Smallholder Diaries Building the Evidence Base with Farming Families in Mozambique, Tanzania and Pakistan. Jamie Anderson Agrifin Webinar 24 May 2016

Transcription

1 Smallholder Diaries Building the Evidence Base with Farming Families in Mozambique, Tanzania and Pakistan Jamie Anderson Agrifin Webinar 24 May 2016

2 Financial innovation for smallholder families Build the evidence base on smallholder households and their financial needs Work with service providers to develop, launch, and test financial solutions 2

3 Build the evidence base on smallholder households Collaboration with providers on digital financial solutions Zimbabwe, Senegal, Rwanda, and Cambodia Financial Diaries with Smallholder Households Mozambique, Tanzania, and Pakistan National Surveys of Smallholder Households Mozambique, Uganda, Tanzania, Côte d Ivoire, and Bangladesh 3

4 Financial Diaries with Smallholder Families Three initial questionnaires feed into the tailored Diaries questionnaire Questionnaire 1: Household roster, living standards Questionnaire 2: HH members income sources, physical assets Questionnaire 3: Financial instruments Data from three initial questionnaires generates ongoing diaries questionnaires Acquisition, loss, or sale of physical assets Major household events: Births, weddings, deaths, etc. Open/close financial instruments/in come sources as needed On-going Diaries Questionnaire Qualitative modules: Risk, labor decisions, agriculture, financial tools, aspirations Crop tracker to record harvests, sale, consumption, and loss of each crop 4

5 Financial diaries with smallholder families Sample locations and key characteristics PAKISTAN: MOZAMBIQUE: Sample households: 93 Monthly p.c. net income: $5.50 Average landholding: 1.31 ha Use fertilizer: 4% Major crops and livestock: Cassava, beans, peanuts, poultry TANZANIA: Sample households: 86 Monthly p.c. net income: $10 Average landholding: 0.8 ha Use fertilizer: 64% Major crops and livestock: Maize, potatoes, rice, beans, poultry Sample households: 94 Monthly p.c. net income: $25.99 Average landholding: 1.18 ha Use fertilizer: 100% Major crops and livestock: Wheat, rice, cotton, buffalo, goats

6 What are we learning? 6

7 Financial Diaries with Smallholder Families: Sources of household income

8 Multiple income sources, changing over the year CGAP Financial Diaries with Smallholder Households 8

9 Household income is cyclical, driven by agriculture CGAP Financial Diaries with Smallholder Households 350 Amin's Income Sources USD, , Tanzania Agricultural Income Other Income Generating Agricultural Activity production Resources Received income From Outside of Household Building Tailor Selling powdered milk Casual Employment Rental Income Soda - Candy income - Soap Mechanics Animal plough Non-agricultural production 9

10 Only half of household income from agricultural production CGAP Financial Diaries with Smallholder Households Household income from agricultural and non-agricultural sources: (1) Median number of household cash income sources (2) Median proportion of total household cash income (3) Median number of household income sources, with in-kind consumption (4) Median proportion of total household income, with in-kind consumption Pakistan % 58% % 47% Tanzania % 74% % 54% Mozambique 2 6 7% 93% % Agricultural production income Non-agricultural production income 51% June 2014-July

11 Financial Diaries with Smallholder Families: Sources of household income Agricultural production is key to smallholder households. Crops and livestock provide important sources of household cash and in-kind income. But other income sources were just as if not more important. Non-agricultural financial tools may drive financial inclusion for some smallholder households.

12 Financial Diaries with Smallholder Families: Household shocks and coping strategies

13 Agricultural shocks differ by connections to markets CGAP Financial Diaries with Smallholder Households 13

14 But most commonly there is no specific response CGAP Financial Diaries with Smallholder Households 14

15 Financial Diaries with Smallholder Families: Household shocks and coping strategies Smallholder Diaries households had weathered many shocks. Illness and death, weather, pests, and price fluctuations were the most common shocks. Sample households often had no specific response to a shock. They coped with a thin portfolio of financial tools, and no insurance.

