A fat wallet is good; a fat electronic wallet is even better. Dutch financial services firm Dodore is partnering with 2SCALE to roll out the Agri-wallet, a mobile phone based platform that allows farmers to save in small instalments, in order to buy seeds, fertilizers and other inputs for the next season.
Cash-constrained farmers are often forced to skimp on inputs, buying low-quality seeds or using less fertilizer than recommended. This leads to significant losses in yield and income. With Agri-wallet, the farmer chooses how much to save. A fixed percentage of revenue from every sale is automatically deducted and credited to the farmer’s Agri-wallet. She can use the savings only for purchase of inputs or services such as tractor rental or veterinary care. Farmers, grain buyers and selected input retailers are all registered with the platform; transactions are automated, with records and monthly statements.
How much should the farmer save? Dodore worked with 2SCALE teams and R&D specialists to help farmers estimate their own production costs and margins. For example, the ideal (i.e. adequate, practical) savings rate is about 24% for sorghum, 28% for potato and 18% for dairy farmers. In practice, most farmers have committed to 10-12%, because the concept is new.
Agri-wallet was launched in April, with 2SCALE clusters in the dairy, sorghum and potato sectors. By June, more than 1,800 farmers (1,000 women) and 18 small businesses were registered, farmers had saved more than KSh 360,000, and more than KSh 5 million has been transacted through Agri-wallet. We expect growth to accelerate, considering that this was the lean period; most crops will be harvested only in the last quarter of 2018.