The first Mobile for Development Summit provided a unique opportunity to gather first-hand insights from the emerging field of mobile agriculture, and GSMA mAgri team hosted a round-table discussion at the event. The discussion was marked by a great attendance, with conversation being driven by mobile agriculture practitioners and mostly centred on emerging challenges and likely future trends in the sector.
We were lucky to have a very diverse group of stakeholders in the room – from entrepreneurs, content providers and mobile operators to development agencies, foundations and NGOs. Represented organisations among others included: Orange Madagascar and Orange Labs, Tigo Tanzania, Vodacom Mozambique, Vodafone India, Dialog Sri Lanka, Microsoft, Zoona, Mobenzi, Oxfam, Praekelt Foundation, Dalberg Consulting, Mercy Corps, the UK Government, USAID and the Bill & Melinda Gates Foundation.
Current themes, challenges and success factors for mobile agriculture
Our guest speakers from Agri Fin and Tigo shared their challenges and approaches to date, and it was great to see that the pioneers of mobile agriculture use common approaches to product design and evolution. While Agri Fin is using a human-centric design approach to develop innovative products, Tigo is relying on business intelligence and analytics combined with user-testing to make service improvement decisions. Both confirmed that the focus on ecosystem is as important as the product design. Partnerships for content, product development and distribution are absolutely key success factors for mobile agriculture solutions.
Content remains one of the main bottlenecks for the success of mobile agriculture solutions. There is a lack of affordable content that doesn’t require significant effort to customise for selected markets and channels. This challenge is intensified by the diversity of content needs depending on the type of farming, value chain and stage of the crop cycle. Mobile agriculture projects are currently dealing with this problem by providing capacity building within research institutions (e.g. CABI, ILRI), but the process is expensive and lengthy, as there is a strong need for professional content providers to come on board.
For the mobile operators leading a roll-out of Agri VAS solutions like Tigo Tanzania with their new service Tigo Kilimo, C-level support is absolutely critical. As those services can’t be treated yet as standard quick revenue generating VAS (e.g. football scores), it’s not always clear within a traditional structure as to which team should handle the service until it reaches its commercial potential. As the benefits of Rural VAS like agriculture are long-term, considering that rural market penetration becomes the next big challenge for telecom in Africa, there is an opportunity for those services to be handled by mobile operators’ innovation teams as opposed to VAS teams, which we see now happening in Tigo. Opportunities for reducing churn and acquisition costs attract mobile operators to the mobile agriculture space and make them search for partnership opportunities with agri service providers, NGOs, entrepreneurs and content providers.
Emerging trends in mobile agriculture
From the experience of current projects, it’s apparent that information is needed, but farmers might not be willing or ready to pay for it. At the same time the perceived value of mobile services that facilitate or support transactions is much higher, as farmers need access to inputs, equipment and infrastructure, capital and markets – information by itself is simply not enough to make a difference on small-holders productivity and income. It’s apparent that the next generation of mobile agriculture services is likely to be represented by a spectrum of bundled services, where information plays a supporting role and reduces transactional and financial risk.
As quite a few practitioners at the round table are already experimenting with Agri Mobile Financial Services (Agri MFS), from payments to more complex derivative financial services, we were able to get a grasp of the challenges they are facing. As current landscape of most of Agri MFS initiatives suggests, it’s more feasible to design the service around existing cash-transactions that involve small-holder farmers, those are most likely to be either G2P payments and subsidies for seeds and fertilisers, or payments from organised buyers and processors to their network of smallholder suppliers. In both cases, there is a powerful stakeholder that benefits from the reduction of transactional costs and associated risks. Zoona shared their example of digitising payments within cotton value chain in Zambia, helping to reduce transactional costs for the buyer.
As digitisation of existing payments currently appears to be perceived as a low hanging fruit, and is an attractive segment for the mobile operators who are desperate to drive the mobile money adoption in rural areas, there are few very significant challenges associated with this strategy. The first one is the seasonality of the crop production that results in a low number of transactions per farmer in any given year. This prolongs the time needed for the product evolution, with a pressure to get it right from the very beginning (however dairy and other livestock value chains might represent a bigger opportunity due to the higher frequency of transactions). The second challenge is a dramatic increase in pressure on agents’ liquidity. To reduce this pressure and risk of operational and infrastructure failure, service providers have to build an ecosystem that would incentivise the farmer to keep the money in their wallet/ account and use it for merchant payments to pay for farm inputs as well as personal purchases. This would mean that a strong network of merchants have to be built in the areas where payments are being sent to.
While organised value chains provide immediate opportunities for mobile money service providers, they only involve a fraction of small-holders in African markets (between 10% and 15%). Creating a mass-market Agri MFS product is much more difficult due to the lack of information and transactional history. CGAP is looking into this segment among others, and they suggest to use extension information to reduce the risk of mobile financial services and look into other cash transactions the farmers are involved in, as agricultural income usually represents only a part of income for rural people.
We are very excited to see so many practitioners moving into Agri MFS sector and will continue to share the insights and trends in this field alongside other mobile agriculture innovations with you.