo is rolling out services in four value chains: relatively low given lack of rain and low crop yields. cocoa (national rollout), rice (pilot), rubber (about Nevertheless, both pilots demonstrate that given to pilot), and maize (prepilot). Following a 2013 sufficient payouts, farmers will use Tigo Cash to store pilot with 200 cocoa farmers, a program based in funds, thereby facilitating consumption smoothing the Ashanti region now plans on moving more than and savings and possibly reducing the risk of families 10,000 cocoa farmers onto Tigo Cash payments. A running out of money before the next harvest.8 number of rice buyers are also working with Tigo Cash. One such buyer, GADCO, currently is piloting As for Tigo, it has seen major benefits beyond the Tigo Cash with approximately 1,000 farmers. If the fees that it receives for facilitating these payments. In pilot is successful, GADCO hopes to pay more than an initial pilot with cocoa farmers, only 3 percent had 5,000 rice farmers with Tigo Cash by 2018. a Tigo SIM prior to the pilot, but most farmers chose to obtain a Tigo SIM to transact on the mobile wallet Due to the costs and risks inherent in cash payments, platform. In addition, Tigo is using the opportunity to commodity buyers are eager to outsource payments cross-sell other products to farmers, including Family to Tigo. Buyers pay a fee (a small percentage of the Care Insurance, Tigo’s mobile-enabled life insurance value transferred) to Tigo, which is responsible for product. However, in rural locations where Tigo ensuring that funds are transferred and that agents coverage is limited, farmers are more reluctant to maintain sufficient liquidity to meet any farmer cash- obtain Tigo SIMs (see Supply-Side Challenges, infra.). out requirements. This arrangement also transfers the 7 risks of fraud and theft from the buyers to Tigo and Challenges its agents. For GADCO, its primary reason for shifting farmers to mobile payments was to eliminate its risk of While mobile phone-enabled commodity payments being robbed when delivering cash payments. have generated enthusiasm in Ghana, Tigo and its partners have experienced a number of demand and Early evidence from the pilot projects suggests that supply challenges during the pilot and rollout phases. farmers also are eager to adopt Tigo Cash. While the system was designed to give farmers the option Demand-Side Challenges to use an electronic voucher to cash out at a Tigo Initially, Tigo and its partners had to address lack of Cash agent without opening a Tigo Cash wallet, most farmer awareness and understanding of mobile money 7 For a general discussion on challenges of managing agent liquidity, see Flaming, McKay, and Pickens (2011). For a broader discussion of the role of agents in facilitating access to financial services, go to the CGAP website at http://www.cgap.org/topics/agent-networks. 8 There is anecdotal counter-evidence, however. A farmer near Kisumu, Kenya, who uses M-PESA to repay a supplier for inputs he received, was asked why he did not keep a balance in his M-PESA wallet. He responded, “It’s too easy to spend money with M-PESA. In the rural areas, there is little to spend cash on so if I want to save, I save in cash.” 5 services. Most farmers were unaware of mobile money, who tend to live in more remote areas. While this will which is not surprising since, as of early 2014, only about continue to be a challenge in the short term, Tigo 8 percent of Ghanaian adults were active mobile money has plans to expand coverage in many such areas. In users. Given their limited margin for error, smallholder 9 addition, bringing farmers onto the Tigo network will farmers tend to be cautious about adopting new boost subscriber numbers in rural areas, which should products. Therefore, Tigo needed to establish trust— justify investments in rural network coverage. and so it partnered with nonprofit organizations such as Agribusiness Systems International (ASI), a subsidiary Another supply-side challenge is ensuring sufficient of Agriculture Cooperative Development International/ agent liquidity in rural areas. Here, too, Tigo Volunteers in Overseas Cooperative Assistance (ACDI/ benefited from partnerships. Prior to implementation VOCA) that provides technical assistance to build the of the pilot projects, ASI mapped out farmer and capacity of farmers and agribusinesses. As a trusted third agent locations and surveyed farmers to understand party with ties to smallholder rice farmer communities, their financial behavior. Tigo then strengthened its ASI was able to leverage its relationship with farmers agent network in these areas as needed. Tigo also to sensitize them to the benefits of receiving payments works closely with partner banks to ensure adequate via Tigo Cash. liquidity. Agent liquidity has been less of an issue so far, since the first two pilot projects were with cocoa Once farmers had expressed their interest in mobile farmers and rain-fed rice farmers, both of whom money services, proper training was required. Key have relatively low incomes and predictable harvest training challenges related to illiteracy and financial dates. Agent liquidity is expected to pose a greater capability. About 30 percent of the target farmers challenge in the future, however, particularly once were illiterate, and most farmers had limited commodities such as rubber are included, since such experience with formal financial services and no commodities have no distinct harvesting season and knowledge of electronic money. In addition to command higher payouts than that of cocoa and rice. conducting trainings, Tigo appointed Tigo Cash “ambassadors” (community members who receive 2. Government Subsidies for small gifts such as souvenir t-shirts) to support users, Inputs in Nigeria: Reducing and it relied in part on help from community youth who Costs and Increasing Yields are literate and technologically savvy. With respect to financial literacy, Tigo and its agents spent a lot To increase yields and promote food security of time explaining the concept of e-money and the and rural development, many countries subsidize importance of remembering and protecting personal fertilizer and seeds for many of their smallholder identification numbers (PINs). Tigo found that role- farmers.10 The efforts of the Federal Government playing with prospective customers proved to be of Nigeria (FGN) provide a good case study on