121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Agri-Fin Mobile
- 1. 35 October 2012 Mobile Banking & Payments for Emerging Asia Summit Lesley Denyes, Agri-Fin Mobile Program Director Andi Ikhwan, Indonesia Program Coordinator, Agri-Fin Mobile
- 2. Mercy Corps Presentation Overview Part 1: Intro to Mercy Corps Part 2: Promoting Uptake of Mobile Services to Rural Customers Part 3: New Models for Rural Financial & Agri Services
- 3. Part 1: Intro to Mercy Corps 35
- 4. Mercy Corps AN OVERVIEW Mercy Corps is an international development agency working amid disasters, conflicts, chronic poverty and instability, activating untapped human potential to create lasting change. Since 1979, Mercy Corps has provided $1.5 billion in assistance to people in 106 nations. Supported by headquarters in North America and Europe, the agency’s global programs employ 4,500 staff worldwide and reach 19 million people in more than 40 countries.
- 5. Mercy Corps Sectors of Engagement Agriculture & Food Emergency: Food & Non- Infrastructure Rehabilitation Security Food Distribution, Shelter, Water/Sanitation, Food & Refugees/IDPs/Returnees Civil Society, Conflict & Commodity Management, Peace building Material Aid Social Innovations: social enterprise, technology, Climate/Environment & Financial Inclusion: literacy, microfinance, insurance, partnerships Energy Poverty franchising, branchless Democracy & Sustainable Resource Governance Gender, Women & Girls Management Disaster Risk Reduction Youth employment, Health: Child Survival; Economic & Market Community Health, Health enterprise & skills training Development Services Delivery, HIV/AIDS, Nutrition, Psychosocial, Water/Sanitation Education Reproductive, *Financial Services active in 22 countries with equity in16 banks/MFIs MFIs
- 6. CONTEXT: Mercy Corps Programming
- 7. Part 2: Promoting Uptake of Mobile Services to Rural Customers 35
- 8. Ecosystem Approach The Challenge: Rural Populations & Areas •Globally there are more than 610 million small holder farmers. •Rural populations by definition live outside of commercial centers, and typically encounter higher costs and travel times to access information and financial services, trade and market goods. •A recent study calculated the cost of information constitutes 11% of farmers’ total costs.
- 9. Ecosystem Approach Impact & Benefit: Mobile & Agriculture • Increased productivity • Reducing transport costs • Reducing price disparity • Increasing trading opportunities • Increasing access to information, services & markets • Building trust • Risk mitigation *While mobile channels hold the best promise for reaching farmers and rural areas, significant behavior change/education is needed realize potential.
- 10. Opportunities for Small Financial Institutions Mobile Application Innovations Around the World Ecommerce & info /productivity apps linking farmers to opportunity Microinsurance (crop, health, credit ) via hand phones Extension services around ag inputs & productivity SMS reminders to build productivity/financial literacy/skills Access to solutions for energy poverty, community sanitation, health care, education Full banking services affordable and accessible for small farmers
- 11. Opportunities for Small Financial Institutions New Models in Digital Financial Inclusion Challenges & Constraints • TECHNOLOGY: Insufficient network coverage and power constraints, Lost SIMS, forgotten passwords, complex product • CLIENT: Technology, digital and linguistic literacy issues; cost of air time; aging population of farmers, effects of climate change • MARKET: Remote nature of market, constraints in market access, input access, poor infrastructure, lack of cash, overindebtedness; keeping clients active • FINANCIAL SERVICES: appropriate products /pricing designed for farmers; low level of banked farmers; savings capacity, core credit risk issues • TECHNICAL CAPACITY: challenges around scalable capacity building • MOBILE ECOSYSTEM: Vendor and Cash in/Cash-out agent training and ongoing support, nascent app providers, managing content/quality of apps • NEW MODEL: New territory with lack of Scalable, affordable, sustainable business models, Weak business case/customer value for associated products, Managing Public-Private programs/partnerships
- 12. Part 3: New Models for Rural Financial & Agri Services 35
- 13. Agri-Fin Mobile The SDC Grant SDC funded project to improve livelihoods, productivity and incomes of Small Holder Farmers through: •Elaboration of mobile solutions for farmers •Building business models and partnerships that lead to scale and sustainability •Tracking impact and farmer end results •Gathering knowledge and disseminating information broadly Phase 1: 3 countries,3 years, $2.8m, 180,000 SHF Phase 2: 8 countries, 2 years, $3m, 1m SHF Funding supports: •Research & Product Development •Application & Interfacing Development •Lessons Learned Sharing & Dissemination •Open sub-grants for partner support Supported by : Partner in-kind contributions, MC programs
- 14. Bundling Mobile Apps & Financial Services for SHF The Agri-Fin Mobile Program facilitates sustainable shared business models between app providers and banks reaching small holder farmers through development, integration and implementation processes to provide a win/win/win of access to market, technical and financial services.
