How did a pioneering mobile money provider become a change agent for the world’s smallholder farmers?
This is the question that Safaricom and the Vodafone Group asked Mercy Corps’ AgriFin Accelerate program, funded by the Mastercard Foundation, three years ago in Kenya at the beginning of the DigiFarm journey. Over the past 10 years, M-PESA has achieved astonishing levels of adoption in Kenya. Active (30-day) M-PESA user has reached over 20.5m users. The growth of M-PESA has brought important gains for rural Kenyans as a whole. In an evaluation by Suri and Jack (Science 2016), access to M-PESA services has moved approximately 2% of rural Kenyan households out of absolute poverty. Female-headed households, in particular, benefited from mobile money remittances by using transfers to bolster both savings and investments in productive assets.
But Safaricom and Vodafone have recognized that both the M-PESA platform and communications services could be more transformative in agriculture, particularly for smallholder farmers. Agriculture is the backbone of the Kenyan economy, with the agricultural sector employing over 75% of the workforce and accounting for 30% of GDP. There are over 7 million smallholder farmers in Kenya, who account for over 85% of agricultural output and 70% of marketed produce. Yet the majority of smallholders live in poverty. And while more than 50% of smallholder farmers use M-PESA, usage rates are lower than for the average population, mainly involving savings and bill payments (AFA 2017 Kenya Smallholder Benchmark Study).
Mercy Corps’ AgriFin Accelerate program supported the DigiFarm journey, as an innovation partner farmer-centric product development, business modeling, partnership support and impact measurement. The full case study of this journey can be found here.
As a first step, Safaricom and Mercy Corps wanted to understand the needs of farmers and used human-centered design (HCD) approaches to define the DigiFarm product roadmap, working with Dalberg and its design team. Early assumptions held that farmers needed more access to credit, but HCD revealed a more complex picture around the risks that smallholders face and manage, as well as the very different position of men and women in smallholder farm households, where women make up more than half of the agricultural workforce.
Gaining Smallholder Insights
Farmer insights showed that low quality inputs, unstable markets and lack information on good farm practice are critical farmer risks. Until these constraints are addressed, farmer growth and demand for financial services, including savings and credit, will be low. DigiFarm was therefore designed to serve as a convenient, one-stop mobile platform offering farmers access to all the services they need to increase their productivity and income. The platform “bundles” services to allow farmers to choose what services are needed and when. Mercy Corps’ AFA program has worked over the past three years with Safaricom to continuously innovate to build in new products and services to that bundle as the platform expands.
Building the DigiFarm Platform
Safaricom understood from HCD results that the wide range of services needed by farmers across multiple types of activities, including crops, livestock and horticulture, required deep agricultural expertise. DigiFarm therefore has been built as a collaborative platform with a shared revenue model across core commercial partners. Safaricom serves as the platform, transactional provider and data hub. Initial platform partners included iProcure for just-in-time agricultural input supply, FarmDrive for credit scoring and farmer profiling, and Arifu for interactive information services and e-learning.
DigiFarm continues to onboard new partners, including iCow, the Kenya Livestock Producers Association (KLPA), AgroCares and Georgetown University gui2de for impact evaluation. Access to quality inputs, up-to-date information and best practices, extension services, or financial services have a direct impact on the productivity and profitability of the farm. Initial e-learning content was developed for dairy farmers with the help of Heifer International and delivered on Arifu’s interactive SMS chat solution that connects dairy farmers to best practices and other services to boost their productivity. Content has expanded based on farmer interests to include maize, poultry, and horticulture. Important topics such as pest management for Fall Army Worm was also developed.
The DigiFarm minimum viable product (MVP) pilot, launched in three Kenyan counties from March to September 2017, registered over 200,000 dairy farmers with 60,000 active users, far surpassed the original goal of registering 50,000 farmers on the system. Spurred on by the market response, Safaricom and partners continued to build the “bundle” of services on the DigiFarm platform to include the DigiFarm input loan, which is fully credit scored and available to qualified farmers in minutes. By June 2018, DigiFarm has registered nearly 700,000 farmers in its first year of the full product bundle, with approximately 35% active rates and received over 200,000 loan applications.
The third major phase of development for DigiFarm was initiated in early 2018 to build a digital marketplace for registered farmers, linking them to a wide range of fair-price buyers, along with the training and input credit they need, but also building in new services to reinforce the farmer journey, including access to soil testing and new cash loans to support the harvest. Market access services were launched in pilot in October 2018, as the platform neared 1 million registered farmers.
What is DigiFarm today?
DigiFarm is accessible on any type of phone through its’ USSD based platform accessed by dialing *283#. Once a farmer dials the short-code, a menu appears with options and suite of services. Given the rising number of Kenyan smallholders, particularly youth, using smartphones, DigiFarm will launch its’ Android app in 2019. Safaricom plans to reach more than 3 million farmers over the next two years. Safaricom is continuously working on iterating and building the DigiFarm suite of services to including insurance and other key services, such as access to mechanization and transport services.