particularly effective in rural areas and that trainings how the cost of administering such subsidies, a key should be conducted no more than one week before component of financing the value chain, can be the first payments to ensure that participants are able reduced through DFS. In 2011, FGN spent NGN 30 to remember and apply the concepts properly. billion (approximately US$180 million) on its fertilizer subsidies. Under this scheme, FGN assumed Supply-Side Challenges responsibility for procurement and distribution Network coverage has posed a challenge in some of fertilizer by placing orders with suppliers and rural areas. As a result, some farmers appear to directing suppliers to deliver the fertilizer to the be reluctant to activate SIMs in areas where Tigo’s respective state governments. FGN provided coverage is limited. At present, this is a greater a general 25 percent subsidy on the cost of the concern in northern Ghana and among cocoa farmers, fertilizer delivered to the state governments, with 9 Based on MNO statistics provided to the Bank of Ghana (Ghana’s Central Bank). MNOs often define “active user” as someone with at least one transaction per 30 days, but some MNOs in Ghana use longer periods of up to 90 days.. 10 This Focus Note addresses only the digitization of farmer subsidies and does not take a position on the merit of providing government subsidies for smallholder inputs. 6 the intention that this would reduce the cost to Box 2. Smallholder Challenge: Difficulty smallholder farmers by 25 percent. (See Box 2.) Financing Inputs Leads to Low Productivity Yields In practice, government distribution of fertilizer One Solution: Access to Subsidized Inputs was inefficient, expensive, and rife with corruption. Without effective oversight mechanisms, some public officials channeled fertilizer to political allies. GOVERNMENT NEEDS Many private-sector stakeholders used their political Method to ensure that subsidies are going to smallholder farmers. connections to obtain subsidized fertilizer and sell it at unsubsidized prices.11 As a result, the subsidy Tracking of distribution of inputs. program severely hampered the ability of legitimate Verification of transactions before subsidy reimbursement. private-sector actors to develop well-functioning markets and value chains for fertilizer sale and Minimization of administrative costs. distribution. Furthermore, Nigeria’s Federal Ministry IMPORTER/DISTRIBUTOR/AGRODEALER of Agriculture and Rural Development (FMARD) NEEDS estimated that only 11 percent of subsidized Prompt reimbursement of inputs sold on fertilizer actually reached smallholder farmers. 12 credit. SMALLHOLDER NEEDS The Growth Enhancement Method to access subsidized inputs. Support Scheme Access to savings and/or credit to purchase inputs. In 2012, 13 FMARD launched the Growth Enhancement Support (GES) scheme to transform the delivery of fertilizer subsidies in the country. messages confirming their registration and notifying Under the GES scheme, the government’s role them of when and where to go to redeem their shifted from direct procurement and distribution of subsidy. fertilizer to facilitation of procurement, regulation of fertilizer quality, and promotion of the private-sector Registered farmers with mobile phones redeem fertilizer value chain. Today, FGN and relevant subsidies using their own phones, while those Nigerian state governments each contribute 25 without phones can use another phone to do so. percent of the fertilizer cost resulting in a 50 percent The GES scheme assigns a certain sum of subsidy subsidy provided directly to smallholder farmers. credit to each farmer; these credits are associated with the farmer’s GES ID number and, if applicable, Under the GES scheme, state and local governments the farmer’s mobile phone number. In either case, are responsible for registering eligible smallholder no funds are directly transferred to the farmers, so farmers (a farmer with five or fewer hectares of farmers can use the service without registering for farmland). Farmers manually fill out a machine- a mobile wallet. Registered farmers with phones readable form, data are processed and captured in receive an SMS message that they have received a national database, and farmers receive a unique their subsidy and can visit their local Agro Dealer GES ID number. If farmers have access to a mobile Redemption Center14 to purchase their inputs. phone, their phone numbers are recorded during Generally speaking, registered farmers without registration, and the system sends them periodic phones will realize that it is time to redeem 11 Nigerian Minister of Agriculture and Rural Development Akinwumi Adesina stated on 23 August 2013: “To put it bluntly: government was not subsidizing farmers; instead it was subsidizing corruption. Farmers’ powerlessness worsened as high quality seeds and fertilizers they need to raise their farm productivity were taken over by the elite, the rich and politically powerful. For the few fortunate farmers that got fertilizers, they often got them in bowls, like beggars. Farmers lost their dignity.” 12 See Miller and Jones (2010). 13 Several pilots had been regionally tested from 2008 to 2011. 14 As of mid-2013, there were 1,466 Redemption Centers nationwide. See Aiyetan and Pindiga (2013). While Redemption Centers are supposed to be private shops, in practice, many are set up in local government warehouses due to the lack of a developed private-sector agricultural dealer infrastructure. 