By Bill Hoffman*
Lacking modern equipment, access to markets, agricultural supplies and basic infrastructure, many smallholder farmers in developing countries struggle to lift themselves out of poverty. But the growing penetration and capabilities of the mobile platform offers unique promise to these individuals. As the mobile platform reaches global ubiquity, advanced services are beginning to take hold in developing regions with many smallholder farmers gaining actionable information through their wireless devices. Simple SMS-based services provide access to market prices, weather alerts, and advice on crop management.
But while these simple information services help to educate farmers, combining them with mobile financial services can empower individuals to act (and transact) on this knowledge to further increase production and boost incomes. Services such as mobile-enabled payments, credit, insurance, and savings creates the opportunity for farmers to buy modern farm supplies, build a credit history, ensure their financial security, and save for the future. In fact, a recent report by Vodafone indicates that by 2020, mobile services will have increased agricultural revenue (in the 20 countries where it operates) by $138 billion, with a significant portion ($51 billion) coming from mobile financial services.At the same time, providing financial services to rural farmers will benefit the broader agricultural ecosystem. Suppliers can collect key data and revenues from increased transactions; financial institutions gain access to a larger pool of capital; and governments boost tax collection revenues from the movement of transactions into the formal economy.Clearly, empowering farmers with an array of financial tools could sow the seeds of prosperity for all involved in the agricultural ecosystem, but several impediments currently block widespread adoption throughout the developing world.
The recent study from the World Economic Forum, Mobile Financial Services Development Report 2011 (www.weforum.org\mfs) further explores these impediments and describes the seven key conditions that must be present to scale mobile financial services including enlightened government policy, consumer protections, and a local agent network that can serve these individuals. Additional information on the World Economic Forum’s New Vision for Agriculture initiative can be found at www.weforum.org\agriculture.
*Bill Hoffman is an Associate Director, Telecommunications Industry, World Economic Forum.