by Strive Masiyiwa
A Note from the Digital Thinking Initiative: Strive believes that the people trying to create a better future for African agriculture can learn a lot from the success of the mobile-phone industry. New interventions won’t succeed just because they’re new. They must be built on simplicity, an understanding of smallholders’ needs, an extensive field presence, trusted intermediaries, and regulatory support. With these principles as a foundation, improved seeds could be as ubiquitous as SIM cards and airtime top-ups.
When I founded Econet in the mid-1990s, nearly three in four Africans had never heard a telephone ring. Today, thanks to the growth in the telecoms industry, more than three in four Africans have a mobile phone. We now have nearly 700 million mobile phone accounts on the continent, more than in Europe and the United States combined. The phones they are linked to not only ring, but also help facilitate communication and commerce via voice, text, and mobile money payments. The mobile phone offers a powerful new channel to deliver affordable services to Africa’s smallholder farmers, who have traditionally lacked access to training, finance, and market facilitation.
The revolution in wireless communications that replaced the old fixed-line infrastructure has given way to a second revolution, a revolution in mobile services. Telecom companies have developed new financial services, starting with mobile payments and diversifying into credit, savings, merchant payments, and insurance. There are now five times more mobile money agents in the developing world than commercial banks. The fundamental architecture of financial service delivery has changed, and sub-Saharan Africa has led the way with over two-thirds of the world’s 100 million active mobile money users.
The speed and scale with which the telecoms sector disrupted centuries-old practices in financial services has some telling lessons for its potential to transform agriculture. How can we ensure that our farmers find it as easy to get better farm inputs or new farm equipment as they do SIM cards or mobile financial services? How can we catalyze a sustainable and inclusive African green revolution using these digital platforms?
In this essay, I use the examples of two platforms that Econet has pioneered, EcoCash (our mobile wallet) and EcoFarmer (our suite of mobile agricultural services), to explore some of these lessons. Our journey with these products illustrates the broader trends underpinning Africa’s mobile revolution 2.0 and that revolution’s ability to improve the lives of our smallholder farmers.
A Ubiquitous Technology And The Green Revolution
We launched EcoCash in Zimbabwe at the start of 2011. This was just after the height of the country’s period of hyperinflation, which had brought to its knees one of the strongest and most sophisticated African economies. As the private sector shrank and employment dwindled, the informal sector came to dominate economic activity. We saw an opportunity to help service the informal economy, where mobile penetration was high but payments infrastructure was lacking.
Four years after launch, EcoCash has 5 million customers—over 70 percent of the adult population. To put that into context, all of the country’s commercial banks, some of which entered the country over a century ago, had just over 900,000 bank account holders before we launched. In the space of three years we had more than tripled the number of current account holders in the country. Last year, EcoCash processed over $6 billion in transactions, representing nearly 40 percent of Zimbabwe’s gross domestic product.
However, we realized that there was more we could do with and for Zimbabwe. With nearly two-thirds of Zimbabwe’s population living in rural areas and nearly all dependent on farming for their livelihoods, we decided to explore how our growing mobile services platform could help support this sector. Smallholder farmers contribute over a third of crop production in the country, but to do so they must overcome the challenges smallholders face in most sub-Saharan African countries—limited access to agricultural advisory services, market information, training, quality inputs and financing.
When we launched EcoFarmer in 2013, we deliberately avoided the conventional payments-first approach to providing mobile financial services to smallholders, and instead focused on a tailored set of products. We started with two initial offerings: an information service that sends advisory extension services through SMS to farmers, and a weather-indexed insurance product.
Farmers receive daily updates on three topics: farming tips, market prices, and weather data. They have already provided information on their district, ward, and frequently grown crops; this allows us to customize the messages they receive, such as market prices for different crops in their region and daily temperature and expected rainfall forecasts from the closest weather station covering their field. Farmers are then able to use the information to improve their crop planting and farm management practices, such as the best time to plant and the best place to sell their harvest.