7 Table 1. Federal Fertilizer Subsidy Expenditures and Outreach, 2011–2013 2011 2012 2013 Federal Costs (Subsidy & US$180 million US$30 million US$96 million (est.) Administrative) Number of Smallholders 600,000–800,000 1.2 million 4.3 million Benefiting Cost per Smallholder US$225–300 (est.) US$25 US$22 (approx.) Receiving Fertilizer their subsidies when other farmers within their in 2012 FGN reached 1.2 million smallholders community receive these SMS messages. At the while spending just NGN 5 billion (approximately Redemption Center, farmers pay their portion US$30 million) in subsidy and administrative costs. and redeem subsidies by sending an SMS 15 to the Even after including state government matching central platform requesting authorization of subsidy contributions of NGN 3.8 billion (approximately redemption. Farmers who did not provide a mobile US$23 million), the subsidy cost per farmer phone number when registering for the service can dropped by over 80 percent from over NGN 37,500 conduct the transaction by using a phone available (approximately US$230) in 2011 to less than NGN at the Redemption Center and supplying their GES 7,500 (approximately US$46) in 2012. In 2013, FGN ID number. If the transaction is successful, both the reached 4.3 million smallholders at a cost (including farmer and the agrodealer receive confirmation subsidies and administrative costs) of approximately messages authorizing the subsidy redemption. For NGN 12 billion (approximately US$96 million). (See the first two years (2012–2013), this scheme was Table 1.) largely managed by Cellulant, a technology company licensed as a mobile payment service provider. Key Challenges to the GES Scheme Initial Results of the GES Scheme While the revised GES scheme is more efficient and reaches more smallholder farmers than prior To prevent obstruction by vested interests that schemes, it faces a number of challenges. Some stood to lose from the new implementation, the challenges are specifically related to the use of GES scheme was rolled out very rapidly. The first mobile phones, while others are not. pilot project started in November 2011 and national rollout began in March 2012. In 2012, 1.2 million Challenges Related to the Use of Mobile Phones smallholder farmers purchased subsidized fertilizer • Network Connectivity: Network connectivity under the GES scheme. By year-end 2013, 8 million varies significantly in Nigeria, particularly in rural farmers were eligible for subsidies, of which 4.3 areas. Some farmers have been unable to redeem million farmers had obtained benefits.16 subsidies because of system failures due to lack of network access. One agrodealer near Abuja even Compared to the prior subsidy program, the GES recommended returning to a paper voucher-based scheme has proven to be much more efficient and system for this reason. transparent. As previously noted, FGN spent NGN • Access to SIM and/or Handset: While most urban 30 billion (approximately US$180 million) in 2011 to Nigerians own their own SIMs and handsets, only subsidize fertilizer, nearly 90 percent of which never about half of Nigerian farmers have their own reached the intended participants. Stakeholders phones. Farmers who share a SIM are unable to use have estimated that 600,000–800,000 smallholders the mobile phone number as a unique identifier,17 obtained subsidized fertilizer in 2011. By contrast, while those who share a handset may not regularly 15 Farmers may call a phone center for support if they are unable to redeem the subsidy using SMS. 16 Although 9 million farmers were registered from 2012 to 2013, only 8 million farmer accounts had been activated due to the time lag between farmer registration at the local level and the validation and uploading of farmer data to the central platform. Of the 3.7 million farmers who were eligible for subsidies but did not purchase subsidized fertilizer, it is believed that most elected not to purchase fertilizer, while some attempted to redeem subsidies but were unsuccessful. 17 While each farmer has a unique GES number, the mobile phone number is supposed to serve as a form of multifactor authentication. 8 receive messages sent to them. Cellulant estimates Redemption Centers still use paper-based master that at least 30 percent of the farmers within a lists, farmer registers, and transaction registers, all particular community must have (i) registered of which must be sent to the state Commissioner with a unique SIM and working handset and (ii) of Agriculture for certification. Once the state entered all registration information correctly for government signs off, these documents are sent there to be sufficient community awareness of the to FMARD and then to Cellulant for reconciliation. subsidy redemption location and dates within that As a result, suppliers often have to wait months community. Only if this critical mass is reached before being reimbursed by the government for will farmers without phone access know when the subsidized portion of the fertilizer cost. to proceed to the local Redemption Center to • Consumer Protection: Farmers still can be redeem their subsidies. taken advantage of at Redemption Centers, • Other Issues: Other reported challenges to the as many are not fully literate and/or financially use of mobile phones include (i) lack of airtime to capable. Anecdotal evidence suggests that some process redemptions via SMS at the Redemption dealers convince farmers to pay them to conduct Center; (ii) dead battery in the handset; (iii) lost transactions as third-party transactions rather or stolen handset; (iv) change in SIM between than helping them to conduct the transactions registration and redemption; and (v) nonreceipt of themselves. informational messages regarding registration and • Identification: Limited customer identification and redemption. verification is performed due to the absence of universal national IDs, digital photographs, and/ Other Challenges or biometric data. In practice, mobile phones have A number of other challenges unrelated to the use not proven to be a reliable means of identification of mobile phones have been identified in the rollout for the reasons noted earlier (dead batteries, lack of the GES scheme: of airtime, lost or stolen handsets, lost or changed SIM, etc.). • Delay between Registration and Validation of Eligibility: The registration process still is New Technologies not fully automated. While the GES scheme has moved from written registration forms to machine- In response to these challenges, the GES scheme readable forms, there is still a significant delay is experimenting with different technologies, between the registration date and the date upon each with different functionalities and ambitions which the farmer becomes eligible to participate with respect to financial inclusion. Cellulant, for in the program. Machine-readable forms need to example, is beginning to implement the Nigeria be transferred from the various local government Agriculture Payment Initiative (NAPI), under which units to be scanned by Data Sciences, an IT each farmer’s biometric information will be captured company. Once the forms are scanned, the data using a biometric point-of-sale (POS) device and are transferred to Cellulant, which then uploads the farmer will be issued a new national identity the data to