By Michael Elliott
Agriculture is more than just a sector in East Africa: it is the backbone of the region’s economies. In Kenya, for instance, about 80 percent of the workforce participates in farming or food processing, while in Tanzania, the sector contributes nearly US $13.9 billion to the GDP. Overall, it accounts for nearly 30 percent of GDP in East Africa and employs over 60 percent of the population. Its importance therefore cannot be underestimated – making it vital to develop tools to support the industry.
Recognising both the importance of farming to development and growth across the region and the need for effective solutions to streamline the entire value chain, Mastercard Labs for Financial Inclusion – an initiative aimed at bringing those previously excluded into the economic mainstream – has created a number of tools that harness the power of digital in order to strengthen critical sectors like agriculture.
Digital continues to gain exceptional traction across the continent because of the ability of technology, particularly mobile, to connect people and make a real difference in their lives. Mobile penetration is already at the 85 percent mark, according to Ericsson’s latest Sub-Saharan Africa Mobility Report, and this number is only going to increase exponentially, with predictions that it will hit 105 percent by as early as 2022. This indicates the potential of digital finance solutions to effect real change that will impact a broad cross-section of Africa’s people.
Tapping into this capability, Mastercard has worked with its partners across sectors on the ground to develop and implement a range of financial tools to digitise the agricultural value chain in East Africa: 2Kuze in Kenya, and eKilimo in Tanzania. 2Kuze, which means ‘let’s grow together’ in Swahili, is effectively a digital agricultural marketplace targeting Africa’s small-scale farmers, agents, large-scale buyers and financial service providers; eKilimo means ‘eAgriculture’ in Swahili and serves the same function in Tanzania.
Essentially the same solution operating under different names, the digital platforms work to increase efficiencies in the country’s agricultural sectors in a secure, simple and transparent way. It connects farmers, buyers and agents through both feature and smartphones and facilitates the entire transaction, removing the need for the country’s farmers to walk long distances to sell their produce at markets. As a result of more direct access to buyers, the ability to network by sending SMSes about their produce and overall greater price transparency, farmers are also typically able to make a higher profit on the value of their goods.
Streamlining the supply chain and transaction processes in the agricultural sector will undoubtedly impact not just the industry itself but the entire economy meaningfully – and ultimately enable small-scale farmers to access formal financial services that they previously may have been excluded from. This will go a long way towards driving financial inclusion for the region’s engines of development through more accessible and efficient tools.
2Kuze and eKilimo have, in fact, both already contributed significantly to strides made in fostering higher levels of financial inclusion in Kenya and Tanzania. Although research by the World Bank shows that financial inclusion is at a relatively high level, in Kenya in particular where 75 percent of adults have an account, there is always room for more integrated solutions to bring more people into the formal financial fold. The fact that only 40 percent of adults in Tanzania have an account just serves as testament to this fact.
Mastercard has therefore worked to ensure that the right solutions that create real and tangible change are brought to life. Because cash remains the main obstacle to financial inclusion across the continent, effective solutions need to be easily available at the touch of a button in people’s hands – and 2Kuze and eKilimo have certainly indicated that this approach works, consistently driving both digital and financial inclusion, delivering on the Mastercard Innovation Lab’s mandate.
These digital tools form a critical part of the company’s global commitment to reach 100 million people currently suffering as a result of being financially excluded from the mainstream by 2020. The East African Lab – supported by the Bill and Melinda Gates Foundation – aims to empower Africans by developing relevant solutions that have been identified as critical drivers of growth.
Cashless solutions are going to continue to act as agents of change for millions of Africans, and Mastercard has committed to being an active part of this change by partnering with like-minded innovators in both the public and private sectors to create financial products and services that will support and encourage increased economic activity in critical sectors such as agriculture, as well as allow more citizens to make payments and transact easily and effectively.
(Michael Elliott, is the VP and Head of Mastercard Labs for Financial Inclusion).