How finance could impact smallholder farmers in the digital era

AGRF 2020

Smallholder farmers play a crucial role in sustaining the progress of agricultural transformation in Africa. However one of the major challenges they continue to face is the poor access to financial services such as payments, savings insurance and loans.

At the heart of discussions during the African Green Revolution Forum (AGRF) is the need to reformulate a vision for smallholder farmers in the digital era.

“If we are serious about third wave and what this could mean for smallholder farmers, we must consider how to get the right policies in place; building infrastructure that’s accessible to the millions of unreached people,” said Mr. Rodger Voorhies, President, Global Growth and Opportunity, Bill & Melinda Gates Foundation.

Despite the launch of digital financial service providers like MPesa, which launched in Kenya 12 years ago, there is still a lot to be done. “There are so many smallholder farmers in various areas some of which are not accessible. There is a need to solve the challenge of connectivity. Sensitization is also needed to help farmers embrace digitization and understand newer systems through training,” said Mr. Belay Begashaw, Director General, SDG Centre for Africa.

In addition to some of the measures highlighted above, the government will also need to advance the right policies and secure investments that will ensure a better life for millions of African farmers and their families.

Mr Kwesi Korboe, CEO, GIRSAL Bank of Ghana spoke on recent efforts to make loans more accessible to smallholder farmers. “We’re working with the banks to find out what it’ll take to give farmers loans, one of which is devising better ways to mitigate risks,” he said.

In countries like Nigeria, on the other hand, one of the things that the Central banking system has done is to take unconventional measures. Mr Aliyu .A. Abdulhameed, Director general, NIRSAL, Nigeria also suggested that African countries look for digital solutions that will take finance beyond what is currently in place.

To properly address the needs of farmers certain factors need to be considered. For one, there are different categories of smallholder farmers ranging from subsistence farmers to commercial farmers, each requiring different solutions to boost productivity. However, this may not only be limited to digital solutions alone. For instance, insurance schemes help smallholder farmers to manage risks and climate challenges. It is also hoped that in the coming years, more stakeholders will leverage the huge savings and capital available on the continent while pulling in the private sector to join the revolution.

MasterCard’s 2Kuze is one of the digital tools for agriculture, which addresses access to markets. The pilot program connects farmers in Kenya directly to buyers. These buyers purchase and collect their products that buy without the services of middlemen who can cut into a farmer’s profit. 

In conclusion, Mrs. Greta Bull, CEO, Consultative Group to Assist the Poorest (CGSAP) stressed the fact that financial services are the lifeblood to digitization. “Digitization not only opens up new spaces, but it also increases resilience, and farmers are able to save money safely and securely in a digital wallet,” she said.  

The panelists also called on policymakers and governments to ensure that national resources are committed to promoting the growth of agriculture across the continent. But in order for agriculture to promote long-term economic growth in Africa, it needs to become profitable. A feat that is only attainable by harnessing digital technologies.