the central platform and makes the card. The national ID will be an EMV smart card information available at Redemption Centers. that will be linked to each farmer’s GES account, Only at this point are farmers eligible to receive enabling farmers to redeem subsidies at POS subsidies. devices using their ID. This service will be able to • Delayed Reimbursement of Suppliers: Despite transact offline and send transactions in batches, the use of mobile phones for communication which should mitigate network connectivity with the farmer, the scheme still relies on paper challenges. In addition, farmers will be able to use records because of the lack of a fully functional their ID as a debit card tied to a no-frills Bank of electronic government ecosystem in Nigeria. Agriculture account, through which farmers will be 9 able to save and seek access to credit, insurance, 3. Other Digital Finance and other agricultural financial services.18 Other Innovations Benefitting agricultural stakeholders also will be connected to Smallholders the farmers through NAPI, including aggregators, input suppliers, agrodealers, financial institutions, The prior case studies highlighted how DFS can and providers of agricultural information services. benefit smallholders by facilitating commodity An initial pilot was being launched in one Nigerian payments, consumption smoothing, and the ability state during the first half of 2014. to save for and access subsidized inputs. This section introduces a number of other DFS deployments in Consult Hyperion, another technology service the early stages of development, each of which is provider, has been authorized to develop a pilot aimed at overcoming a traditional hurdle in reaching using NFC cards. Under the pilot, farmers in two smallholders with financial services: (i) an electronic states will be registered using tablets that collect warehousing service aimed at facilitating access to all data electronically for same-day transfer to warehouse receipt credit, (ii) mobile phone-enabled the central database. Officials responsible for agricultural insurance services, and (iii) digital registration will take digital photographs of the ecosystems that are using farmer transaction data to farmers and give them smart cards. As in the evaluate creditworthiness. (See Box 5.) past, each farmer will be assigned to a particular Redemption Center, but agrodealers now will be Lack of Liquidity at Harvest: equipped with low-cost NFC-capable Android e-Warehouse in Kenya tablets. When farmers go to their local Redemption Center, they will identify themselves by tapping the Lack of liquidity at harvest time is a major financial card on the tablet. The dealer will see a photo of the challenge for the world’s smallholder farmers. Many farmer, along with the farmer’s identification and smallholder farmers have little or no cash left over subsidy eligibility information. Transactions can be from the prior harvest, and therefore, go through uploaded in batches whenever an online connection a “hunger season” before a new harvest (Thurow is established, allowing individual transactions to 2012). The desperate need for income, however, take place in the absence of network connectivity. often forces farmers to sell their crops when the market is flooded and, consequently, when prices While both initiatives aim to improve the are low. Ironically, these same farmers are often distribution of input subsidies, the approaches forced to purchase the same crops for their family’s taken differ markedly with respect to financial consumption later in the season when prices have inclusion. (See Box 3, for an example from Rwanda.) risen. Storage warehouses allow farmers to have the Consult Hyperion’s scheme is specifically aimed at quality and amount of their crops certified. They can improving the delivery of input subsidies. With its then use this certification (called a warehouse receipt) more limited ambitions, the scheme can be rolled as collateral to obtain a commercial loan. This loan out more quickly and at a lower cost than the NAPI permits farmers to sell their crops at a later date when scheme. The NAPI scheme will require costlier supply is limited and prices have risen. However, equipment for biometric data capture, but it offers most commercial warehouses are too distant, are too the potential for fuller financial inclusion in the expensive, or have minimum amount requirements future by connecting farmers to a broad range of that prevent use by smallholders. (See Box 4.) agricultural financial services. What is notable about both schemes, however, is that due to limitations of In Kenya, the Grameen Foundation is partnering network connectivity and handset ownership, both with Farm Concern International (FCI) to develop are moving away from the mobile phone as the an e-Warehouse pilot program for maize farmers. primary channel for service delivery. Farmers are able to store their grain at home or 18 While Bank of Agriculture is the lead bank, all Nigerian banks are connected to NAPI and will be able to offer financial services to farmers through the national ID. 10 Box 3. Is Rwanda’s Approach to Fertilizer Subsidies More Inclusive? Like Nigeria, Rwanda is relying on technology to The mobile wallet provides farmers with a safe and improve the delivery of subsidized fertilizer to convenient way to save, and no fees are charged for smallholder farmers. Currently, local government cashing-in or paying merchants, thereby facilitating representatives identify eligible farmers, after which digital payment of their portion of the inputs. Farmers the Ministry of Agriculture and Animal Resources will no longer need to bring a paper voucher to the (MINAGRI) sends staff equipped with handheld dealer, as payment via the farmer’s PIN-protected scanners and Bluetooth printers to record each mVISA account ensures that only eligible farmers farmer’s details and print paper vouchers. Farmers redeem subsidies. The dealer will confirm the farmer’s redeem vouchers at local agrodealers, who confirm eligibility using a master list (currently paper-based eligibility using a master list. At the end of each but expected to shift to electronic once MINAGRI season, dealers provide the vouchers and master list adopts mFarms) that contains details such as the to the suppliers, who then claim reimbursement from farmer’s national ID number and mobile phone MINAGRI. Currently, verification