Mobile Money Helps Farmers Grow Their Businesses in Bangladesh

This is the first of a three-week blog series on digital financial services for agriculture. This series showcases mSTAR and the Digital Development for Feed the Future team’s recently released interactive online resource and instructional videos, made to complement The Guide to the Use of Digital Financial Services in Agriculture. The online resource breaks down the steps of how to use digital financial services in agriculture.

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Mobile money can transform the reach and success of a USAID project.

By offering a secure way to store money and access financial services, mobile money has the potential to increase the efficiency of programs and significantly improve the resilience of smallholder farmers.

Carrying cash in the field can be precarious for development workers and beneficiaries alike, as many USAID missions and partners know. In Bangladesh, “there is a security risk and safety risk,” says a representative from WorldFish, a non-profit that works with Feed the Future, the U.S. Government’s global hunger and food security initiative. Cash can be lost, or worse, stolen. But until recently, cash was the only form of payment—it’s how farmers paid for agricultural inputs and how buyers paid for agricultural products. “There was no other channel,” explains Josh Woodard, Regional ICT & Digital Finance Advisor at FHI 360.

Mobile money has emerged as an obvious solution to the risk of carrying cash. While access to banks is limited for rural agricultural communities, access to mobile phones is not. In June 2016, for example, the Bangladesh Telecommunication Regulatory Commission reported 131.4 million mobile phone subscriptions in Bangladesh. This makes up around 83% of Bangladesh’s population. With this, mobile money has seen massive growth in Bangladesh. It has “opened an opportunity to eliminate or vastly reduce the amount of cash transactions,” Josh says.

Josh leads the Bangladesh office for the FHI 360-led and USAID-funded Mobile Solutions Technical Assistance and Research project (mSTAR).  In addition to reducing the risk of staff carrying cash, USAID and mSTAR saw the impact mobile money could have in achieving the goals of USAID agricultural programs in the country. To start, mSTAR assessed where and how mobile money could be applied in project value chains. They conducted value chain studies and provided technical assistance, training staff and building capacity.

“Since mSTAR started activities in Bangladesh in September 2013,” Josh says, “we have been able to work with USAID to digitize payments for 10 Feed the Future activities.” Farmers now have access to financial products, many for the first time. Without money stolen or lost, and with the ability to store and manage money, farmers can reinvest more in their farms, in turn increasing the amount of food they can produce, and their profits. All this leads to stronger, and safer, communities.

Watch the video below to see how USAID and mSTAR implemented mobile money in Bangladesh and worked with implementing partners to successfully impact beneficiary farmers.

As the Bangladesh example shows, digital financial services have the potential to strengthen Feed the Future projects around the globe. USAID is here to help missions and partners identify specific challenges in value chains and integrate digital financial services into those corresponding challenges.

To learn more about how to implement digital financial services in Feed the Future projects, walk through the steps of the online Guide to the Use of Digital Financial Services in Agriculture. If you have specific questions or feedback, contact digitaldevelopment@usaid.gov. 

2016: A Year of Digital Development in Action

In 2016, mSTAR implemented 41 activities.

It was a year of dedicated work towards mSTAR’s goal of using technology to improve lives in underserved communities.

Read our 2016 Annual Report.

Our 2016 activities spanned Central America, Asia, and Africa. They included  diverse activities such as the Innovations Awards for original uses of data for resilience; a widely-received report on alternative business models for connectivity; and a Financial Inclusion Forum highlighting Bill Gates. All 41 activities were exciting and meaningful; here are our most noteworthy:

First of its kind digitally-enabled micro-credit in Bangladesh.
One of the biggest challenges farmers face in Bangladesh is that they pay back loans weekly. Paying loans so regularly can cause a snowball effect of debt for farmers who, due to the nature of farming, don’t have a steady weekly income. Once crops are in the ground, it may be a few months before they have income. To pay back the original loan farmers are often forced to “take out other loans…and rush to sell their crops immediately after harvest,” Josh Woodard, mSTAR Regional ICT and Digital Finance Specialist, has said. Rushing to sell crops means farmers often don’t get their full market value. To address this, mSTAR has worked with two different banks in Bangladesh, Bank Asia and IFIC Bank Limited, to launch two new digitally-enabled micro-credit products for farmers; the first using NFC-enabled debit cards, the latter using mobile wallets. Both of these products have much lower interest rates than alternative options offered by microfinance institutions, as well as much more attractive repayment terms—a single repayment after six months, instead of weekly installments. With these products, farmers can now pay after harvest. No longer in a rush to see their produce, they are more likely to receive a better price. In a country where most people work in agriculture, these new products could be critical to stemming poverty and breaking a cycle of debt. Over 250 farmers have signed up for the initial pilots of these two products, and both banks are already eyeing expansion to thousands of more farmers.

