Oct 09, 2019

Bringing Digital Financial Services to Farmers in Africa

Bringing Digital Financial Services to Farmers in Africa

Just over 1 year ago, FINCA International announced the launch of FINCA Ventures, a new impact investing initiative. Shortly after this announcement, FINCA Ventures partnered with its first agriculturally-focused social enterprise called Good Nature Agro (GNA).

GNA works with rural farmers in Zambia to provide them with farming inputs and training throughout the growing season. The organization then buys back each farmer’s yield at the end of the season to ensure a fair market price. However, Good Nature Agro is always looking to improve the quality of life for its farmers. Recently, it partnered with FINCA Zambia to pilot providing digital financial services to GNA’s smallholder farmers.

Creating a Digital Partnership

Across Africa, only 31 percent of adults have an account with a financial institution, and smallholder farmers are some of the most financially excluded. Often in rural locations, farmers live far from banks and financial service providers. As GNA works with these smallholder farmers to help them earn their way into the middle class, it also wanted a way to help them gain access to these far-off financial services. That’s where FINCA Ventures was able to help.

From their initial conversations with GNA, FINCA Ventures saw the opportunity to connect GNA’s farmer network with FINCA Zambia, FINCA’s local microfinance branch. This would allow GNA’s farmers to more easily gain access to financial services. The only question left was “how?”

PEA-Group-Training

Implementing Digital Financial Services

With the help of FINCA Ventures, GNA and FINCA Zambia developed a partnership that leverages each of their networks. These include GNA’s private extension agents (PEA), along with FINCA Zambia’s banking agents and mobile network operators.

PEAs are specially trained farmers who function as GNA managers. Each oversees and trains 40 other farmers in best growing/farming practices. PEAs are paid directly by GNA, historically in cash. However, cash payments are unsafe, inconvenient, and continue the cycle of unbanked farmers.

To address this issue, GNA worked with FINCA Zambia to open a savings account for each of its PEAs. Implemented in June, GNA can now digitally deposit PEAs’ salaries into their individual savings accounts. PEAs can then access their money by visiting mobile money or banking agents in their local communities. Unlike a formal bank branch, these local agents use a point-of-sales device to connect digitally with the official banking network.

FINCA-Banking-Agent

Furthering Digital Financial Service Access

With its early success in paying PEA salaries digitally, GNA is planning to expand this pilot program to its wider farmer network of over 5,000 smallholders. The goal is for GNA to digitally pay all of its growers every season, not just the PEAs.

Through this partnership, both GNA and FINCA Zambia benefit. GNA now has a way of paying its farmers without carrying large sums of cash into remote areas. Additionally, FINCA Zambia now has the opportunity to grow its client base to include previously unreachable smallholder farmers. In fact, some of GNA’s farmers were FINCA Zambia’s first clients in two Eastern Province districts. This will allow FINCA Zambia to expand the reach of its mission to improve financial inclusion in the region.

However, in addition to benefiting each organization, this partnership also benefits another crucial group: the small shareholder farmer. With this access to digital savings accounts, farmers will be able to begin saving safely for long-term goals without having to keep large sums of money in their homes. It will also open them up to the potential of receiving other financial services as they build a history with FINCA Zambia. This is a big step in helping them achieve financial inclusion to continue building their way out of poverty.

FINCA has made it possible for me to open a bank account for the first time. This is a new page in my life.