of paper vouchers number. Since payments via mVISA will be easier to is a challenge; for the first harvest season in 2014, match to subsidy redemptions claimed on the dealer’s MINAGRI rejected 21 percent of submitted vouchers master list, MINAGRI plans to verify and reimburse for noncompliance with reporting requirements. subsidies weekly. As in Nigeria, government officials expect that moving While adoption of mVISA should help MINAGRI from paper-based to digital subsidies will lower achieve its goals of improving input subsidy costs, reduce fraud, and streamline the processes distribution, equipping farmers with mVISA wallets of registering farmers and reimbursing suppliers also offers opportunities for fuller financial inclusion. for redeemed subsidies. Consequently, MINAGRI Some farmers are already using mVISA to pay utility is piloting efforts to replace the paper-based bills and school fees. In addition, since mVISA accounts system with an electronic system using (i) mVISA, are bank-based mobile wallets, farmers are instantly an interoperable mobile wallet, and (ii) mFarms, an connected to a licensed deposit-taking institution. In Android-based fertilizer supply chain management this manner, mobile wallets developed to facilitate system that currently is being used by agrodealers to fertilizer subsidy payments can serve as a stepping manage their operations and is expected to eventually stone to full-fledged banking services, including facilitate data sharing among MINAGRI, suppliers, and formal savings, credit, and insurance.* agrodealers. Although Rwanda’s approach may offer greater The key difference between the Nigerian and potential for financial inclusion of smallholder farmers, Rwandan schemes is that, from its inception, Rwanda’s it, too, faces challenges. Low rates of farmer uptake initiative incorporates a multifunctional mobile wallet. during the pilot largely can be attributed to insufficient At the beginning of the season, MINAGRI identifies awareness and training efforts due to the short eligible farmers and collects information such as their timeframe for pilot implementation. These issues and name, national ID number, mobile phone number, technical glitches—such as receiving SMS messages in and the type and value of the fertilizer subsidy. English rather than in Kinyarwanda—can be addressed MINAGRI transfers this information to Bank of Kigali with greater preparation before full rollout of services. and Urwego Opportunity Bank, who remotely register The biggest challenge, however, to the success of the farmers for mVISA, a bank-based mobile wallet Rwanda’s scheme is network connectivity. As in service. Registered farmers receive a text message Nigeria and Ghana, network access in rural areas can with instructions on how to set up a PIN and use their be unreliable, and some dealers are already calling mVISA accounts, and bank staff go to the villages to for a return to paper vouchers if network connectivity sensitize and train farmers on how to use the service. does not improve. *For more on financially inclusive G2P payments, see Bold, Porteous, and Rotman (2012). collectively with other farmers or, in some cases, collection tools (TaroWorks™) that are used by the e-Warehouse program sets up village-level trained village knowledge workers to collect and warehouses.19 The innovation behind e-Warehouse upload farmer storage information: the amount, the lies in Grameen Foundation’s mobile-based data storage method (to indicate risk of pests or spoilage), 19 The costs of village-level warehouses are covered by FCI for the first six months before being transferred for collective management by smallholder farmer participants. 11 Box 4. Smallholder Challenge: Liquidity Box 5. Digital Ecosystems for Shortage at Harvest Leading to Lower Smallholders: Where Do Financial Earnings, Decreased Welfare Services Fit? A number of service providers see digital financial One Solution: Mechanism for maximizing services as just one component, and perhaps even income through ability to borrow against the final component, of a much broader digital value of stored crops and to sell such crops at ecosystem that connects all key participants in a higher prices in the future. particular value chain, including farmers, farmer groups (cooperatives and aggregators), agricultural dealers, commodity buyers, financial service providers, MNOs, and others. The ecosystem LENDER NEEDS initially draws in farmers by providing, sometimes for Ability to identify crops to serve as collateral. free, access to information such as weather reports, farming tips, and market prices. Agricultural dealers SMALLHOLDER NEEDS would then pay a fee to target registered farmers Ability to borrow against present or future with input advertisements. Buyers would be paid value of stored crops. to upload information about their crop purchase transactions, thereby creating an information trail on specific farmers, what and how much they sell, and the amount of payment the farmers received. This information could be used to establish and the moisture content (to indicate propensity creditworthiness of farmers who typically lack any toward rot or disease).20 A global positioning system formal credit history. Financial service providers device records location at the time of the data input, would use the farmer transaction history to sell helping to ensure that those inputting data are not loans and other financial products via the mobile channel. Ultimately, once the ecosystem is fully remotely inventing information and that the grain running, it would provide the rails for the related can be tracked down if needed. Based on the data financial transactions, such as buyer payments to collected and the value of the stored grain at harvest farmers for their crops, farmer payments for inputs, or farmer repayments of loans. time, Grameen and FCI determine the loan eligibility amount. They share this information with a partner A number of these ecosystems are in the early stages of development, including EcoFarmer in financial institution, which relies on this data to make Zimbabwe (a product line of MNO Econet) and a final credit decision and disburses an advance to the Agrilife in Kenya, Uganda, and Indonesia (led by IT farmers against the value of their stored crop. developer Mobipay). While still nascent, they are showing early, although modest, successes. For example, Agrilife’s