This document discusses a study on the feasibility of mobile banking among smallholder cocoa farmers in Ghana. It finds that mobile banking could help address challenges in the cocoa sector like low loan recovery rates and access to agricultural financing. The study recommends a system where a mobile banking platform connects farmers, agricultural organizations, input suppliers, mobile network operators, and banks to enable financial and input credit services via mobile phones. Adopting mobile banking could help farmers access loans, make payments, and sell their cocoa more efficiently. However, the system would require partnerships between all parties and further education for farmers on using mobile banking.

1. Mobile banking feasibility study
among smallholder cocoa farmers in
Ghana
Session: ICTs/Mobile Apps for Access to Financial Services and
Insurance
R. Okine
mFriday, Ghana

2. CSSCPP Agric Financing in Ghana
•
3-year Gates Foundation grant in partnership with KKFU and Chemico
Limited
•
To increase agric input of 12,000 smallholder cocoa farmers in Ghana,
increasing yield and income by 250% and 100% respectively.
•
10,313 smallholder cocoa farmers registered by KKCU and MoFA in 5
regions representing a total of 20,626 acres, with expected output of
144,300 bags (9,240 tonnes) worth $19.7 million.
•
8 Business Development Centers operational in 8 districts, allowing 8,989
cocoa farmers access to $3,918,000 worth of inputs under the input credit
scheme, resulting in yield increase of 82% and corresponding income
increase of 142%.
•
268 agro dealers certified to access trade credit from input supply
companies using CNFA’s credit guarantee facility.
•
5,852 farmers and 431 producer groups trained in improved cocoa
production techniques and crop diversification, facilitated by representatives
from Chemico and Cocoa Research Institute of Ghana (CRIG).
•
1,446 smallholder farmers received information, training, and corresponding
certification about land rights through Medeem Ghana’s Parcelcert program.
•
$7 million in input credit to smallholder farmers leveraged through
strategically designed matching grants.

3. Problem Statement
•
A total of 474 cocoa farmers under the
CSSCPP were interviewed in this study.
•
Input supply component of the CSSCPP,
smallholder producers were required to
pay a 1/3 initial deposit prior to receiving
chemical inputs.
•
Smallholder Farmers were then given one
year to pay the remaining 2/3 of the cost.
•
Difficulties in loan recovery of the
remaining 2/3 partly, due to improper
records keeping and credit officers using
the funds to purchase more cocoa at the
detriment of the scheme.

4. Overview of challenges faced by Agro Stakeholders
•
•
•
•
•
•
•
•
•
Diversity of input dealers/suppliers, primary producers,
processors, transporters, storage/inventory warehousing
operators and distributors;
Low loan recovery;
Untimely delivery of agricultural credit;
Limited access to medium to long-term agricultural loans;
Seasonality and variability of rainfall;
Property rights and unsecured land tenure system;
Lack of appropriate collateral for agricultural financing;
High level of defaults among agricultural loans beneficiaries in
comparison to other sectors;
High transaction cost of disbursement of agriculture loans to
smallholders.

5. Objective of the Study
•
Understand the need for and willingness of
smallholder farmers to utilize m-banking.
•
Establish a relationship between MNOs and
smallholder farmers.
•
Verify that the telecommunication
infrastructure is reliable for mobile money
Transactions.
•
Confirm that KKCU and other participating
financial stakeholders are able to implement
mobile banking in their operations.
•
Report that mobile banking is feasible with
smallholder cocoa farmers in Ghana.
•
Recommend next steps for the
implementation of mobile banking in rural
communities.

6. Factors Influencing m-banking adoption
•
Higher level of education had a higher
adoption rate as compared to respondents
who had no formal education.
•
Numerically, 63.9% could read numbers
and 48.1% could write numbers.
•
Farmers who own a bank account or use
any financial services are more likely to
adopt m- banking. 54.3% respondents have
a bank account.
•
The farther the farmer is to a bank or
financial service provider, the more likely
that farmer will use m-banking services.
•
Social capital through membership in
farmer organization also affects the
likelihood of using m-banking services.

7. Farmers Education vrs m-Banking Usage

8. Mobile Network Usage by Farmers

9. Proposed Tripartite Agreement in the Agro Value Chain
•
A viable mobile solution requires a banking platform that
interfaces with any of the MNO Mobile Money platforms.
•
All financial transactions will be via the mobile banking
platform and a credit officer will receive and pay money via
the mobile banking platform.
•
The platform should automatically deduct the loan
repayment amount anytime the farmer sells his/her
produce to a credit officer.
•
The minimum amount that should be deducted with
respect to the number of cocoa bags that a farmer sells at
a particular time needs to be agreed upon with the various
stakeholders.

10. Proposed Mobile Banking Solutions for Agric
Financing
•
•
•
•
•
•
•
•
•
Financial Operator (e.g. universal/commercial bank, rural
bank) provides financial services to farmers, through farmers
groups/out growers;
Farmer groups/out growers make deposits and repayment of
loans to Financial Operator through a mobile banking
platform;
Technical Operator (TO) provides technical (modern inputs,
technical/extension advice and marketing services (guarantee
to purchase produce that meet predetermined standards at
agreed prices) to farmers through contract farming
agreements;
Farmer Based Organizations/Out growers sell produce to TO
and/or through TO to
other end buyers;
Financial Operator provides loans to TO via the mobile
banking platform for its own
operations, or through TO to farmer groups/out growers;
TO repays own loans and /or loans of farmers collected at
source when paying
farmers for produce bought via the mobile banking platform.

11. Proposed Services on the Platform
Financial Services
•
•
•
•
•
•
•
•
•
Mobile Banking
Mobile Payment
Mobile Insurance
Mobile Money Savings
Mobile Money Transfer
Risk Management
Financial Analytics
Transactional State Analysis
Collateral Management
Non Financial Services
•
•
•
•
•
•
Visualization
Inventory Management
Maps
SME website
Weather Information
Knowledge Sharing

12. Critical Success Factors
• MNOs such as Airtel or MTN need to have
mobile money merchants in proximity to the
communities in the study districts so that
respondents can have access to physical
cash anytime possible.
• A further education to the communities on the
benefits of using m-banking beyond Agric
Financing program should be encouraged
•
Since most of the farmers use MTN, the
program should make provision for the
farmers to appreciate porting their mobile
numbers to the MNO the program decides to
use for the m-banking.

13. Conclusion
• 90.32% of the farmers were positive about
using m-banking for output sales whiles
89.5% were positive about using m-banking
for input supply provision.