This document provides an overview of Mercy Corps and their Agri-Fin Mobile program. It discusses how Mercy Corps uses an ecosystem approach to promote uptake of mobile services among rural customers in emerging Asia. This involves building partnerships between financial institutions, mobile network operators, and application providers. The document then shares findings from research conducted with smallholder farmers in Indonesia on their mobile phone use, financial access, and information needs. It identifies opportunities to bundle financial and information services via mobile to address gaps farmers face around access to credit, pricing data, and farm management tips.

1. 35
October 2012
Mobile Banking & Payments for Emerging Asia Summit
Lesley Denyes, Agri-Fin Mobile Program Director
Andi Ikhwan, Indonesia Program Coordinator, Agri-Fin Mobile

2. Mercy Corps
Presentation Overview
Part 1: Intro to Mercy Corps
Part 2: Promoting Uptake of Mobile Services to
Rural Customers
Part 3: New Models for Rural Financial & Agri
Services

3. Part 1: Intro to Mercy Corps
35

4. Mercy Corps
AN OVERVIEW
Mercy Corps is an international development agency
working amid disasters, conflicts, chronic poverty and
instability, activating untapped human potential to
create lasting change.
Since 1979, Mercy Corps has provided $1.5 billion in
assistance to people in 106 nations. Supported by
headquarters in North America and Europe, the
agency’s global programs employ 4,500 staff
worldwide and reach 19 million people in more than
40 countries.

5. Mercy Corps
Sectors of Engagement
Agriculture & Food Emergency: Food & Non- Infrastructure Rehabilitation
Security Food Distribution, Shelter,
Water/Sanitation, Food & Refugees/IDPs/Returnees
Civil Society, Conflict & Commodity Management,
Peace building Material Aid Social Innovations: social
enterprise, technology,
Climate/Environment & Financial Inclusion: literacy,
microfinance, insurance,
partnerships
Energy Poverty
franchising, branchless
Democracy & Sustainable Resource
Governance Gender, Women & Girls Management
Disaster Risk Reduction Youth employment,
Health: Child Survival;
Economic & Market Community Health, Health enterprise & skills training
Development Services Delivery, HIV/AIDS,
Nutrition, Psychosocial, Water/Sanitation
Education Reproductive,
*Financial Services active in 22 countries with equity in16 banks/MFIs
MFIs

6. CONTEXT: Mercy Corps Programming

7. Part 2: Promoting Uptake of Mobile Services to
Rural Customers
35

8. Ecosystem Approach
The Challenge: Rural Populations & Areas
•Globally there are more than 610
million small holder farmers.
•Rural populations by definition live
outside of commercial centers, and
typically encounter higher costs and
travel times to access information
and financial services, trade and
market goods.
•A recent study calculated the cost
of information constitutes 11% of
farmers’ total costs.

9. Ecosystem Approach
Impact & Benefit: Mobile & Agriculture
• Increased productivity
• Reducing transport costs
• Reducing price disparity
• Increasing trading opportunities
• Increasing access to information,
services & markets
• Building trust
• Risk mitigation
*While mobile channels hold the best promise for
reaching farmers and rural areas, significant
behavior change/education is needed realize
potential.

10. Opportunities for Small Financial Institutions
Mobile Application Innovations Around
the World
 Ecommerce & info /productivity apps linking farmers to opportunity
 Microinsurance (crop, health, credit ) via hand phones
 Extension services around ag inputs & productivity
 SMS reminders to build productivity/financial literacy/skills
 Access to solutions for energy poverty, community sanitation,
health care, education
 Full banking services affordable and accessible for small farmers

11. Opportunities for Small Financial Institutions
New Models in Digital Financial Inclusion
Challenges & Constraints
• TECHNOLOGY: Insufficient network coverage and power constraints, Lost
SIMS, forgotten passwords, complex product
• CLIENT: Technology, digital and linguistic literacy issues; cost of air time; aging
population of farmers, effects of climate change
• MARKET: Remote nature of market, constraints in market access, input
access, poor infrastructure, lack of cash, overindebtedness; keeping clients
active
• FINANCIAL SERVICES: appropriate products /pricing designed for farmers;
low level of banked farmers; savings capacity, core credit risk issues
• TECHNICAL CAPACITY: challenges around scalable capacity building
• MOBILE ECOSYSTEM: Vendor and Cash in/Cash-out agent training and
ongoing support, nascent app providers, managing content/quality of apps
• NEW MODEL: New territory with lack of Scalable, affordable, sustainable
business models, Weak business case/customer value for associated products,
Managing Public-Private programs/partnerships

