Enabling role of ICTs to transform smallholder farmers to entrepreneurs

Michael Hamp, IFAD 27 October 2010 Overview of IFAD-funded ICT related activities supporting rural enterprises 2010 Information Economy Report presentation at FAO

Outline
Mobile-phone banking pilots
IFAD-WFP Weather Risk Management Facility
Rural remittances
Agricultural value chains and marketing

Why is branchless and mobile banking relevant?
Branchless banking:
reaches large numbers of poor rural people
uses ICT and non-bank retail agents to deliver financial services outside conventional
Some example:
Kenya: 50% of population is registered for M-PESA (only 23% has bank accounts)
Remote rural community in the Amazon: 5 BB agents have made a night-day difference!

Branchless banking: A beacon of hope
Encouraging results:
branchless banks reach remote areas. In rural Brazil, deposits and withdrawals constitute 38% of transactions compared to 8% in urban areas
eight branchless banks reached 37% of people previously unbanked
Five branchless banking providers reached more unbanked people than the largest MFI in country
The same five providers grew rapidly, needing on average three years to acquire more unbanked clients than the largest MFI in the same market

IFAD-WFP Weather Risk Management Facility
a joint initiative of IFAD and WFP with support from Bill and Melinda Gates Foundation
Objective
Increase access of smallholder farmers to a wide range of risk management tools

WRMF focus
The WRMF focuses on four areas:
Building the capacity of local stakeholders in weather risk management.
Improving weather and climate services , infrastructure, data monitoring and management
Supporting the development of an enabling environment
Promoting the use of technology to complement ground-collected data (e.g. use of satellites, remote sensing applications)

WRMF main outputs
pilots in Ethiopia and China
Technical publication on: ‘Potential for Scale and Sustainability in Weather Index Insurance for Agriculture and Rural Livelihoods’ www.ifad.org/ruralfinance/wrmf/index.htm
A technical guide for donors: Effective ways to support index insurance
Mapping exercise with Wageningen University to determine crop vulnerability to weather and climate risk, also relative to weather data availability and household socio-economic conditions

Rural remittances
Did you know that:
30 to 40% of remittances goes to rural areas
Thanks to high mobile penetration rates in rural areas, more and more money is being transferred using using mobile phones
Did you know that:
over 200 million people going north send home $350 billion
Remittances to developing countries total 3 times Official Development Assistance (ODA)

Remittances and mobile banking Konecta in Paraguay : launching a new technological platform service for fast money transfer services targeting 75,000 people IOM and Crystal Fund in Georgia : setting up a mobile remittance platform integrating microfinance institutions and commercial banks, to provide microloans, microsavings, and micro health insurance products Example of IFAD’s projects using m-banking & m-remittances ACCESS Bank Madagascar : piloting a wired and mobile IT platform to link MFIs and remittance companies to small farmers and families of migrants in rural areas

Pro-poor value chain programmes
Smallholders in Value Chains:
Usually disadvantaged because they lack information , which affects their negotiations with other actors in the chain.
Benefits:
Reduced transaction costs
Overcoming information market failures
Improved communication along the value chain
Input suppliers Customers’ feedback Buyers (actual and Potential) Market prices Product specifications Storage facilities Transportation Packaging Operations Weather Input prices Small- holders

Pro-poor value chain programmes: Access to information
Zambia National Farmers Union (ZNFU 4455): Business model
Service focused on needs of smallholder farmers, producers and traders
Provided focused and targeted market information
Easy to understand, little or no bells and whistles
Covered entire value chain
Open to all farmers – no registration fee for farmers
Traders need to register
Local content and no massive pushing
Sustainability: through advertisement
©IFAD/Mwanzo Millinga
Results
Smallholder farmers better access to market info and participate on equal footing with traders
Improve negotiating power
Reduce transaction cost
Win-win: convergence with radio, mobile phone and internet
service has had positive impact say:
90% traders
60% farmers
40% negotiated better price
Over 50% increased income

Where to next?
How do we move from piloting and more piloting to mainstreaming ICT4D in development activities?
What is the future of m-applications?
When will we all embrace m-development?
Is public-private partnership really the panacea?
What are other viable business models to embed ICT4D in rural development projects?

Enabling role of ICTs to transform smallholder farmers to entrepreneurs

by e-Agriculture Community of Practice on Oct 27, 2010

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Enabling role of ICTs to transform smallholder farmers to entrepreneurs — Presentation Transcript