PART 1: Designing a Rural Connectivity Hub Model
On April 10th, 2018, AgriFin Accelerate was excited to host an ideation workshop in Nairobi to engage leading market experts on the concept of rural connectivity and explore solutions to existing challenges and partnership models.
Broadband and wireless internet access has grown exponentially in Kenya over the past few years, in part, due to a range of cost-effective solutions targeting nearly all market segments. Despite this growth of connectivity, many innovative actors reaching smallholder farmers with transformative digital products and services consistently face challenges of connectivity and telecommunications infrastructure to support sustainable and scalable growth.
Successful rural connectivity for agriculture ecosystem actors is dependent on careful planning of network connected device requirements, investments in infrastructure capital and recurrent costs, and potentially the synergistic strategies between stakeholders.
With this in mind, the workshop sought to:
- Present research on successful rural connectivity hub models;
- Identify use cases for rural connectivity, hub models and shared infrastructure; and,
- Ideate and explore how to develop viable and scalable rural connectivity hubs, addressing persistent connectivity challenges in Kenya.
The workshop was designed to bring together participants from different backgrounds including private sector innovators, thought leaders, tech entrepreneurs and agribusinesses, broadband service providers, research institutions, NGOs, donors, financial institutions and other practitioners in agricultural development. Participants were selected to offer a range of interesting perspectives to add to the conversation about leveraging connectivity in rural communities to enhance service delivery with a focus on smallholder farmers.
The key presentation showcased various solutions being implemented in the region and other countries to better connect the rural population, and farmers in particular, across several use cases, including aggregation, digital financial services, agricultural information and extension services, logistics, youth and women, and other use cases.
Following this, an ideation session saw participants separating into six groups to conceptualize rural connectivity hub / partnership models in which different stakeholders can contribute to both improving broadband connectivity and speed in rural areas while optimizing digital opportunities and capacities of agribusinesses and the wider rural community. See the summary report here.
Key recommendations were drawn for the implementation of effective and efficient rural connectivity hubs for different targeted users across the various use cases, as listed below:
Targeted users: Traditionally, connectivity hubs sought to serve the end client, however, hubs should provide use cases not only for rural farmers but also for those who want to reach farmers/rural residents. These include those who want to promote products and NGOs for social campaigns on health and other topics.
Data and data ownership: Data is important in the effective and efficient provision of services across stakeholders; however for data to be most useful – there needs to be: (i) reliable data capture by the different service providers and; (ii) resolution of challenges that exist with regard to data ownership and sharing. This will encourage players such as commercial banks to plug-in – data regulation should involve the government given there is a need for updated policies around data.
Partnerships: Business models need to be explored and designed in order to overcome and/ or minimize the capital and operating expenditure constraints, while maximizing the return on investment. This is best achieved through partnerships between the different stakeholders, with a key investor (e.g. a big player or anchor partner) – looking at what benefits each can bring and maximizing on synergies that exist. This will address the fragmentation that currently exists within the space.
Market-driven approaches: A sustainable business model should be at the core of any enterprise that is to succeed in the provision of rural connectivity – this calls for the use of tools such as subsidies responsibly to avoid the creation of unsustainable ‘white elephants’. Case learnings indicate that the inclusion of FMCG can drive viability of the business across seasons.
Profitability of investing in additional physical infrastructure: To decrease the cost of setup and provision of services, the hub can be set up as a marketplace with different service providers running their individual complementary businesses within the same ‘market’ – this is because the return on investment in physical structures has been found to be minimal.
Technology and its uses: Technology has to respond to the various use cases of both the “anchor business” as well as supporting businesses e.g. currently, the role of technology such as blockchain is becoming clearer for functions such as traceability of produce which assists in quality control.
Use of existing community structures and infrastructure: Hubs should tap into existing community structures that inform where individuals gather so as to promote the accessibility by the largest number of users. This include church, produce collection centres, community markets etc. Furthermore, existing community infrastructure e.g. post-offices can support some of the use cases identified.
Youth and women: Both youth and women are key potential beneficiaries of the connectivity hubs; however, they remain excluded due to cultural norms and other factors. Hubs need to be designed in a way that drives their accessibility to both women and youth. This can be achieved through leveraging human-centered design methods. Furthermore, youth livelihoods can be promoted through the provision of jobs within the hubs, while female-friendly spaces within the hub can overcome some of the access barriers for women.
Centralized aggregation: To attract institutional customers (who want to reach farmers/rural residents), it is ideal to have hubs locally run, as a business, with central aggregation functions. These centers can provide standard design of hub (both hard and soft) and be a central point of contact for the customers who want to use hubs as channel of reaching farmers/rural residents.
Geographical alignment: Partners offering different suites of services need to be geographically aligned in order for their services to be complementary availed to targeted users in different, and especially rural areas.
Transparency and information: There is a need for provision of information to farmers to encourage informed decision making and also remove, any information asymmetry that may be leading to reduces profitability of their business e.g. pricing information.
SUMMARY AND CONCLUSIONS
Rural connectivity indeed poses a shared challenge for agri-businesses, rural enterprises, cooperatives and other aggregators, as well as farmers themselves. By bringing together a set of motivated stakeholders from a wide range of agriculture enterprise objectives, a number of practical solutions and potential partnerships came out.
These opportunities share a common set of requirements. For rural connectivity solution to be viable it must be based on:
- A sound, sustainable economic model
- Multiple, complementary stakeholder approach with viable use cases for each partner/investor
- Shared revenue model with cost/profit sharing
- Sound data sharing agreement with adequate data security and privacy controls
- Realistic business requirements plan for connectivity infrastructure (capex) and operational (opex) costs
- Customized hub approach incorporating user needs and preferences (especially for women to feel comfortable in the hubs).
The above points have spurred a number of partners to test an ‘ideal model’ but also stimulated a number of alternative approaches under review.
With the information gathered during the workshop, we are pulling together a SlideShare presentation identifying viable market solutions for rural connectivity for agriculture. We have also posted a living map (Figure 3 below) of locations where partners are willing and interested in working together to solve this problem.
Finally, AgriFin has been working with agri-business enterprises in Kenya to benchmark marketplace approaches to solving rural e-commerce and last-mile logistical challenges. Alibaba’s Rural TaoBao strategy is one of these benchmarked case studies.
Keep an eye on this space for Part 2: Lessons from the e-Commerce and Rural e-Distribution Benchmark study.
Muthoni Mugo, MErL Program Officer, AFA.