Farmers’ Wallets Grow with Electronic Banking

A fat wallet is good; a fat electronic wallet is even better. Dutch financial services firm Dodore is partnering with IFDC’s Toward Sustainable Clusters in Agribusiness through Learning in Entrepreneurship (2SCALE) project to roll out the Agri-wallet, a mobile-phone-based platform that allows farmers to save in small installments, in order to buy seeds, fertilizers, and other inputs for the next season. 

Cash-constrained farmers are often forced to skimp on inputs, buying low-quality seeds or using less fertilizer than recommended. This leads to significant losses in yield and income. With Agri-wallet, the farmer chooses how much to save. A fixed percentage of revenue from every sale is automatically deducted and credited to the farmer’s Agri-wallet. She can use the savings only to purchase inputs or services, such as tractor rental or veterinary care. Farmers, grain buyers, and selected input retailers are all registered with the platform; transactions are automated, with records and monthly statements. 

How much should the farmer save? Dodore worked with 2SCALE teams and R&D specialists to help farmers estimate their own production costs and margins. For example, the ideal savings rate is about 24% for sorghum, 28% for potato, and 18% for dairy farmers. In practice, most farmers have committed to 10-12%, because the concept is new. 

Agri-wallet was launched in April, with 2SCALE clusters in the dairy, sorghum, and potato sectors. By June, more than 1,800 farmers (1,000 women) and 18 small businesses were registered. Farmers had saved more than KSh 360,000 and made more than KSh 5 million in transactions through Agri-wallet. We expect growth to accelerate, considering that this was the lean period; most crops will be harvested only in the last quarter of 2018. 

2SCALE is an incubator program implemented by IFDC and the BoP Innovation Center (BoPInc) with funding from the Netherlands Directorate General for International Cooperation (DGIS) and private sector stakeholders. The program manages a portfolio of public-private partnerships (PPPs) for inclusive business in agri-food sectors and industries. 2SCALE offers a range of support services to its business champions (small and medium enterprises and farmer groups) and partners, enabling them to produce, transform and supply quality food products. These products go to local and regional markets, including to base of the pyramid consumers. See the project’s current results here.

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