As we successfully rolled out the EcoFarmer information service, we also looked at additional services that would improve farmers’ livelihoods and productivity. Erratic rainfall is a challenge all farmers face, but smallholders have generally been excluded by traditional insurance agencies; typically these agencies don’t have branches in rural areas, and they have been reluctant to extend their services to farmers, whom they perceive as riskier clients with limited collateral. To address this gap, we began piloting a weather insurance product tied to the purchase of quality seeds.
EcoFarmer insures 10 kilogram (22 pound) bags of certified maize seed, produced by Seed Co., a local seed company. A 10 kilogram bag of maize seed would cover a farm roughly the size of a soccer field. Registered EcoFarmers can purchase this insurance using an Econet-enabled mobile phone by dialing an Unstructured Supplementary Service Data (USSD) code, and entering a voucher numbers that comes in a plastic capsule within the seed pack. The farmer then pays a premium of 8 cents a day for the season of 125 days (roughly $10) using EcoCash. In the event of excess rain or drought, monitored through weather stations covering the location of the farm, farmers receive a payout of 10 times the premium paid ($100) through EcoCash.
Today we have over 550,000 farmers using the agricultural information service. We believe there is still more to be gained from linking our agricultural services with the EcoCash platform, and are in the process of looking at complementary financial services tailored for smallholder farmers, such as specialised savings and loans products.
Lessons For Agriculture From Mobile Finance
Our experience developing and scaling EcoCash and EcoFarmer taught us three main lessons, which I believe are broadly applicable to how digital technologies can improve the livelihoods of smallholder farmers in Africa.
Lesson 1: Designing systems for scale starts with simplicity and understanding the needs of your clients.
Although we had big ambitions for EcoCash and knew there were a lot of other products that we could deliver, at launch we deliberately focused only on person- to-person money transfer. We chose a simple payment mechanism, whereby customers could send and receive money using the most basic phones. We wanted customers to easily understand and use the product first, before we added complexity. We kept our tariff structures simple and were transparent about what we charged people for the service. We also made the tariffs progressive, to increase the volume of low value transactions.
The same lesson held for EcoFarmer. We developed insurance-premium products that could cover the needs of small-holder farmers while still remaining affordable. We designed the input package around a 10 kilogram bag of maize because that was appropriate for the average size of a smallholder field. We also created a lower-tier insurance product so that farmers could opt for a premium of only 2 cents a day (as opposed to 8 cents) for the season ($2.50 in total) for a payout of $25, which would cover the cost of the purchased seed.
As EcoCash grew, we layered more complex products on top of the basic payment platform, such as merchant payments, payroll, and savings. As EcoFarmer has gained traction, our customers have begun asking for two-way exchange advisory services. Farmers want to interact with farm management experts by calling dedicated lines, and are willing to pay for the costs associated with the service.
We also learned that most smallholders, especially women farmers, want savings products that can help them meet the fee payment schedules of their school going children rather than generic savings accounts. Working with IDEO.org (a global innovation and design firm), CGAP and MercyCorps, we are looking at developing such products. We hope to continue to use customer feedback to build more attractive and relevant products for smallholder farmers.
Lesson 2: Adoption at scale, even for digital technologies, requires an extensive field presence and trusted intermediaries.
When we moved into mobile financial services, we recognized that distribution and marketing would make or break EcoCash’s success. Mass adoption would come not from new product features, but from whether people saw the need for EcoCash or EcoFarmer in their lives.
We worked hard to educate consumers on the value of EcoCash. We used “above- the-line” advertising—radio, TV, and print—to raise initial awareness. But since this was a novel service that people hadn’t experienced before, we also focused on more direct “below-the-line” customer education. We hired hundreds of young people to act as brand ambassadors and assigned them to high-traffic areas, economic hubs, and rural trade centers. These ambassadors recruited more than three-quarters of all our new EcoCash users in the first few months after our launch.
As we scale EcoFarmer further, meanwhile, we are developing a campaign, “I am EcoFarmer,” to show farming is a profession that one should be proud of. We are also using respected peers from farming communities across Zimbabwe to champion the EcoFarmer products.
