Can this be an Opportunity for Mobile Banking in Ethiopia?

Photo Credit: The Economist

I participated in a very informative event this week in Washington DC where a researcher was sharing his experience on “Weather-Index based Crop Insurance for Smallholder Farmers in Ethiopia”. As I listened to the discussion as an agricultural information specialist, my concern was what is the role of mobile technologies in this?

According to the researcher, Dr. Shukri Ahmed a Senior Economist, Food and Agriculture Organization (FAO), the concept of crop insurance has a long history from Asia with the leadership of India. However, due to the challenges associated with insurance in general and access to credit to smallholder farmers, the idea somehow waned. But according to Index Insurance Innovation Initiative (I4), there is overwhelming evidence that uninsured risk can drive people into poverty and destitution, especially those in low-wealth agricultural and pastoralist households. There is therefore a re-emergence of insurance for smallholder farmers across the globe.

The speaker gave a detailed background to the study in Ethiopia and the importance of partnership in the design and implementation of the study. The difference, however, with this new approach to crop insurance for smallholder farmers is the use of index (indices) to support the insurance service, and intervention against emergency situation. But at the same time the study is targeting farmers that are relatively better off and who are already engaged in the market but are not investing in insurance due to the anticipated risks. The outcome of the pilot study is expected to help protect the livelihoods of smallholder farmers, who are vulnerable to severe and catastrophic weather risks particularly drought, enhance their access to agricultural inputs, and enable the development of ex-ante market based risk management mechanism which can be scalable in Ethiopia.

Dr. Shukri Ahmed, Senior Economist at the United Nations Food and Agriculture Organization (FAO)

Unbanked or Branchless Services

Adding another concept to an already very complex issue that tries to combine weather, insurance, credit/finance, and smallholder farming, should be carefully considered. But the key question is whether mobile technologies can play a catalytic role in this entire complex system?

Among the reasons for choosing a given area for the pilot study, include availability of Nyala Bank branches, the vulnerability of yields to drought, the availability of nearby weather stations, and the willingness of cooperatives in the area to purchase the new product. As the pilot study progresses, the possibility of scaling the project across the country is high. But what will be the implications for the absence of banks in the rural farming communities in a country that has an approximately one bank loan per 1000 adults? Can Mobile Banking help understand why smallholder farmers under-investment in agriculture?

A success story of mobile banking by the Dutch-Bangla Bank Limited (DBBL) in Bangladesh was recently highlighted by the GSMA Mobile Money for the Unbanked. Interestingly, the story pointed out how DBBL learnt from Kenya’s famous mobile money program M-PESA. Kilimo Salama (KS) is an innovative index-based insurance product that insures farmers’ inputs (seeds, fertilizer, pesticides), and outputs (crop harvests), in the event of drought or excessive rainfall. It uses weather stations to collect data and implements SMS-based mobile technologies to administer and distribute the payouts. Mobile technologies will not only help with the financial transactions such as seen in Kilimo Salama’s case but also in support of the weather stations for timely and accurate decision making for pay-outs.

My conversation with Dr Shukri about the possibility of integrating mobile money into the project to address the challenge of absence of banks in rural Ethiopia, revealed the huge untapped market for Mobile Banking in that country. However, the success of such services depends on a convincing business case for both the banks and Mobile Network Operators (MNOs). Most importantly, however, is the state of telecommunication infrastructure and regulation in the country. These need to be in place for services and applications to thrive. With this huge investment

Outside Ethiopia, I believe it is time for African countries to take advantage of the increasing mobile phone penetrations in the continent beyond social networking to general development applications such as for agriculture, health, education, and rural development.

To listen to the audio recording of the event, visit Center for Strategic and International Studies (CSIS).

August 25, 2012/by actualize

Agriculture, Mobile, Originally posted on the GBI Portal

From ICT4Ed to ICT4Ag: The Potential of EasySMS Mobile App!

Photo Credit: EasySMS

EasySMS mobile app intends to enable illiterate people to “read” SMS on Windows Phone 7; understand the meaning of each word of the SMS; and write SMS using icons with sound support and SMS recomposition from previous SMSs.

It is a Windows phone application which empowers illiterate people to read, compose, send text messages to their contacts, and helps managing contacts in an innovative and funny way through text-to-speech solutions.

The design and development of the app is based on the premise that about 800 million illiterate people are excluded from the benefits of text messaging and most of them reside in rural areas in which mobile phone coverage and ownership is growing rapidly and SMS are cheap or even free. Using a touch screen with simple icons, illiterate users may be able to use their mobile device to navigate through text messages, highlight words from incoming messages, listen to them, and then add them to new messages.

Considering the huge current market size of the users of the application, the developers are very ambitious, optimistic, and believe that their work will lead to the creation of more tools to help illiterate people gain access to information and technology.

Below is the preview of the app:

Illiteracy and Smallholder Farming

A major challenge, I believe, facing the ICTs for Agricultural Development Sector in most developing nations is the high illiteracy levels among the smallholder farmers. As a result, the success of this app will be a success to the ICT4Ag community. It is a laudable initiative which is still at the teething stage and needs a lot of support for improvement.

Several discussions, forums, and debates have been taking place over the years to find alternative models to delivering agricultural information to farmers in the developing nations who cannot read or write. At the same time, with the unprecedented growth of mobile phone among these same group of people, it is a great move to take advantage of the technology. The dominant mode at the moment seems to be SMS or text messaging with its two main limitations – the illiteracy barrier and the amount of information that can be transmitted at a time. EasySMS may be able to reduce the former while the latter still stands.

Designing for Today or Tomorrow?

But my question (as derived from the title of this blog) is – what is our priority? To sustainably address the illiteracy problem by educating our rural folks now, so that they can easily access agricultural information tomorrow or to continue investing in applications that help address the challenge of today’s illiterate farmer in accessing the right information? In other words, how can we modify our ICT4Education programs for long term solutions to the illiteracy problem in the rural farming communities in order to impact ICT4Agriculture programs?

I believe it is time for the ICT4Ed and ICT4Ag communities to begin sharing notes. In order for ICT4Ag applications and projects to have tangible impact on the rural farmers, they must get the basic education necessary to use these apps. While the EasySMS app takes an interesting approach that could eventually create a new breed of “literate” rural folks through the use of these visuals (computer icons) and voice support, we should not forget to catch the future literate farmers while they are young. In doing so, we will be on the path of tackling the information barrier through both short term and long term approaches.

April 23, 2012/by actualize