How do we stop financial inclusion from becoming financial slavery

Financial inclusion has become one of the buzzwords in many African countries including Zimbabwe.  It is as if financial institutions, development agents and policy makers have suddenly discovered the need to bring marginal communities into formal financial systems.  However, financial inclusion that does not fully take into account socio-economic circumstances of those to be financially included will miss the mark. In most cases, financial inclusion is being confused with opening bank accounts and mobile money where people are expected to put their money into mobile wallets.

One of the spotlights is now on trying to formalize rural savings clubs which have been part of African economies for decades. The clubs are known by various names in many African countries ranging from Stokvel in South Africa and Mukando in Zimbabwe. Mobile service providers such  Econet Wireless Zimbabwe have started working with NGOs in trying to link mobile money transfer mechanisms with Village Savings and Lending Associations (VSLAs). While this move may seem noble for mobile service providers and policy makers keen to harvest all the money circulating outside formal financial systems, farmers and rural groups do not see the value of formalizing their age-old nests.

The importance of understanding what motivates savings clubs

To make matters worse, those pushing for formalisation have not done their home-work.  The foundation of all savings clubs has strong social and economic dimensions.  The clubs were (and still are) a self-driven initiative as revealed through self-group formation among community members with the same social status. In addition to having specific objectives, traditionally, members had the same and consistent source of income. That would enable them to contribute to the club. The savings clubs  revolved mainly around income-generating projects like beer brewing.

The rush to formalize savings clubs does not seem to be taking this indigenous framework into full account.  The main question is: should formalizing savings clubs start with requesting club members to save or start by supporting income generating projects which will enable member to save?  All savings clubs need a support base and sustainability framework.  Institutions like banks that come into these clubs should come as partners bringing value added services beyond just mobile platforms.  They should realize that they are coming into existing socio-economic networks.

The main selling proposition for a mobile platform like eco-cash has remained the distance factor.  However, for most savings clubs, proximity is key. Members live in the same village and beyond just existing as a club, they conduct regular physical meetings to discuss various issues.  Institutions coming into the community should try to fully understand what drives group formation – Is it a project or self-driven initiatives like local burial societies?

Addressing the real needs

Bringing together savings club members onto a mobile money platform does not translate into addressing softer social issues.  A major gap may be financial literacy in terms of identifying and making sense of investment opportunities.  How can members re-invest their savings?  If a member borrows from the club and repays with interest, there should be a viable business from which s/he will earn enough to be able to repay a loan with interest. Otherwise borrowing for consumption makes members worse off when they fail to pay back with interest.  What is the trade-off between saving in eco-save or investing in an income generating project?  If club members use $500 to buy 100 chickens  and earn $100 profit at the end of eight weeks, to what extent are they able to earn the same profit by saving the same $500 in eco-save during the same period?  This is an opportunity cost factor that most savings clubs consider.

The mobile money platform model across African countries is designed in such a way that users are charged for moving money not for creating business.  If a club member decides to send money to the club through eco-cash s/he is charged while the club is also charged for withdrawing that money. In dynamic businesses like agriculture markets where members can make daily contributions, it means they will lose a lot of money through charges.  Cumulative charges associated with depositing, transferring and withdrawing minimize any interest that could have accrued to the club or individual members.


Time factor and opportunity cost

Saving for three month as a condition for one to get a loan from formal financial institutions attracts prohibitive opportunity costs, especially in the fast-paced agricultural trading business.  An alternative would be riding on the numbers where a substantial amount stays in the club fund.  Members can get loans and repay quickly.  Someone may just need a loan to facilitate a transaction, for example, order financing.  A reserve of, for example, 10% per given amount can act as a reserve fund.  As the number of people increase, so does the reserve fund.  For every $100, a reserve can be $10.  Another option is to inject a loan fund within the savings club at a much lower cost to boost it.  This is more like a backing account for the club’s investment opportunities.

