Page 242 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

• Reinforcing the notion of how challenging eMoney adoption can be – how elegant solutions may fail,
and how goals such as digital liquidity can be undermined.
Bulk payments to farmers

• Concept: A single entity (farmers group, large buyer, etc.) pays farmers with eMoney, possibly mandating
this method.
• E-value proposition: eMoney reduces the payor’s cash handling costs such as theft, security guards, and
transportation. Accordingly, these initiatives are often payor-led.

• Example: In 2013, GADCO, a major rice producer and miller in Ghana, piloted mobile money payments
for 722 rice farmers with plans to increase to 5,000 farmers. Several aspects are notable:
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• GADCO’s primary benefit was lower cash handling costs. Accordingly, GADCO was willing to pay a
one per cent fee to Tigo, the MNO providing the service. Half of this fee enabled waiver of farmer
cash-out fees.
• Farmer benefits included:

a) GADCO commitment to purchase all of the farmers’ rice;
b) ease of hiring seasonal workers through proof of cash flow;
c) financial privacy which reduces the pressure to give loans and gifts, and;

d) traditional mobile money benefits (safety, 24/7 access, no visits to banks, ease of airtime top-ups,
etc.).

• Wide range of training was essential: mobile phone literacy (SMS, PIN codes, balance inquiry) and
financial literacy (savings concepts, recent changes to currency).

• Tactics for increasing adoption included:
a) sending $3 to farmers to incent experimentation with mobile phone interface;
b) providing non-Tigo subscribers with Tigo SIM cards;
c) integrating mobile money education/promotion into existing agriculture training done in person
or via radio (seed placement, pest control, etc.).
• Digital liquidity impact: Conceptually, these bulk payments improve liquidity by encouraging eMoney
adoption and providing a source of funds. However, as discussed earlier, the reach is limited as only seven
per cent of SHFs participate in value chains where this bulk payout is most relevant. Also, implementations
are very small (e.g., 5,000 farmers) and require hand-holding. This is not a scalable solution at this point
in the eMoney adoption curve, but this could change once value propositions and solutions solidify.
• Other issues: Who pays the transaction fees? Farmers do not want to receive eMoney if doing so lowers
net proceeds. Payors have been addressing farmer resistance by either paying transaction fees directly
or by including additional funds to cover the farmers’ cash-out expenses.
Multi-Party agriculture payments

• Concept: Contracts and payments (purchases, loan disbursements, and repayments) are managed
holistically across multiple parties. For example, a crop buyer’s payment can be split automatically
between farmer(s) and bank and input supplier(s) instead of through unaffiliated transactions (buyer
pays farmer; farmer probably pays bank; etc.).
• E-value proposition: eMoney provides administrative simplicity, encourages lending, lowers credit risks
for banks and agro-dealers, and increases production control (ability to specify input packages, etc.).

8 Mobile payments: How digital finance is transforming agriculture. Technical Centre for Agricultural and Rural Cooperation,
Wageningen. May, 2015.

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