Case Study: Lessons from a buyer's experience of mobile money

Central to Mercy Corps’ approach in addressing poverty and undernourishment globally is the increase of small-scale farmers’ productivity, to stabilize their income and improve food security.

With remote areas getting more access to mobile networks, there are new opportunities for rural farmers to reap the benefits of timely information and financial services through their mobile phones.

In June 2013, in the Domboshawa region, north of Zimbabwe’s capital Harare, Mercy Corps piloted the Agri-Fin Mobile program, focused on building a partnership between Mobile Network Operator EcoNet, and a specialized produce buyer, KAITE. Mercy Corps assisted farmers in the region to get registered on EcoCash to receive payments for their produce through mobile phones.

KAITE trains thousands of small-scale farmers around Zimbabwe in cultivating and processing organic herbs and spices to be sold at international fair trade markets. In the area of Domboshawa, farmers were ready to harvest chilies in August, and Mercy Corps worked with KAITE to train and register farmers to set up EcoCash accounts with EcoNet sim cards. This allowed farmers to directly receive the exact payments for their produce via a secure private mobile account on collection day.

Prior to mobile payments, coordinating cash payments was a challenge for KAITE. With only rough estimates of the quality and amount of produce farmers would bring to collection points, KAITE used to rely on approximations of the cash required. This often resulted in cash shortages that posed difficulties, particularly when purchasing in remote locations.

With EcoCash, a direct mobile transfer of cash at the moment of collection ensures that all produce can be purchased and farmers can receive their full payments immediately. Additionally, making cashless business transactions bring with it added security, as both KAITE and the farmers are no longer vulnerable to robberies.

The Domboshawa pilot, in which 448 farmers were trained and registered on Ecocash, proved that farmers were interested in and able to receive payments through their mobile phones, and actually preferred it over cash.

For the farmers, Agri-Fin Mobile has not only brought convenience in receiving mobile payments from their agriculture produce buyer, it has also improved their personal financial transactions. Farmers can now receive and send money to family members and friends and facilitate payments for groceries and school fees through the mobile phone.

For KAITE, the upfront investment in training and registering farmers paid off in increased overall efficiency. Now, even without Mercy Corps support, KAITE is planning to expand mobile payments to all regions of Zimbabwe where they operate.

“To reach Binga in the northwest of Zimbabwe costs us $528 just for the transportation, not to mention time and labor,” said Dominic Collenberg, CEO of KAITE, explaining the move to mainstream mobile payments in their operations. “It is 1,600 km round trip – 10 hours minimum one-way. The whole trip takes several days. There’s no bank there, so we have been bringing cash. Just last month, we had planned on paying around 470 farmers $25,000 for rosella and safflower, but they had an excess of product worth around $2,000. So we registered the farmers still in need of payment and sent them the money through EcoCash.”

Obstacles remain, however. Some rural areas are still without network coverage. Still other areas lack nearby EcoCash agents, or the agents have limited cash that they are unable to provide the adequate amount farmers wish to withdraw.
Yet, the benefits of mobile payments to farmers and buyers alike outweigh the current inconveniences that they are determined to move forward with the program. Users find ways around obstacles, and are optimistic that further improvements are forthcoming, including the expansion of network coverage.

Here is an innovative example of circumventing obstacles: KAITE has made payments to multiple farmers through one farmer who could travel to a nearby agent, withdraw funds, and distribute to the other farmers.

“At the moment, it’s still in the infancy stage, but I see huge potential – if EcoNet installs boosters to improve network reach, as it has planned – then after we register all farmers for making payments, our next priority is pushing information and then improving coordination for production, collection and messaging to negotiate selling prices,” said Mr. Collenberg.

Registering farmers to make mobile payments is an important first step in laying the groundwork to bring numerous services to rural farmers and agro-buyers.

He added: “Although we haven’t started pushing information yet, we are preparing for it. We regularly hold farmer trainings and have developed brief ‘grower guides’ for each product we buy. It describes the complete cropping timetable, as well as recommendations for the type of soil to plant in, the rotation with other plants, laying out the seedbed, fertilizing, weed control, irrigation, pest and disease control, harvesting and drying. All of that information is too long for an SMS, but we can use SMS to send simple prompts to remind farmers of all these things at the time they need to act.”

“Moving to mobile payments is something we never would have done without Mercy Corps’ actively bringing us together with EcoNet,” said the KAITE CEO. “It is a lot of work – very time consuming, and we would never have initiated it on our own. But we will make the time to register all our farmers in the future because we realize it’s worth it.”

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