Mobile money salary payments for teachers in Liberia.
Through mobile money, mSTAR is transforming the daily lives of teachers in rural areas. In 2016, mSTAR successfully rolled out mobile salary payments for teachers in Nimba County. Sixty-seven teachers received payments in the first mobile payment payroll. One hundred percent reported saving time compared to traditional direct deposit. Mobile salary payments also helped teachers save money. Before, teachers reported spending approximately 13.5 hours and $25 of their salary to pick up their money. After mobile payments, they spent an average of 25 minutes and $2 in service fees to cash out their mobile money. The success of the rollout has resulted in buy-ins to roll out mobile money to health workers and to teachers nationwide.

Addressing the data gap in mobile phone users.
mSTAR, USAID/Mozambique and DFID, through DAI’s Financial Sector Deepening project, set out to clearly understand the landscape of growing mobile phone users. mSTAR and partners interviewed over 6,000 mobile phone users and non-users. The survey garnered valuable information and data about the availability and accessibility of mobile technologies and the way people use mobile phones in their daily lives. The findings will allow USAID staff in Mozambique to make smarter programming decisions as they increasingly rely on digital technologies to deliver better results.

In 2016, mSTAR used technology for better development outcomes across sectors. We encouraged innovative uses of data for resilience and rolled out mobile money products that show real promise in improving daily lives and diminishing the threat of poverty. In 2016, we continued to establish digital technologies as some of the most exciting and promising avenues to improving lives among the most vulnerable throughout the world.

Review our 2016 Annual Report (with pictures!) here. 

mSTAR’s First Podcast! Josh Woodard Talks What to Expect at Financial Inclusion Week 2016

More than two-thirds of Bangladeshis lack a formal financial account. This means that more often than not, they rely on cash, which can be both risky and costly. “You’re potentially just a natural disaster away from all of your cash savings in your house being wiped away,” Josh Woodard, technical advisor for mSTAR’s Bangladesh team, says.

[Please note that FHI refers to FHI 360 in this podcast.]

However, in Bangladesh, there’s a clear opportunity to address this. The country is pretty much entirely covered by mobile networks and more than half of the population owns a mobile phone. This combination makes digital financial services a perfect way to break down barriers to financial inclusion.

Over the past three years, the mSTAR/Bangladesh team has directly assisted eight USAID implementing partners in transitioning to digital payments, and they’ve seen tremendous success. As of June 2016, four of the implementing partners have made around US $1.51 million in digital transactions, all of which were previously done using cash. Most of those transactions were made to individuals who were previously unbanked or underbanked.

To continue this success and further the conversation on increasing financial inclusion, mSTAR’s Bangladesh team is joining BRAC, CARE International, Ecobank Foundation and other leading organizations as a partner in this year’s Financial Inclusion Week, hosted by the Center for Financial Inclusion. Financial Inclusion Week is a global conversation exploring the most important steps to full financial inclusion. This year’s theme is keeping clients first in a digital world.

mSTAR/Bangladesh’s conversation will focus on how different actors, from financial service providers to government programs, can support the development, promotion, and uptake of digital financial services that are aligned to the needs, capacities, and aspirations of the financially excluded in Bangladesh.

Josh Woodard, mSTAR’s Regional ICT and Digital Finance Advisor, describes the innovative ways mSTAR/Bangladesh is focusing on clients to advance financial inclusion in this first episode of Digital Development Leaders, a podcast by mSTAR and FHI 360’s TechLab.

Take a listen to Josh explain how mSTAR/Bangladesh is staying ahead of trends, focusing on clients, and innovating to increase financial inclusion. Please note that “FHI” is said in the podcast and is meant to refer to “FHI 360.” 

Josh was also interviewed recently by the Aid and International Development Forum (AIDF) about emerging trends in technology, check it out below.

To learn more about Financial Inclusion Week follow @mSTAR_Project and the hashtag #finclusionweek on Twitter.

