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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.


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

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The First Step in Developing Effective Mobile Programs: Understanding the Landscape

Over the last decade, Mozambique has witnessed a transformative time in communications and mobile technology.

In 2005, with 1.5 million mobile subscriptions, mobile phone use had already far outpaced landline connections. By 2015, subscriptions had skyrocketed to 20 million. This transformation in connectivity marks a fundamental shift in how people, government and businesses communicate with one another across the country. As increasing numbers access mobile services across Mozambique, private and public actors alike are recognizing opportunities to apply mobile technology to accelerate development outcomes.

While this is an exciting time to leverage new possibilities and integrate mobile technology within programming, those seeking to design mobile programs or new products are often faced with a profound dearth of data on who is using mobiles and how. This is a particular challenge for the development and humanitarian communities who often work with some of the most vulnerable populations. Statistics available through industry and trade groups are often outdated and mask critically important differences in access. There are also few statistics captured on usage, yet we know that understanding the mobile features and services users are comfortable with, as well as unique borrowing patterns, are critical for ensuring success. Without better data on ICT access and usage among these key populations, designing effective and efficient programs that successfully take advantage of mobile technology has remained a challenge.

mSTAR set out to address this data gap in Mozambique with the unique Mobile Access and Usage Study (MAUS). Proving that donors are in agreement on the need for data on technology, USAID/Mozambique and DFID, through DAI’s Financial Sector Deepening project, partnered to commission the study. This multi-faceted study examined the availability and accessibility of mobile technologies, and the dynamic ways they are being used in the daily lives of Mozambicans.

mausobjectivesThe MAUS household survey employed traditional face-to-face interviews on access, usage and barriers with adults across four provinces: Manica, Nampula, Tete and Zambezia. The study also included a Computer Assisted Telephone Interview (CATI) survey utilizing remote data-collection via mobiles. The CATI was designed to not only gather a more complete understanding of how active mobile users are using their phones, but also to measure change in that use over time, and to test methods for retaining participants in mobile phone surveys.

mSTAR recently completed the study and hosted a presentation in Maputo, Mozambique to provide a first view of the findings with our many collaborators. The opening and closing remarks featured John Irons, USAID’s  Agriculture, Trade and Business Office Chief, Shahnila Azher, Team Leader of DFID’s Growth and Rural Development and Dr. Americo Muchanga, National Director of the Instituto Nacional das Comunicações de Moçambique (INCM). The coordination and collaboration achieved in working with the mobile operators, government agencies, and donor groups is a testament to the importance of this activity, as well as the shared value in understanding the mobile landscape in Mozambique.

Combined, the surveys completed over 6,000 interviews with both users and non-users in the four target provinces. As presented in Maputo, the study surfaced unique mobile landscapes for each target province and significant variations in access across geographies, gender and education.

Check back to this blog soon to get the full report and additional analysis!

In the meantime, this infographic presents the highlights of the survey results to date. It is hoped that the results of the study will help drive the deliberate and responsible use of technology in development.

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‘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.

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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. 

 

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What Does the “Internet of Things” Mean for Developing Countries?

What does the “Internet of Things” bring to mind?

In wealthy economies, it might be Amazon’s “Dash” that allows customers to get a new supply of cat litter at the push of a button. Or, it might be sensors that track workouts and calories burned.

But for people in Niger, a country where 60% of the population lives below the poverty line, 60% lack access to clean water, and only 10% of households have electricity, the Internet of Things looks much different.

For the 80% of Nigeriens who live in rural communities, the possibilities brought by the Internet of Things can be life-changing. Mobile phones and technology have already made an immediate impact for rural communities. For example, there are apps that track children’s vaccine schedules, so parents know exactly when to make the long trip to the hospital. Through apps that translate text to voice, illiterate individuals can understand important text messages from their doctors, friends, or family.

The Internet of Things has the potential to make an even greater impact. Innovations like mobile-powered drip irrigation systems for rural farmers, apps that monitor well-water levels, and sensors that track the nutritional intake of children, are on the horizon. The technology to advance these solutions is audacious but within reach; its realization depends on investment, drive and collaboration. USAID’s Global Development Lab and mSTAR are taking on this challenge, working together to reduce onerous barriers to adoption and putting these transformative technologies in the hands of those that need it most.

In the video below, Christopher Burns, Senior Coordinator for USAID’s Digital Development for Feed the Future, explains how a redefined Internet of Things might advance livelihoods for rural communities that make up 65% of the total population throughout sub-Saharan Africa and Asia.

To learn more about mSTAR and USAID’s focus on the Internet of Things, contact mSTAR_Project@FHI360.org.