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Why rural business owners continue using cash for daily transaction instead of mobile money

The authors argue that digital channels are dramatically transforming business models for micro-, small and medium-sized enterprises and especially for small-scale farmers.

A paper published recently, with one of its case studies in Tanzania,  indicates that although the potential mobile-money market is large, a lack of education on how to use DFS and lack of trust in the services have resulting in many rural business owners continuing to use cash for daily transactions rather than adopting DFS at high levels. Among the benefits of switching to mobile money are faster customer transactions and the automation of record keeping.

The paper is written by Wisdom Alorwuse, Natalie Baatjies, Margarete O Biallas, Dean Caire, Soren Heitmann, Andrew Kasujja, Ruth Dueck-Mbeba, Joseck Mudiri, Riadh Naouar, Charlotte Ndaw, Rita Oulai, Minakshi Ramji, Beniamino Savonitto and Mark Wensley; published by the International Financial Corporation (IFC); 2018; 233 pages; available at https://www.ifc.org/wps/wcm/connect/4ca05121-fe39-42ae-891f-76203c7b91f0/Digital+Financial+Services+for+Agriculture_IFC%2BMCF_2018.pdf?MOD=AJPERES

A summery of the paper by Michelle Fleming, notes that  authors of this paper discuss the expanding use of digital financial services (DFS) within the agricultural sector in sub-Saharan Africa, which is predicted to grow in value from USD 300 billion in 2017 to USD 1 trillion by 2030.

He notes that although this sector represents a large portion of the GDP of each country in the region, only a small portion of farmers receive funding via conventional banking methods. However, Sub-Saharan African has seen a great increase in mobile-phone use over the last decade, and it is the only part of the world where more than 20 percent of the population has a mobile-money account. The authors argue that digital channels are dramatically transforming business models for micro-, small and medium-sized enterprises and especially for small-scale farmers.

 

The paper includes case studies on the market entry and business models of DFS providers including Apollo Agriculture in Kenya, myAgro in Tanzania and Tigo Rwanda.

 

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