12. Part 3: New Models for Rural Financial & Agri
Services
35

13. Agri-Fin Mobile
The SDC Grant
SDC funded project to improve livelihoods, productivity and incomes of
Small Holder Farmers through:
•Elaboration of mobile solutions for farmers
•Building business models and partnerships that lead to scale and
sustainability
•Tracking impact and farmer end results
•Gathering knowledge and disseminating information broadly
Phase 1: 3 countries,3 years, $2.8m, 180,000 SHF
Phase 2: 8 countries, 2 years, $3m, 1m SHF
Funding supports:
•Research & Product Development
•Application & Interfacing Development
•Lessons Learned Sharing & Dissemination
•Open sub-grants for partner support
Supported by : Partner in-kind contributions, MC programs

14. Bundling Mobile Apps & Financial Services for SHF
The Agri-Fin Mobile
Program facilitates
sustainable shared
business models
between app providers
and banks reaching
small holder farmers
through development,
integration and
implementation
processes to provide a
win/win/win of access
to market, technical
and financial services.

15. Agri-Fin Mobile
The Ecosystem Approach
Each ecosystem requires…
Banks
MNOs
Channels to Small Holder Farmers
Rural Advisory Service Providers
Application providers
Platform Hosting & Management
… to build a comprehensive suite of
services & operational business model.

16. Baseline & Product Development Research
Findings
35

17. Baseline & Product Development Research
Survey Methodology
Data Collection:
• 408 Individual Surveys
• 64 Merchant Surveys (coop, trader,
supplier, etc)
• 8 Focus Group Discussions
• 4 Districts in C&W Java: Wonogiri,
Indramayu, Bandung, Garut
• 4 Value Chains selected linked to food
security and poverty alleviation
mandate: Maize, Rice, Potatoes, Chili
• Data collected from July – August 2012

18. Baseline & Product Development Research
Profile of Respondents
Gender Profile Field Survey
500
408
400
306
300
200
102
 High literacy rates
100
0
Male Female Grand Total Education Profile
450 406
400
350
Farmer Age Profile for Selected Crops 300 218
250
400 200
150 58 70
100 44 16
350 50
0
300
250 0 - 14
200 15 - 24
25 - 59
150
60+
100
50
0
Chili Maize Potato Rice Total

19. Baseline & Product Development Research
Profile of Respondents
Household Size
Literacy Profile
160
450 405 134
400
375 140
350 120
300 100 88 82
250 80
200 60 39
150 40
32
100 14 9
30 20 4 4 1
50
0
0 1 2 3 4 5 6 7 8 9 10
Illiterate Literate Total
Land Ownership Profile
450 408
400
350  75% of farmers live on less
300 275
250 than 1 ha of land
 67% of farmers own land
200
150 115
94
100
50
0
Own Land Lease Land Communal Land Total

20. Baseline & Product Development Research
What are they growing?
Primary Crop Profile
450 408
400
350
300
250
200
150 103 117 116
100 72
50
0
Chili Potato Maize Rice Total
Secondary Crop Profile
60
51
50
 Approximately 55% of
40 35
farmers have 31
30 25
secondary crops 20 21
20 17
10 7
3 2 4
1 1 1
0

21. Baseline & Product Development Research
General Growing Constraints
• Lack of access to high
quality inputs
• High price of inputs
• Drought and climate
stresses
• Pests
• Constraints to selling
goods linked to pricing
data

22. Use of Mobile Phones
35

23. Baseline & Product Development Research
Use of Mobile Phones
 83% of respondents have a mobile phone; strongly skewed towards males; All
households have access to a phone, >80% of males own phones, only 20% of
females
Own a cell phone? Own a cell phone by Gender
100%
100% 7
20 22 68
80% 19
80%
61
60% 79
80 83 303 60%
72
40% 40% 60 61 235
42
20% 39 20%
26
0% 19 21 105 0%
Chili Chili Maize Potato Rice Total
Maize
Potato
Rice
Total Male own Female own
No Yes

24. Baseline & Product Development Research
Use of Mobile Phones
• Respondents reported using mobile phone for both
personal and business voice/SMS communication
• Majority of respondents feel very comfortable with using the
mobile phone for voice and SMS communication but not for
mobile banking or internet services – 10% accessing data
services on mobile; only 1 respondent utilizing mobile
banking
• Focus group discussions identified strong interest in
accessing information and financial services over the
mobile phone, mainly linked to pain points of high cost of
travel and lack of information

