NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, June 6, 2014

Even farther into the country, a few miles from the Ugandan border in a town called Bungoma, I find Gertrude Wamalwa working her farm plot, a rust-colored scarf tied across her forehead and a machete in her leathered hands. Wamalwa and her Bungoma neighbors don’t appear to have any connection to mobile money. In fact, standing outside her mud and thatch home, she doesn’t seem to have much of a connection to anything mechanized, or even shoes. But mobile money is one of the tools that keeps her farm running.

Every year, Wamalwa buys seed and fertilizer on layaway, paying back the cost through a zero-interest loan from an NGO called One Acre Fund. Usually, paying off such a loan would involve interest, traveling distances while carrying cash payments, or dipping into the harvest itself—selling when prices are lowest, leaving nothing for savings. That’s how farm loans have perpetuated the cycle of entrenched poverty that still plagues smallholders throughout the region. Groups such as One Acre Fund are attempting to change the equation by helping farmers pay back those necessary loans in more sustainable ways, including micropayments. Increments of just a few dollars paid regularly when those dollars are at hand make all the difference.

Wamalwa walks through neat rows of corn, beans, and millet to the banana tree sappers she planted a year and a half ago. She shades her eyes to look up at the heavy chandelier of fruit, tipped with a maroon dongle of the massive male flower. The fruit will fetch a few bucks and cover her microloan payment. Her arm makes round strokes with the machete’s 2-foot steel blade. Then, on tiptoe, she grabs the flower and pulls. The soft tree curtsies to the ground, food for cows.

Much of a One Acre Fund field officer’s time involves collecting payment in person from the 80,000 client farmers in Kenya. That involves carrying around small piles of bills. The field officers have been robbed, and fraud is always a concern. Now, instead of a weekly collection, they use M-pesa to quickly deposit money. The next step, currently in large-scale trial, allows farmers to send micropayments directly to the central One Acre Fund account.