Just imagine yourself visiting a bank because you need a loan or a mortgage. You have a nice meeting with the bank representative, a good talk. However, what if you do not have any form of identification and cannot prove your regular income level? You probably already know the answer: “We are really sorry, but unfortunately, you did not qualify.” What would a comparable experience look like for a smallholder farmer in South America, Africa, or Asia? I would call it Mission Impossible.
Many smallholder farmers do not hold legally recognised identity documents and cannot show an income statement or any other relevant historical records, therefore being deemed uncreditable. One of the aims of the UN is to make smallholder farmers bankable, achieving financial inclusion for smallholders.
The World Bank’s definition of financial inclusion:
“Individuals and businesses [should] have access to useful and affordable financial services and products that meet their needs – transactions, payments, savings, credit and insurance – delivered in a sustainable way”
Several banks are really trying, but the current situation remains high risk for them. Therefore, it is so important to organise a minimal level of reliable identification combined with a digital overview of transactions.
Let’s just have a look at the possible experience of a smallholder farmer. Zara, a female farmer, lives on just a couple of acres of land in Ethiopia where she grows food for her family and coffee beans for income. Once Zara has harvested her coffee, she must carry it herself for the duration of the long distance into town. When she gets there, she might find out that the only price she can only sell it for is a lower price than she got last year, it is even possible that she can’t sell it at all, because for whatever reason, the buyer doesn’t have enough cash left to pay for it.
While Zara waits for the buyer to come back to the village a few days or weeks later with more cash, her harvest is losing value and may even completely spoil. If she is lucky enough to sell her coffee, she has to accept what might be her full years’ worth of income, in cash on the spot. Because Zara doesn't have a bank account, she then has to store this cash in her home. Trying to save this money for school fees or a solar lighting kit is extremely stressful and often dangerous, particularly for women farmers, because her extended family, and everyone else in the village, know that she has been paid for her harvest, and they all have ideas about how best to spend it.
Unfortunately, the scenario above is a situation that occurs rather frequently. Let’s now assume that Zara needs a loan to be able to buy fertilizer, seeds and tools for the next harvest. Most likely, she won’t get it, or at least not an affordable one. In addition to the day-to-day challenges facing women in developing nations, smallholder farmers like Zara will also encounter issues relating directly to her agricultural income including:
In the face of so many obstacles, it would surely feel as though it would take a superhero’s effort to improve the situation. Fortunately, AgUnity has developed a mobile platform that has the potential to largely resolve the above-mentioned issues, the AgUnity SuperApp. Farmers can make use of the platform through a mobile app and as network connectivity is often absent in rural areas, the application has been designed to function offline as well.
As many smallholder farmers have not been exposed to these types of digital solutions, it is important to let them experience first-hand the ways in which the technology can positively impact their lives; allowing them to start trusting digital technology. The application will hold their digital ID, a digital wallet, functionality to ensure they will be able to communicate with their community, store their transactions, have access to advisory and educational content and purchase inputs, etc. Any transactions are stored on a blockchain to make sure they cannot be tampered with or misplaced.
The application has been designed with the target group in mind and in close cooperation with the smallholders of the first projects. After initial hesitation, they quickly realised the power of the solution and put forward their own suggestions for new functionalities. Researchers have concluded that both the farmers and the traders feel the communication along the supply chain has been significantly improved after a group of farmers in Kenya trialed the AgUnity mobile solution.
Thanks to this improved communication, Zara has a better understanding of when to sell her crops, being able to access a better rate because she can prepare early and deliver the optimal quality. The cash can now be stored digitally and the transactions that are being recorded help to develop a profile history that increases her probability of accessing a loan; eventually to reinvest in her business.
We can conclude that affordable smartphones and applications utilising blockchain technology have the power to create enormous value and impact in smallholder farming communities. These solutions connect them to the digital world, improve trust in the value chain and help farmers to become more productive and profitable. This is creating a truly unique opportunity to set new standards in transparent, sustainable, long-term value driven investing whilst changing the lives of hundreds of millions of people who need it most.
Thanks to our SuperApp we help making the impossible possible!