Technological limitations

At the moment mobile technology has no way of tracking and providing comprehensive reports compared to what happens in banks.  Users of eco-save or eco-cash can only see their balance and deposits on their mobile phones.  The whole record -keeping process is not embedded in the system so that savings’ club members can monitor their trends. Another challenge is access to technology.  Some members may not have up to date phones for tracking transactions.  Another critical issue is security.  The conventional banking model requires two or three signatories. On the other hand, when using technology, each person gets an individual pin number. How can two or three club members use their individual pin numbers to electronically sign for the whole club in order to do business?

Building on existing economic drivers

The mobile money model should be built around other value chain actors. If a club is interested in inputs, it makes sense for the institutional funder to bring in a seed company or an input provider. Members can get inputs to produce agricultural commodities and payment for inputs in deducted from the club fund.  This is smart financial inclusion riding on production as a motivation for saving. The rural banking model has collapsed in many African countries because of failure to ride on existing economic drivers and other value chain actors. Most Africans based in rural areas do not have potential to save cash due to fewer cash-based economic activities.  Instead, they save in the form of assets such as chickens, goats and cattle which constitute meaningful wealth.  When their cash gets to a certain level, they buy livestock and other valuable assets such as utensils.  They are fully aware that saving should be linked to valuable commodities.  This is a much broader and meaningful notion of multiplying value and creating wealth.

Options in agriculture markets

The rate at which money changes hands in informal agriculture markets presents a unique scenario for crafting appropriate financial saving models. The facility can be designed to attract very low charges on transactions and very small reserve requirements that ride on the velocity of transactions.  In a market with 5000 traders, each trader can easily save $1 a day, translating to $5000 available for loaning out to other traders. Transactions can also show which commodities perform better than others. Traders in the market tend to have speculative tendencies such that sometimes they may not buy commodities every day as they watch market performance.  This balancing act in line with market activities and performance is an opportunity for smart saving.

However, to be functional, this initiative requires a broker who also monitors agricultural commodities in the market.  An additional key role for the broker is verifying and authenticating transactions in line with commodities on transit.  This is one way in which the savings clubs model can be linked to commodities in agriculture markets without impoverishing savings clubs.  Ordinary consumers and club members who want to have agricultural commodities delivered to their door-steps can also use such a trusted facility with an institution taking care of the needs of various actors.  / /

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eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

How can Africans move from chatting to serious wealth creation?

Like any other innovation, the explosion of ICTs and social media has come with merits and demerits in most developing countries.  Although it is always tempting to look at the advantages and ignore disadvantages, we can learn a lot from examining both sides.   Africa now has millions of WhatsApp groups and other social media-driven platforms.  Thousands are formed every day. While it is good that people are talking, finding each other, re-igniting lost relationships and forming new ones, there is so much noise that it is becoming increasingly difficult for good ideas to stand out.

With so many natural resources waiting to be exploited into business opportunities, how can young Africans ignore this noise and focus on what matters? If you ask some of the best entrepreneurs in the world, they will tell you that it takes a quiet, reflective moment for exciting ideas to be transformed into business. If developed countries had the level of noise currently prevalent in Africa, they wouldn’t have found the time, mood, piece of mind and sense of purpose to become industrial economies.


Using ICTs to transform needs into opportunities

One way ICTs can become useful in moving African communities from basic information sharing and chatting to solutions is through enhancing needs identification and assessment. From a development perspective, needs assessments should inform every intervention. Proper and un-biased needs assessment is about gathering information that support decision- making. With the penetration of ICTs into rural and farming areas, communities should be able to use ICTs in identifying, analysing, prioritizing and accomplishing results they really want to achieve.  It is not enough to receive agricultural news, for instance.  What the mainstream media find newsworthy may not be a useful opportunity for farmers but a diversion from important things.  Farming communities can use ICTs to go beyond news and simple surveys but learn to apply creative and engaging techniques that clarify objectives, leading to innovative local solutions.

In most cases, there is a very thin line between social, economic and political needs.  Currently what tends to happen in most African countries is that development organisations and policy makers come up with frameworks and programmes before accurately identifying and assessing the needs of intended beneficiaries.  In many projects needs assessments are conducted when the proposal has already been written and beneficiaries already identified yet needs should inform the project proposal.  As if that is not enough, the process is normally conducted as a once-off activity at project inception yet needs are not static but change during the cause of the project.  For instance, under a changing climate, a project intended to support bean production may need to be flexible enough to switch to horticulture or chicken production when a drought suddenly strikes.  This means needs assessment should be longitudinal.  ICTs can enhance this process.

