Digital Financial Services: Bringing Stability to Small Farms so They Can Grow
Smallholder farmers are realising the benefits of on-demand digital financial services (DFS) to help improve farm resilience to unexpected conditions and to acquire funds for investing in better materials. As a result, many low-income farmers are increasing the consistency and quality of their yields – even as they conduct transactions while in the fields.
The use of DFS such as agricultural microcredit can lead to key contributions in the improvement of value chains, from the timely acquisition of quality raw materials to the methods of storage and implementation. Similarly, agricultural leases provide farmers with options to use helpful tools and products that would otherwise not be available to them.
And with increased yields, what about ensuring fair deals when selling their produce? Farmers can use digital agri-info systems that provide updates on current market prices – and weather forecasts – so they are equipped with this information before making transactions. DFS also allows buyers and sellers to make instant transactions, thus increasing trust and strengthening relations that benefit their farming business in the long run. Mobile Wallets – a way to use credit or debit card information on a mobile device – is a related service that provides a better sense of security when handling transaction funds in the presence of others.
DFS technology is even being used to mitigate emerging threats from nature. Microinsurance can provide a “safety net” for risks to farming, including from increasingly unpredictable weather patterns caused by climate change. Without such protection, farmers’ basic survival against uncontrollable elements can be less certain.
Financial and IT companies are increasingly working together to create digital financial products, such as MoKash, to optimise results for farmers who may operate near subsistence level to improve their livelihoods. The broader impact of these initiatives, as a result, becomes more visible in the overall economic improvement of the countries.
31 March 2017
Sana Himayat and Matt Luna