Our mobile money platform works for those who have adopted it because of a vast network of agents who convert mobile money to goods, services, and cash. They are shopkeepers, butchers, pharmacists, and small business owners—trusted members of their local communities. These agents form the physical backbone of mobile money and the frontline of customer interaction across Africa. Investing in enlarging our distribution network, rather than prioritizing short-term profitability, was critical to the success of EcoCash.
We have leveraged the same network of agents in rural areas to promote the EcoFarmer products. The suite of EcoFarmer services is underpinned by a farmer registration process, which is necessary to collect information on what a farmer is planting, where she’s located and what services she needs. Whilst early iterations of EcoFarmer only relied on knowing a farmer’s mobile phone number, we quickly realized that without this next level of detail we wouldn’t be able to target our services. By investing in farmer registration programs, we can anticipate and enable the next wave of digital solutions targeting smallholders.
Lesson 3: Without regulatory support you cannot achieve transformation at scale.
When we started experimenting with EcoCash, we anticipated that the banking sector would fight our entry into the financial services market and resist any disruption to their industry. In addition, the idea of being able to send and receive money via phone was foreign to many of our regulators.
Well in advance of our launch, therefore, we made sure that policymakers understood the product and how it worked. We invited them to assess the changes happening with mobile financial services around the world and assisted them in connecting with their counterparts in other countries to understand the benefits. We worked to demonstrate the security of the EcoCash platform, and the advantages of moving away from a cash-based economy. These early engagements ensured broad support for EcoCash as a way to improve financial inclusion.
Likewise, we involved a range of government agencies in the development of EcoFarmer, including the Ministry of Agriculture, the National Agricultural Research System (NARS) and the Meteorological Services. We also worked to ensure that our services were in line with government plans and regulations for the agricultural sector. For example, our extension and advisory text message services incorporate best practices identified by the NARS. In addition, we’ve used the weather station network of the government and supplemented it with our own stations and other means, including satellite imagery, to design better weather-indexed insurance products.
Digital Technologies and A Sustainable Revolution
I believe we can catalyze a sustainable African Green Revolution. There is no reason village shopkeepers should be readily stocked to sell SIM cards, charge mobile phones, and distribute airtime top-up cards, but not in a position to distribute certified seed and disseminate good farming practices at the same scale.
Mobile services provide a low-cost and ubiquitous platform for providing innovative products tailored to the needs of our farmers. In the next generation, I believe we can meet the challenge of making poverty and hunger history in Africa, a challenge Nelson Mandela called us to tackle head-on a decade ago. Digital thinking and technology can help us meet that challenge by accelerating the transformation of smallholder farming across the continent.
AUTHOR’S PERSONAL STORY
I started off my career training as an electrical engineer, built an engineering company, and soon moved to telecommunications just as the mobile wireless revolution was taking off in Africa in the mid-1990s. My journey into agriculture only really began when I joined the board of the Rockefeller Foundation in 2002. Gordon Conway, then president of the foundation, impressed upon me that what we were doing in Africa’s telecommunications sector, taking technologies to scale, could also be done in agriculture. I was intrigued that the mobile revolution I was part of might help power a green revolution.
When the Rockefeller Foundation and Gates Foundation partnered to launch the Alliance for a Green Revolution in Africa (AGRA), I joined its inaugural board, with Kofi Annan serving as our founding chair. Four years ago it was a great honour to succeed Annan as AGRA’s chair and to continue to work to change the narrative of African agriculture from one of subsistence to one of economic prosperity. The inspiring grantees, partners, and young entrepreneurs I’ve met during my time at AGRA have reaffirmed my belief that we can leap-frog technologically—just like we did in the telecoms sector—to transform the lives of Africa’s smallholder farmers.
Strive Masiyiwa is the Founder and Executive Chairman of Econet Wireless and the Chairman of AGRA
Note: This essay first appeared in a special edition anthology, published in partnership with Foreign Affairs.
View and download the Foreign Affairs anthology here: http://fam.ag/20JyIQm