16 Financial Diaries with Smallholder Families: Household financial portfolios

17 Financial portfolios ranged from narrow to broad CGAP Financial Diaries with Smallholder Households Median number of financial instruments Smallholder Diaries sample households Mozambique Savings instruments 2 Credit instruments 1 Total financial instruments 3 Tanzania Pakistan

18 Financial mechanisms emphasized family and friends CGAP Financial Diaries with Smallholder Households Percentage of Smallholder Diaries households using various financial tools Smallholder Diaries sample households Mozambique Tanzania Pakistan Saving or storing money Savings at home 87% Lending to friends and family 41% 100% 48% 85% 61% ASCA 9% 53% 19% Borrowing money Borrowing from friends and family 59% Credit at a store 22% Borrowing from informal group 5% Agent credit (arthis) 77% 60% 67% 99% 94% 97% 18

19 More structured financial tools are considered less important CGAP Financial Diaries with Smallholder Households Reported importance of financial tools Smallholder Diaries sample households Most important Second most important Saving or storing money Mozambique Keeping money at home 91% Tanzania Keeping money at home 59% Pakistan Livestock 40% ASCA 4% Storing harvests 21% Keeping money at home 33% Borrowing money Mozambique Friends and family 68% Tanzania Friends and family 69% Pakistan Friends and family 73% Never borrow Informal groups 22% Agricultural middlemen 17% 19

20 Financial Diaries with Smallholder Families: Household financial portfolios Most Smallholder Diaries households only had access to a thin scattering of informal financial tools. Their financial portfolios were narrow, and emphasized family and friends. Even broad financial portfolios have their challenges. Sample households in Pakistan were linked to arthis in a tight value chain, and faced unique opportunities and constraints.

21 Financial Diaries with Smallholder Families: Mobile phones and digital financial services

22 Challenges remain on access, capability, relevance of DFS CGAP National Survey of Smallholder Households: Tanzania Mobile phone ownership, awareness of mobile money, and possession of a mobile money account among smallholders Sample: Smallholder farmers who participate in household s agricultural activities Mozambique n=2,574 66% Tanzania n=2,771 76% 49% 33% 27%.4% Own a mobile phone Aware of mobile money Have a mobile money account Own a mobile phone Aware of mobile money Have a mobile money account Sample: Smallholder famers who participate in household s agricultural activities 22

23 Limited experience with and capability for digital finance CGAP National Survey of Smallholder Households: Tanzania Percentage of most economically active household member among Smallholder Diaries sample households Mozambique Tanzania Pakistan Have a mobile phone 43% 56% 70% At least one other HH member has another phone Understand how to send and receive SMS (but not the internet) 38% 43% 21% 25% 68% 24% Has heard of mobile money 21% 98% 82% Would likely use mobile money to send or receive money Has used mobile money to send/receive remittances 0% 74% 57% 0% 19% 0% 23

24 Financial Diaries with Smallholder Families: Mobile phones and digital financial services Access, capability, and relevance impede the potential of digital financial services. Create digital financial services that are easier to use and more relevant to smallholder context. Successful digital financial solutions won t be the same for every group of smallholders. Work to understand client demand, and design with features that are familiar, flexible, and tangible.

25 Financial Diaries with Smallholder Families: Recommendations

26 Smallholder Diaries sample in Mozambique: Non-commercial households Recommendations Strengthen informal mechanisms like ASCAs to store and stretch small amounts Improve agronomic practices and crop storage Emphasize support related to health, education and infrastructure, which may also provide entry points to financial inclusion

27 Smallholder Diaries sample in Tanzania: Smallholders in loose value chains Recommendations Build on the importance of tangible savings and crop storage with other savings and layaway instruments Design and deliver products with the wide variety of household income flows in mind Develop digital financial tools that are familiar, flexible, and tangible, capitalizing on the robust mobile financial services infrastructure

28 Smallholder Diaries sample in Pakistan: Commercial households in tight value chains Recommendations Facilitate financial relationships with middlemen, such as digital savings ledgers Develop financial solutions that echo the benefits of working with middlemen, such as refinancing and emergency loans Meet the financial needs of middlemen, and put them in a stronger position to serve smallholder households

29 CGAP: Financial Innovation for Smallholder Families For more information Financial Diaries with Smallholder Families: Full paper Working paper Data visualization Microdata and User guides: Mozambique Tanzania Pakistan National Survey of Smallholder Households in Mozambique Full paper Microdata and User guide Designing Digital Financial Services for Smallholder Families: Full paper

30 Publications Data sets Visualization

31 CGAP SMALLHOLDERS TEAM Gerhard Coetzee Jamie Anderson Max Mattern

32 Advancing financial inclusion to improve the lives of the poor