How eliminating cash and embracing mobile-money is lifting farmer earnings

When Michael Ocansey and Francis Obirikorang left formal employment at Esoko Ghana, an agricultural profiling and messaging company, they had one thing on their mind: to improve the welfare of small scale farmers in Ghana by expanding access to the market. That was in 2016 and the journey to this goal has been both challenging as it has been rewarding.

When I spoke to Michael on the sidelines of the Sankalp Africa Summit in Nairobi, Agrocenta – the startup that he co-founded with Francis – had just been announced as the overall winner of the 2020 Sankalp Awards, an initiative that recognizes impactful social businesses across Africa.

With trophy in hand, Michael explained Agrocenta creates the right linkages between large scale consumers of agricultural produce with small scale farmers that, when pooled, can supply to organizations that need large quantities.

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“A typical example is one of our clients, Guinness. Guinness uses maize to make malt Guinness…so we signed a 5-year deal with Guinness to buy the commodity from farmers. Now the problem of farmers saying, ‘I can’t sell my commodities’ is taken care of because we have one company that can mop up everything they have harvested,” said Michael.

But the co-founders at Agrocenta soon found out that connecting farmers to large scale demand was solving just one part of the equation.

Small scale farmers repeatedly told them that they had no access to finance to invest in their farms.

Financial institutions would not touch them because a majority of farmers did not have records showing steady income from their products largely due to the cash-based, fragmented and irregular transactional ecosystem that is heavily tilted in favor of middlemen.

Agrocenta developed a mobile-based payment system that not only creates a digital ledger that tracks the expenses and income of farmers but also a digital payment system.

“So instead of paying the farmers with cash, we pay them using mobile money and this allows farmers to have transactional history which they can use as a bank statement, and now financial institutions can use this as a basis of extending loans to farmers,” explained Michael, who is also the CTO of Agrocenta.

The four-year-old agri-tech company has so far on-boarded 50,000 small-holder farmers in Northern Ghana, about 16-hours by road from Accra.

Now that Agrocenta has injected structure and proof of income, farmers in the network have become an attractive proposition for financial institutions who are now channeling funding and capital through Agrocenta’s lending platform in partnership with Ecobank known as Lendit.

Agrocenta’s extensive agent network has been instrumental in winning and retaining the trust of farmers, most of whom don’t have a smartphone or even access to a mobile phone.

Michael, Centre, with other winners at the SANKALP Awards in Nairobi.

The agents – trained and equipped with smartphones – sign-up and constantly interact with the farmers to ensure records are up to date through the Agrocenta android app. So records such volume and value of produce, market prices, purchase history, input requirements and financial records are recorded by the agents.

“We don’t send an agent from the city to the village. All the agents are elected by the local farmers which brings down a lot of barriers. Unlike Kenya, Ghana doesn’t have one local language used across the country like Kiswahili. So agents have to speak the language of the community they operate in,” said Michael.

A track record of income has not only lured financial institutions, telcos, specifically Vodafone, have also partnered with Agrocenta to provide affordable phones to farmers, where they can pay over time.

By providing the devices to farmers, Vodafone is growing its mobile money service as Agrocenta increasingly cedes control from agents to the farmers.

Investors, such as Seed Stars World, NP Consulting and GreenTec Capital Partners, have taken interest in Agrocenta’s work and impact pumping $1.5 million over the four years. The company closed 2019 with revenue of $800,000 and is projecting revenue of $4.7m, “if we successfully close a round (of investment) by quarter two.”

“We are currently raising $4 million, a combination of debt and equity, which will help us increase our farmers to 100,000,” said Michael.

The start-up is now venturing into crop insurance and a pension scheme through strategic partnerships.