collection of farmer transactions Risks related to storage and side-selling are mitigated has resulted in an increase of loans to farmer in a number of ways: (i) farmers guarantee each participants. One of the three banks currently other’s loans, and are also mobilized to check the using the Agrilife platform, Century Microfinance Bank, lends to individual Agrilife farmers via farmer grain of their fellow farmers throughout the storage cooperatives and other aggregators, from whom it period; (ii) the village knowledge workers conduct obtains a loan guarantee. In August 2013, Century “verification checks” throughout the storage began lending via Agrilife. By December 2013, period—these checks are collected via mobile Century’s outstanding loan portfolio had risen from KSH 25.2 million to KSH 88.6 million. Using the application and measure the moisture content and Agrilife platform, Century was able to increase its quantity of grain being stored at the household or loan portfolio by 250 percent in five months with group level; and (iii) the loans themselves act as a minimal extra costs. risk mitigant against side-selling, as farmers are less likely to side-sell if they have some cash to weather In addition, the lender’s financial exposure is limited: shocks and if they are able to sell at a higher price at the loans cover only 50 percent of the value of the a later date as a result of group bulking and selling. grain stored, and with estimated price increases 20 In cases where farmers store their crops at their home or on a group level outside the village warehouses, farmers or farmer groups are personally responsible for guaranteeing the crops they are storing. Such farmers need to adhere to minimum storage requirements before their harvest information is entered into the e-Warehouse system. For example, if the moisture content of the maize exceeds 13.5 percent, or if the structures are not protected from rain or rats, they cannot participate. 12 of about 50 percent, the loan exposure is typically smallholder farmers by (i) outsourcing farmer equivalent to only a third of the value of the grain registration to lenders and agricultural dealers at sale time. equipped with a mobile application, (ii) using remote, index-based monitoring technology that does not e-Warehouse is still in its very early stages of design. The require costly in-person verification of claims, and pilot indicates that while digitization can help connect (iii) using M-PESA for payouts. Another key to its farmers to finance, there are still challenges. One expansion was moving from an “opt-in” approach challenge is finding partner financial institutions that (requiring marketing to encourage farmers to make a are both comfortable with the inherent risk (particularly “grudge buy”) to an “opt-out” approach through which around home storage) and willing to commit the farmers are automatically enrolled upon purchasing required internal resources. Another challenge is time applicable products. As of the end of 2013, nearly sensitivity—farmers at harvest time are in a hurry to 185,000 smallholder farmers in Kenya (and Rwanda22) access funds to meet immediate cash flow needs, and had obtained Kilimo Salama insurance, of which a vast the e-Warehouse process takes time. Finally, ensuring majority were farmers taking loans from MFIs to buy accuracy of collected data is a challenge that Grameen certified seed and fertilizer, where the insurance was and FCI are trying to address through continuous mandatory and bundled into the loan.23 According to training of the Village Knowledge Workers. Syngenta, a 2012 impact assessment concluded that insured farmers invested 20 percent more and earned Reducing Risk: Agricultural Insurance 16 percent more than their uninsured neighbors. in Kenya and Zimbabwe Key challenges that Kilimo Salama faces relate to Crop and livestock insurance reduce the risk in trust and profitability. Most farmers either have agricultural lending, helping lenders and farmers alike. no experience or a bad experience with insurance In Kenya, the Syngenta Foundation for Sustainable products. Sensitizing farmers has been a costly, time- Agriculture and UAP Insurance have developed Kilimo consuming process, and most early adopters initially Salama (Safe Agriculture), an index-based weather insure only a small amount of seed or other inputs insurance product that allows farmers to insure until they are confident that payouts will be made inputs purchased at participating agricultural dealers. (IFC n.d.). In addition, Kilimo Salama has incurred Farmers pay a premium equal to approximately 5 significant upfront costs for purchasing required percent of the $100 worth of inputs required to hardware and software, obtaining government plant one acre of maize, and the input manufacturer approvals, and developing partnerships and matches with another 5 percent. Farmers can register relationships with agrodealers, farmers, and others. through microfinance institutions, cooperatives, As a result, there are still questions about the viability or agricultural dealers, all of whom use a mobile of the product, at least until it achieves sufficient phone application (developed jointly by Syngenta economies of scale. and Safaricom) to enter the farmer’s details into the system. The farmer then receives a confirmation SMS MNO Econet is developing a similar insurance listing registration details and a policy number. 21 product in Zimbabwe. EcoFarmer, a joint venture Rain levels are monitored using satellite data and between Econet’s product line EcoFarmer and Cell automated weather stations; in the event of excess Insurance, insures 10 kg bags of Seedco EcoFarmer rain or drought, funds are automatically paid into the Special Maize Seed, sold at EcoFarmer agents and farmer’s M-PESA account. partners. Farmers first register as EcoFarmers at the agent or partner institution by providing identification Kilimo Salama has developed a low-cost agricultural information. Farmers then can purchase insurance insurance product that can be affordable for using an Econet-enabled mobile phone by dialing 21 See http://kilimosalama.files.wordpress.com/2010/02/kilimosalama_v031.pdf. 22 As of early 2014, farmers in Rwanda were not yet using mobile phones to access Kilimo Salama services. 