By
Juan Guardado
The digital cloud is
high above every smallholder farm in Africa. We have the opportunity to bring
the power of the cloud down to earth, and transform the ability of smallholder
farmers to access finance, information and markets as never before.
On Monday, a landmark edition of the international
journal Foreign Affairs highlighted the possibility of rebuilding Africa's food
systems with smallholder farmers as the standard bearers of digitally powered
world-class agriculture. The technology to do so is now available -- from the
farm, to the cloud.
The African continent is already in the forefront of the
mobile revolution. There are now nearly 700 million mobile phone accounts --
more than in the US and Europe combined.
Africa has also become the world leader in mobile
banking: 12 per cent of adults in sub-Saharan African have a mobile money
account, compared with only 2 per cent of adults globally. We are leapfrogging
development -- skipping a whole phase of technology and putting Africa in the
lead.
Or so it seems. But mobile phones and even mobile money
accounts do not amount to digital financial inclusion. Millions still live
without access to formal financial services and the potential of digital
technologies to equip smallholder farmers with knowledge, data and market opportunities
has yet to be realised. Digital technology offers an historic opportunity to
scaling success across Africa's farming households and rural communities.
Consider
the gap in financial inclusion. As Chidi Okpala, former African director of
Airtel Money recently told the Mobile Money Expo in Nigeria, of the roughly 75
million people living in the Democratic Republic of Congo, less than two
million have bank accounts.
Of Tanzania's 42 million people, less than four million
have bank accounts. In 2014, only 29 per cent of adults in rural areas had a
financial account of any kind. Across the region, fewer women (30 per cent),
than men (39 per cent) have formal accounts.
Without access to credit, loans, savings, payment
systems, and weather or crop insurance, smallholder farmers cannot run their
farms as efficient businesses. But traditional finance is difficult and
expensive to access -- and rarely designed to meet farmers' needs. Similarly,
networks of government agricultural extension agents on their own cannot
possibly reach the millions of farmers dispersed across our landscapes.
Done right, mobile services provide alternatives. They
can reach people in remote areas, deliver valuable information and services to
a broad customer base, and allow two-way communication.
But the devil is in the detail. Lack of familiarity with
technology, an explosion of ill-conceived apps and an absence of trust in
financial institutions have contributed to slow uptake of digital financial
tools. Meanwhile, mobile agriculture is just getting started.
Grameen Foundation
and other innovators across the continent are overcoming these challenges. Last
month, the sixth annual Kalahari Awards at Africa's Mobile Money Expo in Lagos,
Nigeria, honoured an innovative digital group savings plan, Airtel Weza, with
the Best Pro-Poor Innovation Award.
The plan is designed for some one million rural Ugandans
who rely on informal community savings groups and usually store their cash in a
metal box. Despite having three locks entrusted to three members, the money is
still subject to theft.
Grameen Foundation partnered with Airtel Uganda to
develop a secure and transparent digital system built on the group practice by
requiring three members to enter individual pin numbers to approve cash
withdrawals, with SMS messages confirming each transaction. Within months of
its launch, more than 250 groups had registered for the service.
Airtel Weza is just one way in which digital innovation
can benefit smallholder farmers. Another is Digital Green, a nonprofit that
uses video to improve extension and create farmer networks. Nigeria's
government-initiated mobile wallet programme enables distribution of subsidised
fertiliser through digital vouchers.
In Kenya, smallholders account for more than 75 per cent
of agricultural output, but can rarely access loans. Grameen Foundation and
microfinance institution Musoni created Kilimo Booster, a mobile-based
agricultural loan designed specifically for smallholder farmers. Unlike other
loans, its flexible repayment terms correspond to farmers' harvest cycles and
cash flows.
But
for most farmers, problems persist in accessing both finance and agricultural
information, and banks have little understanding of farmers' businesses. One
solution relies on three-way information flows -- between farmers, extension
agents, and financial institutions. In this vein, Grameen Foundation has
partnered with Opportunity Bank of Uganda to bundle mobile extension and
financial services.
Farmers receive farming advice and information from a
network of mobile-equipped agricultural extension agents; the agents also
collect data on farm operations that help Opportunity Bank understand farmers'
needs and identify smallholders who are qualified for loans.
The loans enable farmers to improve their productivity
and connect to markets. It's a win-win situation that simultaneously trains
farmers in best agricultural practices and financial literacy, and provides a
scalable business model that benefits the bank.
As these examples show, the rapid expansion of financial
inclusion and the development of mobile agriculture hold enormous promise for
agricultural development. But these transformations require Africa's
government, business and civic leaders to invest in a new era of digital
innovation to serve poor rural communities. Then, from the ground up to the
cloud, the possibilities will be endless.
Juan Guardado is East Africa director of the Grameen
Foundation.
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