Digital Financial Services in the Agricultural Sector At the example of the Uganda Coffee Farmers Alliance (UCFA)

Transcription

1 Digital Financial Services in the Agricultural Sector At the example of the Uganda Coffee Farmers Alliance (UCFA) European Microfinance Week 2015; November 20, 2015; Luxembourg Wolfgang Bücker Head of Sector Project Financial Systems Development, GIZ Page 1

2 Starting Point: developpp with SAP and the Uganda Coffee Farmers Alliance (UCFA); January July 2015 Objective: To enhance transparency, efficiency and traceability of business operations in the coffee value chain. Development of a smartphone-based application capturing buying and payment transactions digitally Training and sensitization of smartphone-users and farmers Central monitoring and evaluation of transaction data Page 2

3 Starting point: Value chain management in the coffee sector Production Processing Trade Export Page 3

4 Exporter Multi-level system setup Exporter Page 4

5 Impact: 24 smartphones capturing transactions of 13,500 UCFA farmers in Mityana, Mubende and Kassanda digitally 100% adoption rate (comparing paper-based data with digital data) Increased production/deliveries (approx. 10 %) Reduction in transaction costs (- 11%) Significant increase of trust and transparency in UCFA s organizational structure (sample: 100 participating UCFA farmers in three districts) Average price per kg of dried Robusta coffee paid in 2013/14: UCFA farmers 1,674 UGX Non-UCFA farmers 1,467 UGX Page 5

6 Key Success Factors 1. Initial training and sensitization 2. Ongoing support in the field, continuous monitoring and adaptation 3. Ownership of data and knowledge (UCFA staff) 4. Increased transparency and trust 5. Aggregated data allows analysis of productivity levels, training effects etc. Challenges 1. Phone and internet network, power supply 2. Security 3. Time constraints during double record-keeping 4. Individualisation vs. standardized software application Page 6

7 Next Step: Based on project experiences: Idea to integrate Digital Financial Services Mobile payments Designing agricultural loan and savings products for farmers to overcome financing gap between coffee seasons - based on smartphone data as track record - easily accessible via mobile phone - suitable for the smallholder farmer and adapted to the value chain - profitable for the partner financial institution - combining financial literacy training and support in the field Page 7

8 Digital Financial Services for Smallholder Coffee Farmers Co-funding by Financial Sector Deepening Africa (FSDA) in partnership with PostBank Uganda, UCFA and UGACOF Ltd (January 2015 April 2017) Objective: To support the development of a digital financial services market for smallholder coffee farmers in Eastern and Central Uganda. 24,000 farmers have a proof of income through SAP smartphone-based system. Farmers can opt for mobile instead of cash payments when selling their coffee. Farmers financial literacy has improved and they are able to make informed financial decisions. Farmers have access to a sustainable and fair savings and loan product. PostBank Uganda can establish a new customer-base and can assess and process financial products more efficiently. Page 8

9 Current Status and Roll-out Plan: 04/2015: Tender process to define partner financial institution together with UCFA and UGACOF 07/2015: Signing of MoU with Postbank Uganda 08/2015: Developing financial literacy training content specifically for smallholder coffee farmers; Training and roll-out of a test loan product among 90 selected farmers (79 accounts opened, 83 loan applications) 09/2015: Baseline-study, needs and risk assessment; Subsequent adaptation of financial product 10/2015: Training of Postbank branch staff; Financial literacy training and product roll-out for 12,000 UCFA farmers 01/2016: Financial literacy training and product roll-out for additional 12,000 Ugacof farmers Page 9

10 Co-funding Project with FSD Africa Phase 1 (April 2016) Phase 2 (April 2017) Registered Farmers 12,000 24,000 Region Central Uganda Central and Eastern Uganda Farmers with access to mobile payments Farmers trained on financial literacy and with access to loan and savings product Farmers have access to loans provided with loan 12,000 24,000 2,400 24,000 1,800 18,000 Page 10

11 Thank you for your attention. Contact: Wolfgang Bücker Dirk Steinwand Page 11

12 Registration of Farmers and Deliveries Page 12

13 Exporter Processing & Logistics Page 13

14 Exporter Bulking & Sale Page 14

15 Exporter Direct and Digital Payments Page 15

16 Integrating additional functionalities Agricultural Extension Services Certification (Traceability) Production Processing Trade Export Access to Inputs Financial Services Page 16