NB Financial Health

Thursday
October 13
2016

Lee Babcock

Digital Technology is Key to Solving ‘Wicked Problems’ in Agriculture

There is great need for agriculture public private partnerships (PPPs) to help solve “wicked problems” by deploying information and communication technologies for agriculture (ICT4Ag).

Wicked problems are numerous and highly complex. They include how to feed more than 2 billion more people by 2050, reducing the poverty of smallholder farmers who produce 70 percent of food worldwide and mitigating the impacts of climate change on crop production.

While various definitions abound, many will accept that ICT4Ag includes the digital functionalities of finance, supply chain management, surveillance, extension services (i.e. agricultural knowledge exchange) and market access. In addition, there are other rapidly advancing technologies and trends, including precision agriculture, drones, rapid growth of smartphones, the internet of things, big data analytics (finance, supply chain, traceability, etc.), the blockchain decentralized ledger for international remittances/land registry/smart contracts, cloud computing, artificial intelligence and machine-to-machine learning.

The scale, scope and complexity of current and future ICT4Ag is beyond what any one entity can harness in the pursuit of revolutionizing agriculture. ICT4Ag is no longer an application that we use, but rather an approach to digitize the entire agricultural supply chain. As Daniel Asare-Kyei, managing director of Esoko-Ghana, said, “Technology is only 5 percent of the solution; 95 percent is the business processes, deployment process and team composition.” Therefore, there is a great need for partnerships between the private sector and government, as embraced by the UN’s Sustainable Development Goals, as well as broader, cross-sectoral partnerships (CSPs) inclusive of civil society, NGOs, farmer organizations, research institutes and academia, in order to collaboratively solve wicked problems with ICT4Ag.

An upcoming report from the Technical Centre for Agricultural and Rural Cooperation (CTA) will consider why and how to invest in ICT4Ag. An obvious need – following CTA’s seminal ICT4Ag-Rwanda conference in 2013, their subsequent work and a focus of their upcoming report – is for coherence in the development and deployment of converged functionalities onto common platforms to close gaps and avoid duplication. Information and communication technology convergence bodes well for agriculture digital finance as a distribution channel for payments, savings, credit and microinsurance, as well as an enabler for the other ICT4Ag functionalities and new technologies mentioned above. In addition, a key supply chain inefficiency gap – the expensive, non-transparent and inconvenient use of cash to pay farmers – can be closed by the strategic insertion of mobile money into agriculture.

CTA’s upcoming report about ICT4Ag investment – which is a component of overall investment in agriculture – will have five chapters, each with a specific focus: evidence, potential, challenges, areas for future investment and options for future investment. CTA is acutely aware that in the first decade of ICT4Ag most applications/platforms have not scaled. Rather than provide the usual menu of applications/platforms, CTA’s report will consider the evidence within the context of gaps and challenges that will help explain the disappointing performance of ICT4Ag solutions to date while recommending investment approaches that will improve ICT4Ag in the future.

As one of the team of authors for this upcoming report I have begun my primary and secondary research. Some of the findings so far are consistent with what I have found during my recent work as team leader for the performance evaluation of the USAID/Malawi Mobile Money Accelerator Project (MMAP), as well as soon-to-be-published case studies by TechnoServe, authored by Evelina Moceviciute and myself.

TechnoServe published case studies of the Kenya Nut and Tanga Fresh pilot projects that linked M-Pesa payments and information to farmers with a converged, multifunctional farm management information system as part of the USAID/Vodafone Connected Farmer Alliance (CFA). While performance was mixed for both MMAP and the two CFA pilots, we must also note that what was done in both cases had not previously been attempted, and much credit is due. Many ICT4Ag initiatives, to date, have been supported by donors and foundations and have provided tremendous use case, “proof of concept” evidence to pave the road for private sector investment. The need for their continued support remains but now is the time for private sector investment to begin traveling the highway that donors and foundations have helped pave. The CFA donor/private sector model appears to be a good on-ramp to that highway for the private sector.

MMAP did a number of CSP pilots, including three for agriculture. In the case of the MMAP pilots as well as the CFA pilots there was a rush to secure farmer adoption of mobile wallets and solutions. In this rush, though, there was little regard, from the CSP perspective, for the need to have internal management and staff buy-in as well as mobile wallet adoption by management, staff and field agents for disbursement of salaries and allowances. There was also little or no analysis of the underlying business case for how digital supply chain payments/management would decrease costs, increase yields, improve quality and reduce spoilage. In addition, there was little or no analysis of the many benefits that directly accrue to farmers as well as the financial and other benefits that accrue to the agribusinesses.

The need for PPPs and CSPs seems a foregone conclusion by most, but the lack of management/staff buy-in as well as any analysis of the underlying business case and design of the value proposition for each of the partners reveals that we have not recognized the importance of managing the partnership. This suggests one area deserving of our attention and investment for the benefit of the sustainable and scalable future of ICT4Ag to help solve agriculture’s wicked problems.

 

Lee H. Babcock is managing director of LHB Associates.

Photo: Agro-dealer and grocer Charles Mbalika in the Balaka District, Malawi, earns about U.S. $40 and $137 per month, respectively, as an agent for TNM Mpamba and Airtel Money. Photo courtesy of LHB Associates


 

 

Categories
Agriculture, Financial Inclusion
Tags
agribusiness, digital payments, financial inclusion, public private partnerships, smallholder farmers, technology