About the Event
A major obstacle facing the continent is identifying the best methods for utilizing innovative technologies affordably, and that are flexible in meeting the diverse requirements of Africa's vast agrilcultural sectors. E-agriculture offers a wide range of solutions to agricultural challenges.
Vuyani Jarana, Chief Officer of Vodacom Business, of the Vodacom Group, speaks about the experience of Vodacom with regards to how banks and other financial institutions can expand operations by leveraging and capitalizing on the improving digital infrastructures of Africa. Vuyani dives into issues that surround emerging innovations, capacity strengthening, and the enabling environment of mobile service banking. Specifically, he speaks about information gaps in existing agriculture value chains. Gaps prevent farmers from gaining access to markets. Also, a lack of transaction records, that many consider the "financial footprint" of smallholder farmers, constrains their ability to produce the evidence needed for credit scoring. This further limits access to financial services. These combined with several other factors inhibit African agricultural development.
The presentation argues for modernization of the agriculture sector through digitization of farming activities and the crop production cycle. Storing the data on accessible platforms and sharing it may lead to increases in farmer knowledge and skills. More digital records could be beneficial to financial institutions who use it to create unique agriculture client profiles. User experience results of agriculturalists and industries who have adopted Vodacom's Connected Farmer Platform, which uses e-Voucher management to track key points in the agriculture value chain are discussed. Details regarding how e-agriculture has the power to transform Africa's economy are highlighted during the webinar Question & Answer session.
Featured Topic | Digital Finance in Agriculture
About the Presenter
Chief Officer of Vodacom Business, an enterprise division of the Vodacom GroupAn Engineer by training, he holds a National Diploma in Telecommunications, a BCOM, Economics and Business to drive business growth through the enterprise business segment. He is responsible for strategic planning and execution of the enterprise growth plans in all Vodacom markets Pan-Africa.
A visionary leader, he holds a number of chairman positions within the Vodacom Group ofCompanies, including Vodacom Business Africa, and Vodacom Business Nigeria as well as Chairman of Stortech, a company focusing on Storage and cloud-based ICT services for the Enterprise Business. He is the director in the board of Vodacom South Africa and a member of Vodacom Capital Investment Review Board.
Vuyani is a passionate leader and an African enthusiast. His in-depth belief in social transformation is evident in the roles he plays as a board member of Eastern Cape Rural Development Agency and Council member of the Nelson Mandela Museum. He was previously the Chief Operating Officer for Vodacom South Africa a position he held until March 2012, before taking on his current role.
Agriculture, Banking, and the Digital Economy Merge to Improve South African Agriculture
Key Messages from our Recent Webinar
A successful and thriving agriculture sector in Africa is one that feeds not only its growing population but also meets the global food demand while driving economic growth. Hence, agriculture represents a promising business that will require more modern ways of production and increased access to information, markets, and finance sources. Mobile services and products are beginning to play a major role in driving efficiency and sustainability in Africa’s agriculture value chains. Vodacom’s Connected Farmer Platform uses mobile technologies and data to connect different stakeholders within an agricultural value chain, facilitating a better understanding of the farmer’s profile and their proficiency. The aim of this technology is to enable increased lending to farmers and other actors within the agriculture value chain. This mobile-based system is an innovative endeavor to redesign how financial transactions are conducted in the sector.
The current share of lending to rural and smallholder agriculture is not sufficient to support the smallholder financing demand in the continent. Two key challenges are 1) the lack of farmer profile information available to lenders, and 2) a fragmented agricultural value chain. On the one hand, lenders often view smallholders as too risky, because there is not enough information about their skills, production patterns, etc. Lenders have to take a farmer’s word at face value because of a lack of an adequate data collection system that captures and generates credit scores. On the other hand, underlying challenges in the value chain further compound the problem: Smallholder farmers frequently use less organized or informal value chains to get their product to market. This may lead to a lack of receipts and other gaps in tracking the information. Furthermore, small holders rely on informal forms of credit. These and other inconsistencies lead to fragmentation. Vodacom created the Connected Farmer Platform in response to these challenges. The platform assesses the smallholder farmer risk profile by modeling key risk factors and then layering the risks most associated with smallholders. This helps identify pain points where Information and Communications Technology (ICT) can mitigate and lower liability. Farmer lack of skills and access to markets are among the highest risk factors.
Increasing use of mobile services among farmers can help overcome agricultural sector lending challenges. For example, ICTs and data mitigate risks and build trust and understanding among the actors of the agriculture value chain. A multifaceted technological approach incorporates big data, the Internet of Things (IoT), cloud-based storage, and mobile money to plug leaks in the value chain. One tool the Vodacom platform uses is e-voucher management. It registers and contracts with the smallholder farmer, the store officer or agro-dealer, and the quality-control inspector (who shares results with the farmer via SMS). Farmer purchased goods on the loan account are tracked. Monthly repayments can be made through the mobile phone. The digital signature protects the farmer and his data. Following these activities moves paper trails to digital data, builds relevant financial information about the borrower that is of interest to the lender, and increases access to valuable information for all actors in the value chain. For instance, AGRISUITE Plus was developed to make educational content accessible to farmers, who can retrieve instruction about soil, harvesting techniques, plants, correct application of fertilizers and pesticides, etc.
Vodacom does not own the tracked data stored in the cloud. The terms of the agreement between the smallholder and larger aggregators dictate who owns the data while Vodacom acts as the facilitator in this evolving model. Through the right data framework, the data can be shared intelligently. Data and credit scoring will continue to improve as more users adopt and input their information into the system.
Technology is facilitating an evolution in agricultural lending, where digital financial services can play a catalytic role in dramatically increasing financial inclusion. New innovations have and continue to emerge at an unprecedented fast pace. Many are already being piloted indicating that appropriate and clever use of tailored Information and Communication Technologies will generate easier, cheaper and more predictive lending, increasing profits for both suppliers and consumers and ultimately facilitating stronger agriculture values chains and economic development. Hence, technological improvements in agriculture financing represent not only an attractive business opportunity for lenders but also one of the most promising avenues to significantly increase financial inclusion.