In recent years, nations across the world have devised strategies to help improve food supply for the growing human population, yet the global food security outlook remains gloomy, especially in the face of climate change and rising demand for biofuels.
By 2050, it is estimated that there will be nearly 10 billion people on earth, meaning that there will be about 3 billion more mouths to feed than there were in 2010. Now, despite setting the agenda to end hunger, achieve food security and improve nutrition as well as promote sustainable agriculture as the second of its 17 Sustainable Development Goals (SDGs) for the year 2030, the United Nation’s Food and Agriculture Organisation reports that with eight more years to go into 2030, the world is far from achieving the SDG targets for hunger and malnutrition, with the number of people suffering from hunger slowly increasing since 2014.
Given the progression in farming today, supported by allied technological advancements and scientific breakthroughs, there begs the question, why is the world off track from achieving the 2030 set goal for the eradication of hunger and malnutrition? The answer points to the fact that today’s agriculture as currently practiced cannot deliver enough food to meet the goal.
While agriculture contributes largely to the GDP of many nations, most farmers across the world operate on a small scale. According to GSMA, a global organisation unifying the mobile ecosystem, there are 450 to 500 million small scale farmers in the world, and they constitute over 50 percent of the labour force in developing countries.
Interestingly, 80 percent of this population is in South Asia and sub-Saharan Africa, regions where the financial exclusion gap among adults remains deep-set. In essence, when you look at the rate of rural financial exclusion – which stands at about 60 percent for sub-Saharan Africa – a picture of the reality is that most of the population of small-holder farmers in sub-Saharan Africa and Nigeria, by extension, are financially excluded.
Thus, even with a high yield potential, the majority of small and medium-scale farmers lack access to the financial system and the solutions it can afford – loans, grants, or even as means of collections of proceeds of their sales – to enable them to maximize the full potential of the land. However, despite the interventions from the CBN and other stakeholders to drive inclusion and access, there still is a major gap in guaranteed access to the intended end beneficiaries: in this case, the farmers.
A major reason for this is inadequate financial education/enlightenment programmes tailored to the ease of understanding of the targets to guarantee adoption. Research has shown that many of the small and medium-scale farmers have neither the requisite education nor the financial knowledge needed to maximize and increase their capacity. The same sorry tale follows the several grants and other intervention funds available from reputable international NGOs who are ever willing to help the sector.
With Nigeria being a dynamic market with rapid population growth and food shortage problems, it is very clear that there are enough opportunities that can be tapped into in the agriculture value chain.
In assessing the opportunities, stakeholders, including agribusinesses, governments, Fintechs and payment service providers, converged recently at the Vanguard Economic Forum Series to dissect the issues around “Enhancing Nigeria’s Food Security in a Changing Climate and Digital Technology Environment’’, while proffering innovative solutions to solidifying the country’s agricultural value chain and ensuring food security.
One of the resolutions made at the conference is the need to digitize financial transactions in the sector to facilitate and galvanise the desired outcomes in agribusiness. Digitizing financial transactions will not only help connect farmers more closely to their buyers and suppliers, it will create the much-needed access to financial services that will make their agribusinesses thrive.
Branka Mracajac, chief executive officer, 9PSB, in a presentation at the forum titled “Digitizing Payment & Agricultural Value Chain Financing for Small Holder and Commercial Farmers”, noted that the solution to the problem of the country’s agriculture value chain is two-pronged: the need to increase funding which farmers have easy access to for agribusiness, and to digitise payments in the agriculture value chain.
Mracajac further highlighted the need to speed up action on addressing the gap in financial literacy. According to her, “Although, there is an increase in the uptake of digital financial products and payment platforms in Nigeria, the fact remains that most farmers in rural Nigeria are unbanked and have little or no access to formal financial services, including adequate information on the most basic elements of financial concepts.’’
On how 9PSB is enabling the agric ecosystem, Mracajac reiterated that 9PSB is committed to spreading financial inclusion in the sector, particularly among small-holder farmers.
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“At 9PSB, we are ensuring that farmers and everyone else, who are financially excluded, especially in the hinterlands, obtain a dependable level of financial literacy to improve their potential. With our USSD platform, we have deliberately brought the bar of access to the level of our customers. More so, we operate an easy-to-open account by simply using what they already know and are comfortable with, which is their phone number, as the account number. With this they can receive payments remotely for goods sold either on site or farther away in the city. In this way, the smallholder tomato farmer in Katsina would have an account into which to receive payments from his Lagos customer upon delivery; or to receive grants and loans flowing from government or other stakeholders,” she said.
Mracajac said that 9PSB, in addition, offers an extensive last mile access through its growing agent network of more than 7,000 well-trained and well-supported agents and partners who have become the local banking centres for the farmers, thereby reducing the risk of travelling far with cash from their base just to access banking service. The farmers also can earn an income as 9PSB Agents, with an equal opportunity policy that leaves no one out of the network via its very competitive commission regime.
“Indeed, it is a fact that the Nigerian government is already doing a lot in supporting digitization in the last 10 years. To complement the government efforts, stakeholders need to brace up to the challenge of driving true inclusion through strategic partnership,” Mracajac said.
Various speakers at the summit agreed that there must be a cross-sectoral collaborative effort consisting of grassroots actions and initiatives that will create an ecosystem to reduce transactional cost, improve efficient cash management, accountability, and transparency, and drive financial footprints for end-stage beneficiaries while providing them with access to the financial ecosystem, thus improving information for credit scoring.
No doubt, as a company invested in partnerships that facilitate seamless and accessible payment solution, a collaboration between 9PSB and stakeholders in the agribusiness chain will not only guarantee financial access, it will also drive sustainable agricultural growth, improve efficiency in the sector’s service delivery and increase profit margins for businesses across the agriculture value chain.