- 15. Agri-Fin Mobile The Ecosystem Approach Each ecosystem requires… Banks MNOs Channels to Small Holder Farmers Rural Advisory Service Providers Application providers Platform Hosting & Management … to build a comprehensive suite of services & operational business model.
- 16. Baseline & Product Development Research Findings 35
- 17. Baseline & Product Development Research Survey Methodology Data Collection: • 408 Individual Surveys • 64 Merchant Surveys (coop, trader, supplier, etc) • 8 Focus Group Discussions • 4 Districts in C&W Java: Wonogiri, Indramayu, Bandung, Garut • 4 Value Chains selected linked to food security and poverty alleviation mandate: Maize, Rice, Potatoes, Chili • Data collected from July – August 2012
- 18. Baseline & Product Development Research Profile of Respondents Gender Profile Field Survey 500 408 400 306 300 200 102 High literacy rates 100 0 Male Female Grand Total Education Profile 450 406 400 350 Farmer Age Profile for Selected Crops 300 218 250 400 200 150 58 70 100 44 16 350 50 0 300 250 0 - 14 200 15 - 24 25 - 59 150 60+ 100 50 0 Chili Maize Potato Rice Total
- 19. Baseline & Product Development Research Profile of Respondents Household Size Literacy Profile 160 450 405 134 400 375 140 350 120 300 100 88 82 250 80 200 60 39 150 40 32 100 14 9 30 20 4 4 1 50 0 0 1 2 3 4 5 6 7 8 9 10 Illiterate Literate Total Land Ownership Profile 450 408 400 350 75% of farmers live on less 300 275 250 than 1 ha of land 67% of farmers own land 200 150 115 94 100 50 0 Own Land Lease Land Communal Land Total
- 20. Baseline & Product Development Research What are they growing? Primary Crop Profile 450 408 400 350 300 250 200 150 103 117 116 100 72 50 0 Chili Potato Maize Rice Total Secondary Crop Profile 60 51 50 Approximately 55% of 40 35 farmers have 31 30 25 secondary crops 20 21 20 17 10 7 3 2 4 1 1 1 0
- 21. Baseline & Product Development Research General Growing Constraints • Lack of access to high quality inputs • High price of inputs • Drought and climate stresses • Pests • Constraints to selling goods linked to pricing data
- 22. Use of Mobile Phones 35
- 23. Baseline & Product Development Research Use of Mobile Phones 83% of respondents have a mobile phone; strongly skewed towards males; All households have access to a phone, >80% of males own phones, only 20% of females Own a cell phone? Own a cell phone by Gender 100% 100% 7 20 22 68 80% 19 80% 61 60% 79 80 83 303 60% 72 40% 40% 60 61 235 42 20% 39 20% 26 0% 19 21 105 0% Chili Chili Maize Potato Rice Total Maize Potato Rice Total Male own Female own No Yes
- 24. Baseline & Product Development Research Use of Mobile Phones • Respondents reported using mobile phone for both personal and business voice/SMS communication • Majority of respondents feel very comfortable with using the mobile phone for voice and SMS communication but not for mobile banking or internet services – 10% accessing data services on mobile; only 1 respondent utilizing mobile banking • Focus group discussions identified strong interest in accessing information and financial services over the mobile phone, mainly linked to pain points of high cost of travel and lack of information
- 25. Access to Financial Services 35
- 26. Baseline & Product Development Research Access to Financial Services • Maize farmers reported higher levels of savings (41%) than other farmers (10-20%) • Less than 10% of farmers have any form of insurance services (life, health, education) • 67% use domestic transfer and remittance services to suppliers, traders and family
- 27. Baseline & Product Development Research Access to Financial Services • 55% of farmers have received a loan for inputs - 45% of farmers access finance through informal means (friends, relatives, & money lenders); 29% reported accessing through commercial banks, 15% from agri suppliers and traders and 10% through MFIs • Merchants report that the major constraint for farmers in access to formal financial services is inability to provide collateral • Rice farmers reported the highest level of access (71%) to credit; maize the lowest (35%) and chili and potato at a medium level of 57%
