It’s becoming increasingly clear that cash payment schemes are obsolete in the 21st century.
At the recent Fin4ag conference hosted by the Technical Center for Agriculture and Rural Cooperation in Nairobi, GSMA, the apex organization for over 850 mobile network operators worldwide, declared its strategic business interest in transitioning cash payments to farmers by large commodity buyers to mobile payments. East Africa’s urban centers have become — or will soon be — saturated with mobile money, so mobile money providers are now beginning to pursue strategies for rural rollouts. Mobile payments to farmers can be economically viable for value chains with predictable and high volume transactional activity. Characteristic of this next generation of mobile money in rural areas will be investment by large commodity buyers as well as a “high-touch” approach to the ecosystem creation of mobile money users and cash-in/cash-out agents.
This alignment between mobile money providers, large agriculture buyers and farmers presents a win-win scenario for everybody. Mobile money providers register new users and increase the annual revenue per user. Large commodity buyers reduce the onerous and costly security, record-keeping and administrative protocols — as well as incidences of fraud — related to making cash payments to thousands or tens of thousands of farmers. Farmers have greater safety and security because they no longer carry large amounts of cash after selling their harvest. A mobile wallet also provides many farmers with their first ever “financial identity,” thereby opening the door to future access to finance opportunities.
CTA will soon publish a landmark study about the race among large commodity buyers to have the fastest speed of payments to their smallholder farmers, profiling next generation business models in Ghana and Zambia, as well as successful systems already in place like SmartMoney in Uganda. By definition, cash payment schemes present an agriculture value chain efficiency gap.
Source: devex.com
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