One of the most important tools on Everline Wakhungu’s farm is her mobile phone.
Everline, who raises maize, beans, and livestock on a four-acre farm in western Kenya, always plants her crops on time because of text message reminders she receives from One Acre Fund. Mobile phones have become ubiquitous in Kenya, and the nonprofit, which provides smallholder farmers with inputs on credit and agricultural training, has expanded its digital presence in the past few years. In 2016, all 198,000 of its farmer clients in the country were able to use their mobile phones to pay back their loans.
A new case study by the United Nations-based Better Than Cash Alliance shows how agriculture nonprofit organization One Acre Fund, in partnership with Citi Inclusive Finance, successfully digitized loan repayments for farmers in Kenya. This move significantly boosted transparency and efficiency, driving economic opportunity and financial inclusion for thousands of smallholder farmers and their families.
One Acre Fund, supported by Citi, enabled farmers to easily make loan repayments via mobile money instead of cash, reducing the uncertainty, inefficiency, insecurity and high costs previously caused by cash transactions.
One Acre Fund can now reach more farmers with greater reliability, and staff can spend almost half as much time collecting payments in cash, using that extra time to help farmers increase their incomes through training and educational programs. With One Acre Fund’s package of services, including training and inputs like seed and fertilizer, the average farmer participating in the program earned nearly 50 percent more than peer farmers who do not participate.
Everline, who farms with her husband Matthew near the village of Namawanga, said text message reminders about field preparation and planting helped her harvest a big crop last year. She also said that the mobile repayment system made it easier to manage the family’s finances. Now, instead of waiting for a One Acre Fund field officer to collect cash from her every week, she uses her phone to send loan repayments directly to the organization whenever she has enough money on hand.
Study findings include:
- Increased participant satisfaction due to transparency and convenience.
- Eighty-five percent decreased instances of repayment fraud.
- Reduced processing time for each repayment from 12-16 days to 2-4 days; farmers now know immediately when their payment is received, eliminating the worry about whether it arrived.
- Eighty percent decrease in repayment processing costs.
- Forty-six percent of time reduced for staff working on collections, allowing for more time helping farmers improve agricultural practices.
- Women farmers benefited especially, feeling safer about payment deliveries.
“We trust this system better than the other one, because before sometimes money could be stolen or lost,” Everline said. “Now, when you send the money, you receive a message back immediately. You can see your balance, and know what amount is left on your loan.”
“Mobile repayments have allowed us to increase our efficiency and provide better service to farmers,” said Mike Warmington, the Director of Microfinance Partnerships at One Acre Fund. “We’re excited to be working at the forefront of this technology in the smallholder agriculture lending sector. In our experience, farmers were empowered to thrive in these communities. Clients receive immediate confirmation of payments as they happen, enabling them to better manage their businesses and family finances.”
“Citi’s footprint, track record in inclusive finance and transaction banking capabilities enable us to provide global support to leading social enterprises like One Acre Fund,” said Bob Annibale, Global Director, Citi Inclusive Finance. “Among other benefits, digitization enables efficiency and security, and drives innovative and inclusive business models. Citi is proud to play a part in enabling One Acre Fund and other organizations like them to improve the livelihoods of farming communities.”
Mobile repayment has also made life easier for One Acre Fund staff, said Meshack Mocho, a field director who oversees workers in Teso district, where more than 180 farmers are enrolled. Prior to 2014, farmer repayment to One Acre Fund was a 12 to 16-day process that involved a host of middlemen, from field officers to bankers, treasurers, bookkeepers and farmers. Now, due to mobile repayments, the process takes only 4 days. “Now, field officers are able to spend more time working on training sessions and answering questions for farmers, instead of collecting cash,” Meshack said.
“Before, field officers would have payment meetings, and not all farmers would attend, so then they would have to do a lot of work following up with everyone. Now, field officers can basically focus on training. They can get back to what is important and what they need to do.”
One Acre Fund is an example of the significant benefits and impact that digital payments and inclusive digital financial infrastructure, as developed in Kenya, can bring to agricultural value chains, contributing to a more sustainable and productive agriculture sector, a cornerstone of the UN’s Sustainable Development Goals (SDG). These learnings can easily translate to poor farming communities in other countries and One Acre Fund is working on plans to expand in Rwanda, Tanzania, and Zambia in the future.
“For companies and nonprofit organizations who want to work in rural Africa, this success story is a must-read,” said Oswell Kahonde, Africa Regional Lead at the Better Than Cash Alliance. “Digital payments are essential to building sustainable business models and creating long-term impact. By enabling smallholder farmers to make and receive payments digitally, we are creating transparency and accountability which translates to numerous benefits and empowers people to take control of their finances.”