Leveraging AMCOS to scale Digital Financial Services – Insights from Tanzania’s Cashew Value Chain

Nov 16, 2018 | All, Data & Tech Acceleration, Digital Financial Services, Market Access

How can Agricultural Marketing Co-operative Societies (AMCOS) be further leveraged as a channel for increased access and utilization, and what should financial institutions consider to ensure their services are effective? One of our learning approaches to these questions is conducting relevant research that informs interventions that can delve into different value chains, introduce new technologies, and create new partnerships – all with the aim of improving digital inclusion among smallholder farmers.

Read the Full-Length Case Study.

One such project involved the cashew sector – one of Tanzania’s largest exports. The cashew sector boasts having 300,000 smallholder farmers who produce 265,000 MT of cashew with a worth of TSh. 780 billion (US$350 M). It is a highly structured value chain with farmers required to aggregate their prodUce into warehouses through agricultural and marketing co-operatives societies (AMCOS) and sell through an auction process. However, financial transactions in the sector were hampered by cash payment processes, which involve a high level of risk and challenges, including transparency, security, and timeliness, among others.

Digital Payments

To address the risks and challenges, the Government of Tanzania passed the Cashew Nut Act of 2017-18, requiring all cashew nut farmers to sell through cooperatives and as well as to receive payments through a bank account (including mobile money accounts).

As an implementing partner, the Financial Sector Deepening Trust (FSDT) took on the task of coordinating the various actors across the payment value chain to ensure that the new model would work. This involved incorporating banks and mobile money providers for high value and low-value payments respectively. To enhance learning, FSDT invited AFA and to conduct a synopsis AND  improve the model going forward.

In this model, AMCOS was leveraged as an entry point for providing digital financial services to farmers, given their integral role in farmers’ livelihoods and day-to-day activities. The model showed great success as it enabled registration of more than 200,000 bank accounts, establishing a pathway to financial inclusion for smallholder farmers, reducing security risks, and reducing fraud, emphasizing the pivotal role of the public sector.

Despite the success, the study uncovered a number of key challenges. Some of these were payment delays, distrust of FSPs and AMCOS, limited value proposition for the farmers, and immediate cash-out. The study further increased our understanding of farmers’ spending and borrowing behaviors, which is essential for developing products that (1) meet their needs and (2) encourage repeat use of these products and services.

AFA Insights

This case study highlights our insights on the Cashew Sector, outlining strategic levers that Financial Service Providers should use, and value chains that the Cashew model can be potentially replicated.  

Read the Full-Length Case Study


Paul Kweheria, Tanzania Country Director, Mercy Corps AFA

Collins Marita, Monitoring and Evaluation Manager, Mercy Corps AFA