Going beyond household needs

At the moment, development interventions assess needs at household level only yet these households are supported by many actors who also have their own needs which enable them to support households.  For example, value chain actors such as transporters, processors and the market have their own needs which should be understood if agricultural interventions are to be sustainable.  Training needs for smallholder farmers are different from those of market actors.  On the other hand, policy level needs assessments look at to policy goals.

From an agricultural perspective, needs assessment should embrace a market research strategy to inform production so that farmers are able to meet specific market needs while making a profit.  African agriculture still has enormous gaps in pin-pointing actual needs of farmers and rural communities. Most crop varieties, livestock breeds and farming implements are introduced without a strong needs assessment base. That is why you often get the wrong crop varieties in areas where they do not do well and wrong livestock in inappropriate areas. Again, there is so much duplication and  waste of resources due to reluctance by development partners to share community needs.

 Needs assessment as a practice and not a tool

Needs assessment should be considered a practice rather than a tool.  Needs differ by gender, age, religion and location among, among other factors. Using ICTs, communities and value chain actors can constantly update such information.  Due to lack of a needs assessment culture, we often end up with generic extension messages. Needs assessment should speak to resource allocation.  In many African countries, development interventions are implemented in isolation, leaving out other actors like transporters, processors, market actors and government agencies.   Where programmes are not fully informed by needs, they end up providing food aid to all households when particular households require school fees.  Some households end up being given cooking oil which they can afford. They end up selling it to get what they really want.  If you find farmers selling donated food and inputs, it means there is something they really want.

In support of wealth creation

If properly identified and analysed, needs can be business opportunities waiting to be tapped.  As defined under wealth creation, want is slightly above needy.  Supporting the want will enable the needy to graduate to another level.  This will address issues of exclusion.  Unfortunately, most agricultural needs assessment exercises focus on production at the exclusion of markets.  There is an assumption that the market is always available.  You can’t just assume farmers need finance for production. A real challenge could be lack of a market not finance.  Instead of being trapped in trivial issues that scratch the surface, ICTs can support participatory ways of needs identification, assessment and ranking are important.  ICTs can also challenge current top-down approaches where policies, proposals and frameworks are developed in urban capital cities and then taken to communities for validation. At that stage it is already too late to integrate local knowledge which speaks to local needs.  By ignoring local coping strategies, it is as if development interventions are starting from zero.

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eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Why producers should always get a clear view of the competitive landscape

While African countries seem to be encouraging their farmers to produce for exporting to developed countries, those countries are looking at African countries as their customers. Competition has become so real that it is very easy to find chickens from Brazil and Chinese noodles in remote corners of Africa. This means all producers, including smallholder farmers in developing countries have to keep a hawkish eye on the competitive landscape.  Taking advantage of digital networks, producers are forced to creatively imagine how they can participate in a rapidly globalising agricultural market. A good start can be scanning their local market environment.

With digital platforms allowing many farmers to quietly and quickly produce and deliver commodities to the market, pricing pressures are intensifying such that uninformed farmers suffer more than those who are strategically informed. To assist farmers and other agricultural actors, agricultural platforms have to move beyond providing general information to building econometric models based on real-time inflows and outflows of agricultural data in agricultural markets. Data on commodities, traders, farmers, services and finance have to be regularly captured and analysed into rich insights that reveal the contribution of agricultural markets to national GDP.  Competitive farmers are not interested in news but market intelligence for decision-making.

Examples of market intelligence that smallholder farmers should strive to get




There is always strong competition for consumers between fruits and other commodities such as vegetables and field crops.  Farmers are interested in information about wild fruits because the fruits have a strong bearing on the availability and performance of field crops and other commodities in the market.


