The AGRA financial inclusion team, in its partnership with The MasterCard Foundation, has been assessing the business models of fifteen ICT4Ag solution providers in Kenya, Tanzania, and Ghana. Study outputs to date include the full report, executive summary, 15 case studies of providers, and a short video where farmers give their perspective on these solutions. Hedwig Siewertsen, AGRA's Team Leader of Financial Inclusion, summarizes key findings below.
[Download the full report and executive summary]
The proliferation of mobile phones among rural households in Kenya and Tanzania (72% in both countries) has seen a significant increase of digital information solutions for farmers. However, many of these solutions do not sustain beyond the life of an award or a typical three-year donor project.
We use the term “Digital Harvest” to refer to the 150+ different ICT solutions in these countries that allow farmers to access information on market prices, good agronomical practices, and weather updates. With the help of these solutions, farmers are able to source services like transport and produce aggregation. These non-financial agricultural services are instrumental in reducing the risk of delivering financial services, as a farmer who knows the best time to plant, how to apply fertilizer, and where to get a good price for the harvest, is more likely to be able to pay back an input loan.
Despite the initial success of the Digital Harvest, there are already signs of ‘post-harvest losses’ with some solutions disappearing from the market due to flaws in their business models. Based on earlier research from GSMA, CTA, and Mercy Corps these flaws are the main cause of underperforming solutions. Therefore, AGRA is interest in understanding what’s working and what’s not. This requires identifying which ICT4Ag solutions are sustainable and valued by farmers in order to target support at scalable and lasting solutions.
To build on these interests, AGRA with support from The MasterCard Foundation and assessments conducted by Advantech Consulting Ltd from Kenya, commissioned a business model assessment of fifteen ICT4Ag Solution providers in Kenya, Tanzania, and Ghana. The sample is small and we do not claim that the review is representative of the universe of ICT4 Ag solutions. However, it does yield insights in flaws and possible improvements needed to grow and sustain the solutions that offer real value to users.
The business model review identified eight key problems that hamper the growth and sustainability of the solution providers.
Unfortunately, these flaws in business models and the lack of a clear business case for users, lead to solutions that do not have robust revenue models or do not empower customers to adopt the solutions.
The business model review found that five out of fifteen solution providers were sustainably delivering services. The longer the solution providers are in existence, the more likely it is that they are sustainable. This may reflect adjustment of business models over time or it might be that the non-sustainable solutions have disappeared from the market after an initial donor-funded project phase.
Nonetheless, successful solution providers were found to have the following traits in common.
With these findings, we believe that ICT4Ag solutions could become more sustainable, attract more resources, and have more users by taking the following approaches:
ICT4Ag can play an instrumental role in improving the farmer experience, making it easier for smallholders to grow their crops and sell their harvest at the market rate, thus putting them in a better position to pay back their loans. For ICT4Ag solutions to work, Digital Harvest providers will need to revise their business model to align with a more sustainable approach.
Note: On Sept 6, 2016, AGRA and CTA jointly held a workshop on the Digital Harvest study at the African Green Revolution Forum in Nairobi. 10 solutions providers came together to comment and discuss the findings to date from the business model review as well as view farmers’ perspectives. A suggested next step at the conclusion of the workshop was to create a community of practice which could aim to:
Alliance for a Green Revolution in Africa (AGRA) facilitates FISFAP, an initiative that aims to reduce food insecurity and increase the incomes of about 700,000 smallholder farmers in Kenya, Tanzania and Ghana by February 2020 by working with financial institutions and agriculture value chain actors.
Press release: AGRA and The MasterCard Foundation partnership
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