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The difference mobile money makes – Part 2

Simon Kimani Kijochi (centre) sells his avocados to Fair Trade Enterprises, the company managed by James Weru (left). All payments are made by mobile money.

As I explored new ways Kenyan farmers connect with markets for the Irish Farmers Journal over the past week, one crucial link in the value chain became evident: mobile money.

The country is famous for the M-Pesa service pioneered by mobile phone company Safaricom and now spreading to operators across the developing world. M-Pesa allows payments between individuals, businesses and financial institutions through a mobile phone. The system is built into the SIM card and accessible from the menu of any mobile – no need for an app or even a smartphone.

M-Pesa and its competitors have been widely celebrated as a way for people in developing countries to access financial services even when poverty or isolation mean they have no hope of crossing the threshold of a bank. This sounds good in theory – hearing first-hand from farmers how it has allowed them to switch from subsistence agriculture to businesses with a steady cash income makes it a lot more real.

In the Mt Elgon region of north-western Kenya, where a dairy industry is emerging from the growing milk supply of thousands of farmers, mobile money is the payment method of choice between them, their co-ops and milk processors. Rural electrification and government investment in the road network mean that each village co-operative is running its own bulk tank and milk collection points. But a trip to the nearest bank would remain a costly, whole-day expedition for most farmers.

In the centre of the country, avocado farmers have found a new source of income through Fair Trade Enterprises, an exporter of organic fruit to the Netherlands. Their business relationship goes through TruTrade, a non-profit trading platform supported by Gorta-Self-Help Africa that secures the transactions and provides credit for Fair Trade Enterprises’ purchases through advance payments to avocado farmers. They get paid within days of delivery – on their mobile.

Like many farmers around the world, those I met in Kenya were fleeced more than once in the past. Traders and co-op managers paid them with months of delays, or vanished with their debts altogether. Mobile money reduces such risks with a clear electronic trail of transactions and identification of the parties involved.

M-Pesa also acknowledges the regular payments that hit farmers’ phones with its own credit rating system: many are now deemed solvent enough to access loans from the mobile money operator.

The next of leg of my trip takes me to Uganda, where mobile money is becoming the norm, too. In the remote north of the country, I will visit farmers and traders using similar mobile-phone based trading and payment systems to create markets where the infrastructure we are used to in Ireland – the mart, the bank, the co-op – simply don’t exist.

Thomas Hubert is a journalist with the Irish Farmers Journal and a recipient of the winter 2016 round of the Fund. He travelled to Uganda and Kenya in June 2017 to examine how infrastructure and digital technologies can help local farmers to connect with buyers, access credit and financial transactions, and transport produce to consumption centres. Thomas’s feature examining what it will take to turn local subsistence farmers into commercial ones was published by the Irish Farmers Journal in June 2017. The piece also explores the benefits of such a move to the farmers, and to the wider economy, as well as looking at the risks involved.