25. Access to Financial Services
35

26. Baseline & Product Development Research
Access to Financial Services
• Maize farmers reported higher
levels of savings (41%) than other
farmers (10-20%)
• Less than 10% of farmers have
any form of insurance services
(life, health, education)
• 67% use domestic transfer and
remittance services to suppliers,
traders and family

27. Baseline & Product Development Research
Access to Financial Services
• 55% of farmers have received a loan for inputs - 45% of
farmers access finance through informal means (friends,
relatives, & money lenders); 29% reported accessing
through commercial banks, 15% from agri suppliers and
traders and 10% through MFIs
• Merchants report that the major constraint for farmers in
access to formal financial services is inability to provide
collateral
• Rice farmers reported the highest level of access (71%)
to credit; maize the lowest (35%) and chili and potato at a
medium level of 57%

28. Baseline & Product Development Research
Access to Financial Services
• 63% Farmers reported using
remittance services to send
money to commodity buyers and
ag-input shops or to other farmer
business partners mainly via
commercial banks, post office
and MFIs
• 93% of farmers reported
accessing bill pay services, with
electricity being by far the most
common and paid through
informal groups

29. Access to Information Services
35

30. Baseline & Product Development Research
Access to Information Services
• Main providers of agricultural information services are
government extension workers, followed by suppliers,
friends and relatives, farmer groups/coops, traders, NGOs,
etc.
• At least 70% of respondents reported accessing
information related to seed and fertilizer recommendations,
pricing information, and pest and diseases
• Less than 50% of respondents reported accessing weather
and production assistance, including pest, disease and
drought information (major farm-level constraints related to
increasing income and productivity).

31. Baseline & Product Development Research
Constraints to Accessing Info Services
• First, farmers do not know of other providers who
might be able to provide them with additional
information, and, second, although not satisfied with
current services, farmers at least have some level of
personal trust with current sources due to familiarity.
• Both conclusions indicate that there is a need for new
sources of reliable technical information with respect
to agricultural practices, but that any new service
must develop a reputation for consistency and
reliability if it is to be accepted by rural famers.

32. Moving 35
Forward

33. Baseline & Product Development Research
Agri-Fin Mobile Opportunities
• Rural Indonesian farmers are rational actors who can
identify the services that are likely to increase their farm
productivity and cash flow.
• A lack of information and experience makes it difficult for
them to evaluate whether mobile applications can meet
these needs, however, they appear open to receiving the
education and training that will make this a viable
delivery channel for such services.
• Deep penetration of mobile phones in rural regions of
Indonesia makes the delivery of agricultural information
and financial products by this methodology viable.

34. Mobile Phone Penetration
Baseline & Product Development Research
Key Gaps for Product Development
• Lack of access to financial services
appropriate for the needs of rural
farmers
• Lack of knowledge concerning the
range of buyers available in the value
chain, and price information
• Lack of access to timely, reliable and
personalized information related to
farm management practices

35. Baseline & Product Development Research
Recommendations:
• Need to Build Bundled Financial and Information
Service Product Trust:
• Improving buyer-supplier linkages
• Timely, regular, reliable farm management information
• Reputation is key

36. Agri-Fin Mobile Partners
35

37. Agri-Fin Mobile Partners
Financial Services: Bank Andara
Investors Product &
Donors &
and Banks Service
Govt
Vendors
Bank
Mission: To be the premier,
Andara
pioneering financial partner
of the Indonesian
microfinance sector,
promoting innovation and
massive outreach to the un-
banked and under-banked.
Ban
MFI MFI
k
Clients Clients Clients Clients
Clients Clients
Goal: 15M Clients – 2,000 MFIs - 5 years

38. Agri-Fin Mobile Partners
IRRI Nutrient Manager

39. Agri-Fin Mobile Partners
8Villages created LISA: Layanan Informasi Petani, the
Social network for Indonesian Farmers
• LISA is a mobile service allowing
farmers to receive crop and location
specific tips in the form of questions
and answers
• LISA is promoted by Telkomsel with
the support from public institutions
A Problem in your like IPB
field? Ask LISA on • Currently SMS – web based with
9639 plans to introduce mobile website

40. Thank you for your time &
your support of our work!
35
Contact us:
Lesley Denyes, ldenyes@field.mercycorps.org
Andi Ikhwan, aikhwan@id.mercycorps.org