- 28. Baseline & Product Development Research Access to Financial Services • 63% Farmers reported using remittance services to send money to commodity buyers and ag-input shops or to other farmer business partners mainly via commercial banks, post office and MFIs • 93% of farmers reported accessing bill pay services, with electricity being by far the most common and paid through informal groups
- 29. Access to Information Services 35
- 30. Baseline & Product Development Research Access to Information Services • Main providers of agricultural information services are government extension workers, followed by suppliers, friends and relatives, farmer groups/coops, traders, NGOs, etc. • At least 70% of respondents reported accessing information related to seed and fertilizer recommendations, pricing information, and pest and diseases • Less than 50% of respondents reported accessing weather and production assistance, including pest, disease and drought information (major farm-level constraints related to increasing income and productivity).
- 31. Baseline & Product Development Research Constraints to Accessing Info Services • First, farmers do not know of other providers who might be able to provide them with additional information, and, second, although not satisfied with current services, farmers at least have some level of personal trust with current sources due to familiarity. • Both conclusions indicate that there is a need for new sources of reliable technical information with respect to agricultural practices, but that any new service must develop a reputation for consistency and reliability if it is to be accepted by rural famers.
- 32. Moving 35 Forward
- 33. Baseline & Product Development Research Agri-Fin Mobile Opportunities • Rural Indonesian farmers are rational actors who can identify the services that are likely to increase their farm productivity and cash flow. • A lack of information and experience makes it difficult for them to evaluate whether mobile applications can meet these needs, however, they appear open to receiving the education and training that will make this a viable delivery channel for such services. • Deep penetration of mobile phones in rural regions of Indonesia makes the delivery of agricultural information and financial products by this methodology viable.
- 34. Mobile Phone Penetration Baseline & Product Development Research Key Gaps for Product Development • Lack of access to financial services appropriate for the needs of rural farmers • Lack of knowledge concerning the range of buyers available in the value chain, and price information • Lack of access to timely, reliable and personalized information related to farm management practices
- 35. Baseline & Product Development Research Recommendations: • Need to Build Bundled Financial and Information Service Product Trust: • Improving buyer-supplier linkages • Timely, regular, reliable farm management information • Reputation is key
- 36. Agri-Fin Mobile Partners 35
- 37. Agri-Fin Mobile Partners Financial Services: Bank Andara Investors Product & Donors & and Banks Service Govt Vendors Bank Mission: To be the premier, Andara pioneering financial partner of the Indonesian microfinance sector, promoting innovation and massive outreach to the un- banked and under-banked. Ban MFI MFI k Clients Clients Clients Clients Clients Clients Goal: 15M Clients – 2,000 MFIs - 5 years
- 38. Agri-Fin Mobile Partners IRRI Nutrient Manager
- 39. Agri-Fin Mobile Partners 8Villages created LISA: Layanan Informasi Petani, the Social network for Indonesian Farmers • LISA is a mobile service allowing farmers to receive crop and location specific tips in the form of questions and answers • LISA is promoted by Telkomsel with the support from public institutions A Problem in your like IPB field? Ask LISA on • Currently SMS – web based with 9639 plans to introduce mobile website
- 40. Thank you for your time & your support of our work! 35 Contact us: Lesley Denyes, [email protected] Andi Ikhwan, [email protected]