‘The First of Its Kind’ – mSTAR/Bangladesh & Partners Launch a New Mobile Banking Service

In Bangladesh, smallholder farmers have traditionally had a difficult time securing loans from banks. The due diligence process is rigorous in Bangladesh and high loan interest rates can be prohibitively expensive for smallholder farmers. Moreover, commercial banks are often located in urban centers, making them challenging for rural farmers to reach.

To remove these barriers to financial inclusion that farmers face, mSTAR in Bangladesh is launching an innovative pilot program with IFIC Bank Limited and the International Rice Research Institute (IRRI). Under the pilot, IFIC Bank Limited is offering 100 farmers one of their newest products, IFIC Amar Account, a unique transactional account where both deposit and loan facilities are bundled into a single account.

100 Bangladeshi farmers are piloting the service.

The service has a wide-range of benefits for farmers. It enables them to enroll into flexible savings schemes and save BDT 100 per month at an annual interest rate of 7.5%. Farmers will be able to purchase inputs from participating retailers, and they’ll have access to secure agricultural loans at a low interest rate with flexible repayment options. This flexible repayment scheme is critical for farmers says Josh Woodard, Regional ICT & Digital Finance Advisor and lead of mSTAR/Bangladesh. Currently, he says, “microfinance loans offered to farmers must be paid back on a weekly basis for around 46 weeks.” Paying the loan back so regularly can be difficult for farmers who do not have a steady weekly income: once crops are in the ground, it may be a few months before they have income. This causes a snowball effect. To pay back the original loan, farmers are often forced to “take out other loans…and rush to sell their crops immediately after harvest.” Rushing to sell their crops means they often don’t get their full market value.

However, this new service will relieve those pressures. With the flexible repayment scheme, farmers will pay back the loan in a single payment after six months. Since it will be after harvest, Josh explains, it will likely enable farmers to sell their produce at a higher rate as they are not in a rush to sell. And, there’s one more perk – perhaps most importantly, farmers will operate the account through the IFIC Mobile Banking system. In many respects, this innovative service is the first of its kind in Bangladesh.

mSTAR/Bangladesh held an event last week to launch the new service. Senior staff of Bangladesh Bank, IFIC Bank, and Feed the Future Bangladesh Rice Value Chain Project attended the event to explain the new product. Mr. Mohammad Robiul Islam, General Manager of Bangladesh Bank described the service as “a significant improvement over standard microfinancing.” He explained: the low transaction costs of the mobile phone system mean the bank can offer “unbanked farmers interest rates of 10%, which is much lower than those offered by traditional microfinance institutes.” The 100 registered farmers are being provided agricultural loans worth BDT 5,000 to BDT 20,000.

IFIC Bank made it clear at the event that they were not only aware of the financial inclusion challenges smallholder farmers faced, but prepared to take on those challenges. As “an urban-based commercial bank, rural penetration is always a concern of the bank,” Shah Md. Moinuddin, Deputy Managing Director of IFIC Bank acknowledged. “The vision of IFIC Bank,” he continued, “is to overcome all the hurdles.” This project was the first step, he said.

mSTAR, IFIC Bank, and IRRI have high hopes for the service. IFIC Bank hopes to extend it to more smallholder farmers, and IRRI and mSTAR plan to bring other value chain actors, such as input dealers, companies, millers and wholesalers into the system and ensure that all actors can benefit from the digitization of payments along the value chain.

To learn more about mSTAR, contact mSTAR_Project@FHI360.org. 

 

Innovative Uses of Data Prepare Communities for Climate Change and Improve Resilience

By Josh Woodard

Data and resilience are two of the biggest buzz words in development right now.

Chatter is growing in the development sector about the potential ways digital data can be opened, shared and analyzed to transform decision making and accelerate development outcomes.

At the same time, there is an increased focus on the value of resilience, which manifests itself in the ability of individuals, communities and countries to respond and adapt to shocks and stresses.

Like all buzz words, data and resilience run the risk of being frequently talked about but infrequently put into action. The fact is that if we can cut through the hype and engage in complex but necessary dialogue and partnership, digital data has the potential to enhance resilience capacities.

It was against this backdrop that USAID and FHI 360 organized a two-day Harnessing the Data Revolution for Resilience Summit in Bangkok, Thailand. The Summit drew more than 90 participants with an interest in driving forward the state of data for resilience. Participants included entrepreneurs, innovators, development organizations, technology providers, donors and governments.

