A specialized produce buyer in Zimbabwe has increased the prosperity of thousands of smallholder farmers, but it has run into a problem: not enough cash.
It’s not that Kaite doesn’t have enough money to pay their client farmers for the produce. Kaite’s agents, who travel to small, rural villages on motorbike, can only carry up to $2,000 USD in cash for safety reasons, often not enough to pay farmers for all they’ve produced. Multiple trips have to be made, resulting in high transportation costs for Kaite and slower payments for farmers. Zimbabwe has also faced intense liquidity problems since hyperinflation in 2008 and 2009, causing physical cash to be extremely difficult to obtain.
Enter mobile money. Kaite is planning to go cashless soon, making payments to farmers via mobile phone using EcoCash, Zimbabwe’s largest mobile money provider.
Kaite trains farmers to gather or grow herbs, spices and essential oil crops, and has helped 2,500 farmers become certified as organic and fair-trade, for which leading international cosmetic and natural fertilizer companies pay a premium. Kaite passes on that premium to farmers to improve their communities, and provides other valuable services like growing tips and drying rack kits. By using mobile money, Kaite will ensure farmers receive their payments and premiums faster and more securely, while protecting their own staff, too.
Room Chigwinya, a 70 year-old farmer in Domboshawa, about an hour outside of Harare, attended a farmers’ meeting in late March, saying he feels confident in EcoCash’s security and actually trusts it more than local banks. “I save money at my home now, but it’s not safe and I tend to spend it quickly.”
Despite farmers’ enthusiasm for the benefits of mobile money, Kaite faces some hurdles in moving their payments to a digital platform.
“The nearest EcoCash agent is 10 kilometers away,” said Chigwinya, which means to ‘cash out’ his Kaite payment, he has to pay $3USD for a round trip bus fare first. But the main difficulty, he says, is “we don’t yet have EcoNet coverage in our area.”
EcoCash, which just launched in mid-2011, is expanding rapidly throughout the country and committed to serving this new, non-traditional client base. EcoNet is looking to Kaite and Mercy Corps as key actors to help determine where the company should invest resources in certain areas by building new towers and contracting new agents. While a few farmers don’t yet own a mobile phone, most do, and all have access through a neighbor or family member. A user only needs to sign up for their own EcoNet SIM card since they can borrow a phone to make the transaction. Though farmers expressed some hesitation at the transaction fees associated with mobile money, they admitted the fees are many times less than at traditional banks.
Mercy Corps’ Agri-Fin Mobile program plays a behind the scenes role, working to build more relationships like these to bundle financial and agricultural advisory services and make them available to poor, rural farmers on mobile phones. The goal is to increase farmers’ income by 30 percent within the program’s first three years (through 2015). Mercy Corps is encouraging Kaite, other buyers, and input suppliers, like seed and fertilizer companies, to provide their growing tips via SMS, so farmers have a one-stop shop for information and financial services available in their pocket. The tricky part is designing the Agri-Fin Mobile partnerships so a viable value proposition exists for each player, such as an expanded customer base for EcoCash, lowered transaction costs in Kaite’s case, and access to up-to-date, tailored tips for farmers to improve their yields, among other built-in incentives.
Kaite’s 2,500 organic, fair-trade farmers will be the first of thousands more to soon enjoy the benefits of buying, selling and saving directly from their farm, as well as learning methods to get more out of each meter of soil, all via the phone. And by increasing their transaction efficiency, Kaite is well on its way to raising the social and economic living standards of small-scale producers in Zimbabwe even faster.