NB Financial Health
Why a Common Platform is Within Reach: Mobile finance and the emergence of a comprehensive ICT4D mHub platform?
I had the pleasure of participating in and being a lunch table discussion leader for the July 2015 ICT4AG conference in Washington, D.C. As I reflected on the various presentations and coffee break conversations, it seems we are already well on our way toward imagining what the next generation of ICT4AG (information communications technology for agriculture) can offer. But what this blog proposes is a broader view of the next generation of ICT4D (information communications technology for development); one that breaks down the inertia of our silos toward a common platform, a chain of sectors linked together by finance. The potential for doing this is not limited by the technology but only by our imagination and commitment.
Currently there are numerous applications but they are not synced with each other. What is truly needed (and possible) is a comprehensive mHub type of platform that is multi-sectoral (e.g. agriculture, health, education, etc.) and multi-functional. This is an expansion of what was a formal outcome of another ICT4AG conference in Kigali, Rwanda, in November 2013. Like the July 2015 conference, the Kigali conference imagined the next generation of ICT4AG would be a comprehensive platform(s) that includes multiple agriculture functionalities that align with each other. Such type of comprehensive platform for multi-sector and economically viable mobile money and mobile solution functionalities for rural communities will be a manifestation of the vision in the Gates Annual Letter 2015 that “the lives of people in poor countries will improve faster in the next 15 years than at any other time in history.” Given the rapid advancements in technologies and the related business model innovations, might the term “ICT4D” be replaced by the term “mHub”? Further, if we accept this notion of an eventual aggregation of all these wonderful ICT/mobile solutions for agriculture, health, education, etc., into a single service offering, how might it happen and what will it look like?
As with every business model there must be a channel for the flow of finance. We know that can be a challenge in developing countries but most particularly in the rural areas of developing countries. Enter agriculture mobile payments. In almost all rural areas in developing countries, the agriculture sector predominates. Yet, even though we are in the 21st century, 1.5 billion farmers are still paid cash for their crop deliveries. By transitioning cash payments to farmers to mobile payments we can jumpstart the requisite ecosystems of cashin/cashout agents and merchants in these lower population density areas that are traditionally underserved by mobile network operators (MNOs). Mobile crop payments by large commodity buyers will make the economic value propositions for partnership with MNOs (that want to increase transaction fee revenue) and large commodity buyers (that want to reduce costs and improve value chain eficiency) while providing financial identity, safety, security, storage and other benefits that accrue to smallholder farmers. These underlying economic fundamentals and farmer benefits – at the grassroots – are aligning at the policy level with central banks in developing countries considering proportionate risk management. In addition, a number of the upcoming Sustainable Development Goals (SDGs) also promote wider financial inclusion.
Initial desk/site-visit research will reveal the existing landscape of in-country, multi-sectoral business models. These business models might include the UN Foundation’s Mobile Alliance for Maternal Action (MAMA) messaging, Eneza Education, mobile microfinance, GeoTraceability, ESOKO’s agri marketing platform, Farmforce farm management system and TaroWorks agri extension platform. There might also be in-country distributors of clean cookstoves, solar panels/solar lanterns, irrigation pumps and more for which mobile money presents a pay-as-you-go supplier financing channel that can boost their sales of these vital products/services for rural communities.
The first step for an agriculture mobile payments platform can be expanded to include additional target market research of import to those other in-country business models. Informed by the results of Step 1, the formation of mHub strategic alliances can be a natural extension of Step 2 that can add multi-sectoral partners along a timeline that aligns the respective technical and partnership complexities with the requisite need for gradually increasing levels of trust by farmers and other rural community members. Finally, Step 3 can leverage the ongoing outreach and interventions in rural communities to transfer knowledge about good agriculture practices (GAP) … to include other subject matter content in health, education, etc.
Mobile money must be the core functionality and agriculture is the only sector in rural areas that has the transactional volume that can make the business case for inviting the MNO into the mHub strategic alliance. This is because not everybody will need payments functionality for HIV/maternal care treatment, education or loans, but just about everybody will need to be paid for their crop sales. Once this main payments channel is established – extending directly into the households at the base of the economic pyramid – we’ll have the core infrastructure for sustainably adding additional health, education, supplier financing, credit and other functionalities onto the platform.
As these grassroots dynamics continue to align with the favorable policy environment we’ll be one step closer to mobile finance doing for the base of the pyramid what commercial banking did for the Industrial Revolution.
Lee Babcock is a recognized digital finance thought leader with robust private sector, development implementation and consulting experience.