SPECIAL REPORT: Sharing Tractors Like Uber, Selling Agricultural Inputs Like Mobile Phone Credit, Motivating Savers Like Clockwork

At a session on agricultural and financial technology during the recent SAM conference, Emmanuel Ansah-Amprofi of Ghana’s Trotro Tractor described how his company’s service helps small-scale farmers mechanize their operations. Farmers call a toll-free number to request a tractor for a short period of time, such as for harvest. Within 72 hours, the farmer is connected with one of the 320 tractor owners that partners with Trotro. Trotro takes a commission of 10 percent on the payment from the farmer to the tractor owner, which totals USD 20 to USD 25 per acre. Mr Ansah-Amprofi said the mechanization helps the farmers increase their yields by 50 percent to 66 percent.

With more demand for tractors than its tractor owners can supply, Trotro has developed several methods for supporting tractor buyers. For example, Trotro’s data can help a bank forecast how much money a new tractor can bring in, thus increasing its confidence in lending to the tractor buyer. Trotro can also divert a percentage of the tractor owner’s income directly to the bank to pay off the tractor loan.

At the same session, Karen Rieckmann of Mali-based NGO myAgro discussed her organization’s support of 60,000 farmers – typically women tilling about an eighth of a hectare – in 1,500 villages in Mali and Senegal, as well as newly in Tanzania. Her team observed that nearly everything in the towns most accessible to the farmers is sold in small, affordable units. A unit of phone credit or cooking oil might cost USD 1, while seeds or fertilizer costs USD 50 per unit. MyAgro started equipping young people in these towns with smart phones to act as “village entrepreneurs,” enrolling farmers in savings plans and offering cash-in and cash-out services. Farmers receive an account card, which allows them to save money in increments of USD 1 or more. Over time, the farmers build up credit to pay for myAgro to deliver seeds and fertilizer to them at planting time. These quality inputs, along with training from myAgro, have increased the farmers’ agricultural yields by 50 percent, which is worth USD 145 to a typical family. After the farmer saves successfully during her first year of participation, she saves an average of 27 percent more in her second year of participation.

Ms Rieckmann also described using technology to reduce costs. For example, staff are trained, motivated and retained via WhatsApp messages and videos. Automated tracking also offers insights into transaction patterns, such as what time of day women tend to save. The higher frequency of saving during the evening hours led myAgro to focus its staffing availability on that time of day.

Paul Kweheria of US-based NGO MercyCorps discussed issues such as alternative credit scoring and how to increase the usage of available financial services. To improve one lender’s credit scoring, MercyCorps worked with the lender to expand the sources from which it draws data. Previously, it had relied on bank and mobile-money transactions, but it added agricultural data from producers’ cooperatives, thus increasing its confidence in lending to farmers. Regarding boosting usage, the microfinance institution FINCA found usage in one region was much lower among women. Upon further research, MercyCorps and FINCA found that the chief marketing strategy – sending vans blaring loud music into small villages – was less favored by women.

Mr Kweheria also described a tea buyer in Tanzania that had a complex system for paying tea farmers in cash via village intermediaries. With money getting “lost,” and complaints about the slow speed of the system, there was a strong case for moving to digital payments. One significant problem was that the village intermediaries would lose power in the transition, so it was very important to find incentives for them to support the new system, so they would not be tempted to sabotage it.

After going digital, organizations can analyze customer data much more easily. In one case, MercyCorps was able to determine that women preferred to save as part of a periodic plan, whereas men preferred open-ended accounts. While women saved less, they did so more consistently, particularly on Wednesdays and Fridays. Meanwhile, Monday was the day that they most often broke with their savings plan. In response, the institution began sending its customers motivational SMS (text) messages on Sundays to help maintain consistent participation.

This article is part of a sponsored series on SAM (the French acronym for African Microfinance Week), a major conference dedicated to financial inclusion in Africa. The most recent SAM took place in Ouagadougou, Burkina Faso, from October 21-25, 2019.

ADA, an NGO based in Luxembourg, co-organizes SAM every two years with the support of Luxembourg’s Ministry for Development Cooperation and Humanitarian Affairs. The SAM steering committee members are: ADA, Luxembourg’s Ministry of Foreign and European Affairs, the Microfinance African Institutions Network, the African Rural and Agricultural Credit Association, and the Fédération des Association Professionnelle des Systèmes Financiers Décentralisés de l’Union Economique et Monétaire Ouest Africaine. We invite you to learn more about SAM at http://www.sam.africa.

MicroCapital has been contracted to promote and document each SAM since 2015.

Additional Resources

SAM
http://sam.africa/

Other MicroCapital coverage of SAM and vignettes demonstrating its value to participants
http://www.microcapital.org/category/semaine-africaine-de-la-microfinance-sam/

Vignettes demonstrating the value of SAM en francais
https://www.ada-microfinance.org/fr/evenements/semaine-africaine-microfinance/objectif-sam-2019/paroles-de-nos-participants