23 While bundling insurance with loans for the purchase of agricultural inputs can facilitate access to insurance, this approach raises concerns about whether consumers clearly understand the costs and benefits of bundled products. For a discussion of bundling in the context of microinsurance, see CGAP, Section 6c (2012). 13 a USSD code, entering a voucher number, and ecosystems continue to expand, we can expect to see paying an annual premium of US$10 (or US$2.50, more financial service providers targeting the largely if the farmer wants only reimbursement of the untapped smallholder client base. seed purchase price). 24 In the event of excess rain or drought, farmers receive a payout through the The use of DFS to reach smallholders nevertheless mobile channel of 10 times the premium paid. A key 25 faces a number of challenges. One key challenge obstacle in Zimbabwe to customer uptake is farmer is that the traditional difficulties of digital finance reliance on government pay-outs in the case of crop (such as enrolling customers and developing agent failure or natural disaster. networks) are amplified when it comes to reaching smallholders who not only have generally lower Agricultural insurance products aimed at levels of financial capability but who also generally smallholders have recently expanded into coverage live in rural areas with lower levels of infrastructure of livestock. For example, Juhudi Kilimo, a provider and network coverage. While mobile phone use is of smallholder agricultural asset financing, has expanding rapidly, many smallholders still lack SIM been offering livestock insurance in Kenya since cards and/or share handsets with others. 2009 but recently partnered with Kilimo Salama to enhance the product offering. Farmers who As a result, some countries may be better served borrow from Juhudi Kilimo to buy a cow can through adoption of other technologies, particularly obtain dairy insurance covering up to 80 percent in the short term. A related risk, however, is adopting of the cow’s value. Borrowers pay a premium of short-term technological solutions that limit the 3.5 percent of the cost of the cow and commit to potential for farmers to use these solutions as a stepping following a Best Practice Care Calendar, including stone toward fuller financial inclusion. This risk is evident vaccination, tick control, deworming, and mineral in Nigeria, where the initial GES scheme—which offered supplementation. If the cow dies within one year, a mobile phone-based system with no mobile wallet a local veterinarian determines the cause of death functionality—is being followed by two card-based and covered farmers are eligible for a payout equal pilots with very different ambitions with respect to to 50–80 percent of the cow’s insured value.26 The financial inclusion. In contrast, Rwanda and Ghana are use of the mobile channel can facilitate repayment embracing mobile wallets that provide access to an array of farmer loans and insurance payouts, but payouts of financial services.27 Pilot projects with cocoa farmers often exceed mobile wallet limits, requiring the use in Ghana have already demonstrated that smallholder of cumbersome checks. farmers use mobile wallets for P2P transfers, airtime top-up, and even for cash-in, rather than just cashing 4. Conclusion out immediately. And in Rwanda, the government and banking sector view smallholder mobile wallets as an Although the use of digital financial services to expand entry point to full banking access in the future. smallholder access to finance is still in its infancy, the sheer number of pilots is cause for optimism. Smallholder receptiveness to mobile financial DFS are addressing a number of traditional pain services likely is correlated with the general points in the context of agricultural finance, making adoption of such services already operating in the it easier for farmers to save, borrow, manage irregular country. In countries such as Nigeria, where less income, obtain inputs, and insure against loss. And as than 1 percent of adults are active mobile money mobile phone access, network coverage, and digital users,28 farmers have been reluctant to adopt mobile 24 EcoFarmer initially required farmers to register to receive daily SMS messages at a cost of US$1.50 per month, but now provides the informational service for free. 25 Excess rain is defined as six consecutive days with at least 50 mm of rain within the first 50 days of the planting season. Drought is defined as 24 consecutive dry days from planting until harvest. 26 In general, farmers are paid out 50 percent for preventable deaths (such as tick-borne diseases) and 80 percent for accidental deaths (such as Foot-and-Mouth disease). Certain deaths are not covered, including those related to intentional harm, malnutrition, mastitis, and others. 27 In mature DFS markets such as Kenya, mobile wallets are facilitating access to formal savings (mShwari), agricultural credit (Musoni), consumer credit (mShwari), agricultural insurance (Kilimo Salama), and health insurance (Linda Jamii). 28 Based on statistics provided by the Central Bank of Nigeria. 14 wallets. In the absence of a nationwide mobile around the needs of smallholder families. This will money infrastructure, smallholder farmers have require a greater understanding of the broad array little incentive to use mobile money services. Over of smallholder financial service needs, including not time, as mobile money services become increasingly only those needs related to agricultural production ubiquitous, agents will expand their presence in but also those needs related to consumption and rural areas and farmers will become more familiar managing other sources of income.33 with the concept and technology. Farmers have been more receptive in Ghana, where mobile money References adoption is increasing rapidly and approximately 8 percent of adults are now active users.29 And in Adesina, Akinwumi. 2013. “Agriculture: The Value countries with high mobile money adoption, farmers Chain Road Map.” Presentation at the 9th All Nigerian may be more open to using mobile wallets. Several Editors Conference, “Nigeria Beyond Oil: The Role East African countries offer good prospects, such as of the Editor,” Asaba, Nigeria, 23 August. http:// Kenya, Tanzania, and Rwanda, where in 2013 active nigerianguildofeditors.com/2013/10/agriculture-the- mobile money users comprised 62 percent,30 40 value-chain-road-map/ percent, and 25 percent of the adult population, 31 32 respectively. Aiyetan, Dayo, and Habeeb I. Pindiga. 