“You brought innovators and leaders together from two different worlds – those working to strengthen the capacity of governments, NGOs and communities for development and resilience, and those who are pushing the boundaries in using new tools, technologies, and data to solve the complex problems that threaten sustainable development and erode resilience.” – Summit attendee

Leading up to the Summit, we launched the Harnessing the Data Revolution for Resilience Recognition Award to highlight case studies and new approaches using data and technology to build resilience at the individual, community, national and regional level. The award received close to 70 applications for two categories: Impact Demonstration and Early Stage Innovation. The top five finalists from each category were invited to Bangkok to make their pitch, and Summit attendees selected the winners via popular vote.

When all votes were counted, Project NOAH won the Impact Demonstration award for using data and real-time visualizations to mitigate the impact of natural disasters in the Philippines. mClinica was awarded the Early Stage Innovations award for their SnapData platform, which provides real-time monitoring tools that help governments, NGOs, and private sector companies better manage healthcare systems.

Over the course of the two days, participants heard how people are using of data to increase resilience with various levels of complexity and success. Promising examples from India, Indonesia, the Philippines and elsewhere showed how data is empowering citizens and governments to make informed decisions that are contributing to improved resilience.

We explored the next generation of technologies including sensors, machine learning, and the Internet of Things. These innovations have the potential to open up new depths of our understanding of the world around us. In addition, we heard how both new and old forms of connectivity, such as TV white space, may open up the bandwidth required to move massive amounts of data required to extend the benefits of these technologies all the way down to the base of the pyramid.

“The Summit was so exciting because we got to learn from each other and brainstorm together during the breaks on opportunities for collaboration.” – Summit attendee

None of the innovations discussed at the Summit will be possible without breaking down silos between the development sector, governments and innovators. At the Summit, we heard from several organizations in the process of doing just that. While each of them had slightly different partnership models, there were common threads: the need to invest significantly in consensus building, promote transparency between partners, and deeply understand necessities and concerns. None of these ideas are revolutionary, but they take effort and are easy to forget when faced with other competing demands during implementation.

The Summit provided participants an opportunity to dive deep into how data is being used to enhance efforts around environmental resilience, disaster risk management, planning and governance, reducing poverty, and urban resilience. Participants divided into groups to explore the challenges that they face in effectively making use of data in each of these areas. They shared promising examples and brainstormed around actions that can be taken to further accelerate uptake. As one participant said of the group discussions:

“In the many years I’ve been working as a development practitioner on these issues, I’ve never before been in a room with the types of innovators you convened. I left the Summit with new partners, new ideas, and fantastic models for how we can use and leverage data and new technologies to enhance our work.”

While it would be hyperbolic to claim that we were able to come anywhere near unlocking the data dividend for resilience in just two days, for many of those present, the Summit represented the beginning of that path. Through the combination of interactive sessions and ample networking opportunities, we hope to have sowed the seeds for future action at this intersection of these two emerging fields of data and resilience.

For those wanting to learn more, the participant list, speaker bios, presentations, and other resources from the Summit are accessible online at: https://sites.google.com/site/dataforresiliencesummit/summit-materials.

Josh Woodard serves as a technical advisor for the mSTAR project, where he oversees technical quality and provides technical direction to several activities in Asia focused on digital development, including digital financial services. He also led mSTAR’s efforts to organize and facilitate the Data for Resilience Summit.

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Empowering Women through Mobile Money

Hear from our partners on the MAMA project in Bangladesh on how mobile money is transforming the way they work.

mSTAR on Youtube

Measuring the Benefit of Mobile Money

This tipsheet provides suggested indicators and a process that can be used by USAID implementing partners and other development practitioners to measure the impact that mobile money is having in their projects and programs. In particular, it focuses on assessing changes in cost, perception, financial inclusion, and programmatic efficiency. It is based on mSTAR’s experience working with partners in Bangladesh to quantify the benefit of mobile money (MM) on their projects.

Download Tipsheet

Keep up with mSTAR Bangladesh Tools and Resources

Access the mSTAR Bangladesh activity page.

The USAID/Bangladesh mSTAR activity supports the acceleration and adoption of mobile money and electronic payments (e-payments) within the USAID Mission’s programs, with a specific emphasis on health and agriculture. Implementation of this activity began in September 2013 and it is anticipated to run for three years.

Technical resources and reports produced by the mSTAR Bangladesh team are listed below. If you would like to stay up to date on new publications and other news, sign up for the monthly mSTAR Bangladesh Newsflash.