The ‘Inclusive Business’ of Agriculture Mobile Money

Agriculture is the most significant sector in rural areas and provides livelihood for 70% of the worlds poor. Further, there are 500 million smallholder farming families that grow and harvest 70%+ of worldwide food production. A longtime, nagging issue for agricultural finance has been how to cost effectively and securely provide financing to rural smallholder farmers in such manner that fraud is minimized while accountability and transparency is promoted. Mobile money is simple, convenient, affordable – and is disruptively innovative for agriculture finance. Or as stated in the Bill and Melinda Gates annual letter for 2015 “once (mobile money) gets going, then there will be competitive innovation in offerings like special savings or credit plans related to farming.”

Beginning in 2007 when M-Pesa in Kenya first caught our imagination I’ve thought carefully about how best to insert mobile money into agriculture value chains. I knew that when the ‘low hanging fruit’ of densely populated urban centers became saturated for mobile financial service providers (e.g. MTN, Airtel, Tigo, etc.) their attention would turn towards the more challenging task of target market segmentation and rollouts of mobile money in rural areas. I was previously the head of mobile strategy for an international agriculture NGO and am now an independent digital finance strategic advisor, speaker and writer. With an eye towards the usual menu of value chain development design and implementation my three steps for agriculture mobile money are; cash usage behaviorial research, strategic alliance formation and embedding mobile money into the value chain. The most strategic insertion point is to transition the cash payments by large commodity buyers (e.g. multinational, regional, local) to thousands of farmers….to mobile payments. This transactional activity can make the economic value proposition for the mobile financial service providers to invest in building the ecosystem of agents and merchants where off-the-grid and financially illiterate farmers live and work! Pictured is a Uganda coffee washing and hulling society that makes SmartMoney (a third-party mobile financial services provider) mobile payments to its farmers.

These ideas have received significant traction with my clients, conference audiences and readers. I was recently invited to speak at an internal strategic planning retreat for a global agribusiness with $17B USD in revenue, 23K employees and sourcing operations in 65 countries. In Ethiopia my client designed a full suite of digital agricultural functionalities, beginning with payments to farmers. For the Technical Centre for Agriculture and Rural Cooperation I did agriculture mobile payments primary research in Uganda, Zambia and Ghana. I also designed and helped implement mobile money projects for cocoa and rice in Indonesia, Tanzania and Ghana.


You might have noted that paying farmers onto their mobile phone wallet is interesting but wonder how it favorably impacts farmers and the farming household by way of financial inclusion. The use of a mobile money ‘wallet’ for receipts/payments is analogous to the use of an actual wallet in a woman’s purse or a man’s back pocket. Every receipt or payment is a fee-generating ‘transaction’ for a mobile financial services provider. Agriculture generates more numbers of transactional payments than any other sector in rural areas and payments by large commodity buyers into farmer mobile wallets will only be viable if there is investment made to build a robust ecosystem of cashin/cashout agents and merchants where farmers live and work. By using these three steps the infrastructure of an economically viable mobile money platform in rural areas can be created. Once done, agriculture mobile payments will have served as the mobile money gateway for rural areas by opening the door to other vital services and sectors such as mobile banking, water, health, education, solar power, solar lanterns and more.


This, in a nutshell, is how we can operationalize the vision in the Gates 2015 annual letter that “mobile banking will help the poor transform their lives.”


This blog is a part of our March 2015 series on inclusive business in the agriculture sector. To view all the articles in this series click here.

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