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

Friday, November 8, 2013

Among problems facing farmers is access to financial services, including banking services and loans. In Bungoma County, Western Kenya, farmers shied away from small and micro financial institutions due to the high cost of loans and high expectations imposed on them. In Zambia, a donor funded pilot project brought in some form of financial inclusion to cotton farmers.

Chrissy Martin, a mobile financial specialist with Mennonite Economic Development Associates gives a case study of a cashless solution deployed by Zoona in the Zambia cotton growing belt. She was presenting at the ongoing ICT for Agriculture conference current;y ongoing in Kigali. At the same conference, lack of financial inclusion such as savings, access to loans have been cited among major challenges facing small farmers.

Farmers would harvest cotton once an year and supply the produce to Dunavant, a cotton processing firm. The company would then transport cash across the country and make lump sum cash payments to the farmers.

Chrissy explains that Zoona introduced an electronic scratch card in the form of a voucher. After supplying cotton, farmers would be given some of their payment in cash, and the rest in the form of an electronic scratch card that could be redeemed over time. A scratch card provided an advantage to mobile money due to the low maturity of such services in the country. Farmers felt the scratch cards to be more convenient and safer – it eliminated the need to carry huge amounts of cash , which were often stolen or destroyed in fire. The evoucher could only be used by a particular farmer and was therefore not prone to theft and its value could not be destroyed.