2013. “Fertiliser Subsidy: How Nigeria Short Changes One emerging lesson is that reaching smallholders Farmers.” Daily Trust, 3 October. http://dailytrust. with DFS requires significant effort and resources, info/index.php/agriculture/6812-fertiliser-subsidy- particularly in the early stages of product rollout. how-nigeria-short-changes-farmers Smallholders typically are risk-averse and less experienced with technology, so sensitization and Bold, Chris, David Porteous, and Sarah Rotman. training are required. Strong multistakeholder 2012. “Social Cash Transfers and Financial Inclusion: partnerships often are critical to success, as Evidence from Four Countries.” Focus Note 77. demonstrated in Ghana and Kenya. While these Washington, D.C.: CGAP, February. http://www. services may not be profitable for all stakeholders cgap.org/sites/default/files/Focus-Note-Social-Cash- in the short term, private-sector players must see Transfers-and-Financial-Inclusion-Evidence-from- a viable business case or the services will not move Four-Countries-Feb-2012.pdf from pilot to national rollout. CGAP. 2012. “A Guide to Regulation and Supervision The bulk of current DFS innovations tailored to of Microfinance.” Consensus Guidelines. Washington, the agricultural context are driven by the interests D.C.: CGAP, October. http://www.cgap.org/ not of smallholders but of other parties, such as sites/default/files/Consensus-Guideline-A-Guide- governments seeking to reduce costs of subsidy to-Regulation-and-Supervision-of-Microfinance- delivery or commodity buyers seeking to reduce Oct-2012_0.pdf costs and risk associated with cash payments. There are undoubtedly benefits to smallholders, and Christen, Robert Peck, and Jamie Anderson. 2013. these innovations should be encouraged, but these “Segmentation of Smallholder Households: Meeting the services are not designed with the specific needs of Range of Financial Needs in Agricultural Families.” Focus smallholders in mind. Going forward, financial inclusion Note 85. Washington D.C.: CGAP, April. http://www. efforts should focus on complementing current DFS cgap.org/sites/default/files/Focus-Note-Segmentation- innovations with other innovations that are designed of-Smallholder-Households-April-2013.pdf 29 Based on statistics provided by the Bank of Ghana. 30 InterMedia Kenya FII Tracker survey (preliminary results from survey conducted from September to October 2013). As these results are preliminary, data have not yet been validated. 31 Based on statistics from the GSM Association: http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/03/Tanzania-Mobile- Money-infographic-GSMA-MMU.pdf. 32 Based on statistics provided by the Banque Nacional du Rwanda. 33 For more information, see http://www.cgap.org/blog/series/understanding-demand-smallholder-financing and http://www.cgap.org/blog/ series/diaries-tool-understanding-smallholder-families. 15 CTA Technical Center for Agricultural and Rural Miller, Calvin, and Linda Jones. 2010. “Agricultural Cooperation. 2014. “Reducing Supply Chain Credit Value Chain Finance: Tools and Lessons.” Nigerian Risk.” Update (76): 27. http://ictupdate.cta.int/ Guild of Editors. http://nigerianguildofeditors. content/download/32066/256706/file/ICT_76_ENG_ com/2013/10/agriculture-the-value-chain-road-map/ DEF_LR_NEW.pdf Pénicaud, Claire, and Arunjay Katakam. 2013. “State Flaming, Mark, Claudia McKay, and Mark Pickens. of the Industry 2013: Mobile Financial Services 2011. “Agent Management Toolkit: Building a for the Unbanked.” London: GSMA. http://www. Viable Network of Branchless Banking Agents.” gsma.com/mobilefordevelopment/wp-content/ Technical Guide. Washington, D.C. CGAP. http:// uploads/2014/02/SOTIR_2013.pdf www.cgap.org/publications/agent-management- toolkit Statham, Chris, Kirsten Pfeiffer, and Lee H. Babcock. 2013. “Key Lessons for Mobile Finance in IFC. n.d. “Kilimo Salama—Index-based Agriculture African Agriculture: Three Case Studies.” Briefing Insurance: A Product Design Case Study.” Paper. Washington, D.C.: USAID, January. https:// Washington, D.C.: IFC. http://www.ifc.org/wps/ communities.usaidallnet.gov/ictforag/node/362 wcm/connect/2de52e004958606ba2bab719 583b6d16/Kilimo+Salama%E2%80%93Index- Thurow, Roger. 2012. “The Last Hunger Season: A based+Agriculture+Insurance-Final. Year in an African Farm Community on the Brink of pdf?MOD=AJPERES Change.” Public Affairs. No. 94 June 2014 Please share this Focus Note with your colleagues or request extra copies of this paper or others in this series. CGAP welcomes your comments on this paper. All CGAP publications are available on the CGAP Web site at www.cgap.org. CGAP 1818 H Street, NW MSN P3-300 Washington, DC 20433 USA Tel: 202-473-9594 Fax: 202-522-3744 Email: cgap@worldbank.org The authors of this Focus Note are Jeremiah Grossman and Michael Tarazi. The authors would like to thank the following for their cooperation, © CGAP, 2014 time, and energy in helping the authors research this Focus Note: Selorm Adadevoh and Judith Bossman (Tigo Ghana), Sridhar Reddy and Julius Ameku (GADCO Ghana Limited), Kwesi Korboe (ASI Ghana), Stephen Mink, Sheu Salau and Aparajita Goyal (World Bank), Azeez Muyiwa (Nigerian FMARD), Scott Wallace (IFDC Nigeria), Bolaji Akinboro (Cellulant Nigeria), Pankaj Chawla (WACOT Nigeria), Bulus Ogbaji (FADAMA Nigeria), Robert Hale (DFID Nigeria), Martin Drevon and Jeanne di Arc Nyaruyonga (IFDC Rwanda), Lucy Mbabazi (VISA Rwanda), Charles Murekezi and Emmanuel Nyirimana (Rwandan MINAGRI), Espoir Serugo (Urwego Opportunity Bank), Lawson Naibo and Kizito Okute (Bank of Kigali), Flor Owimbera (Rwandan Government Agronomist), Erin Connor (Grameen Foundation), Lee Babcock (independent consultant), Nila Uthayakumar and Laura Johnson (Kilimo Salama), Nat Robinson (Juhudi Kilimo), Pauline Githugu (Century Microfinance Bank), and Lesley Denyes (Mercy Corps). The authors would also like to thank external reviewers of this paper: Michael Hamp and Kathy Zissimopoulos (IFAD), Maria Pagura (World Bank), and members of the GSMA’s MMU and mAgri programs. The suggested citation for this Focus Note is as follows: Grossman, Jeremiah, and Michael Tarazi. 2014. “Serving Smallholder Farmers: Recent Developments in Digital Finance.” Focus Note 94. Washington, D.C.: CGAP, June. Print ISBN: 978-1-62696-044-2 epub ISBN: 978-1-62696-046-6 pdf ISBN: 978-1-62696-045-9 mobi ISBN: 978-1-62696-047-3 UKa from the British people