Building capabilities to compete

As a result of rich analyses, farmers and traders can be empowered to examine complexities and risks surrounding their commodities. From an informed position, they can decide to focus on farm-gate marketing as opposed to taking commodities to urban markets.   Like everyone in business, farmers and other agricultural value chain actors have to be always taking a fresh look at their assets such as relationships with customers and market data. To do so, they badly need advanced digital capabilities. Fortunately, most developing countries have a growing cottage industry of young people able to build the digital capabilities of farmers and other value chain actors.  Acquiring such capabilities will enable farmers to navigate local and global agricultural markets.

Digital platforms are also enabling consumers to instantly see what is on offer in agricultural markets. This provides opportunities for good agricultural commodities to go viral and be demanded by consumers in corners of the globe that local farmers never imagined existed. Properly organized agricultural markets that leverage on ICTs can provide up-to-the minute visibility into complex agricultural supply chains. This can enable coordination of buyers and vendors in real time. Harnessing digital technology is giving farmers capacity to deal with previously sophisticated traders. Digital technology is also enabling farmers and traders to see what is used to be privileged information held by contract companies and supermarkets. Such insights are empowering their competitiveness.  / /

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eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Why farmers should understand consumers and the pains of knowledge sharing

In a world increasingly driven by ICTs, farmers should not be satisfied with feedback from supermarkets and contract companies. Nothing stops them from speaking directly to consumers who are the final end users of what they produce.  A majority of consumers particularly those in urban markets have more information than producers.  That means farmers have to spend time and resources trying to understand how these dynamic consumers make decisions and their food choices.  If this does not happen, producers in developing countries will perpetually fail to accurately meet demand.


It is becoming natural for consumers to turn to their mobile phones when comparing prices and the diversity of commodities. The traditional commercial approach based on mass-media advertising and relatively uninformed consumers is falling short. Producers have to engage with consumers when they are looking for information about what to buy and why.  This means connecting with consumers when they are looking for answers rather than providing information just in case it may be used.

The engagement between farmers and consumers should feel natural and personal. That may mean providing information that facilitates an important choice to be made and supporting the execution of that choice through empathizing. For instance, some consumers may be looking for particular agricultural commodities to support their healthy consciousness. In this case, producers must be able to articulate benefits in their commodities. If a consumer is interested in organic food, a producer should be able to explain organic benefits in ways that make sense to consumers. This practice is common in informal agriculture markets where traders go to the extent of understanding their consumer needs at a granular level.  Embracing a full- fledged commercial approach means farmers have to allocate marketing issues a significant part of their time and resources.

Knowledge challenges that have to be overcome

A strong consumer focus goes with a different approach to knowledge. While it may seem that provision of inputs and a market for commodities are critical ingredients in African agriculture, some of the most critical knowledge issues revolve around awareness, willingness and ability.  Regarding awareness, farmers and other actors who have crucial knowledge are often unaware that they have it.  They are also unaware how valuable their knowledge is as well as who needs to know it.

Most importantly, farmers and rural communities do not know how to go about sharing their knowledge.  That is why they always use field days and agricultural shows which, unfortunately, have become over-used in the absence of efforts to assess their effectiveness. On the other hand, people who need the knowledge that is with farmers are often unaware that they lack it, unaware that they need it, unaware that it exists already and are unaware of who holds that knowledge. As a result, they would not know how to go about acquiring that knowledge. That is why most development organisations end up duplicating their efforts instead of building on existing knowledge.


When it comes to willingness, a significant number of farmers, traders, transporters, processors and other people who have crucial knowledge are unwilling to share it. Since they seem to have been convinced that knowledge is power, they fear that, besides costing them time and effort, sharing knowledge may in some way disempower them.  On the other hand, people who need the knowledge are unwilling to look for it.  They fear that admitting a need for knowledge makes them look incompetent.  For instance, most African policy makers and development workers are unwilling to look for knowledge among farmers and traders because they think they know everything.

The ability angle is the most subtle one. Farmers, traders and other actors who have crucial knowledge are unable to share it. They don’t know who to share it with, where to put it, or how to share it. Efforts to create community knowledge centres in African farming communities are designed to address this challenge.  In most cases, people who need knowledge are unable to find it.  They don’t know where to look, who to talk to, or how to search.  Organisations and communities should try to analyse and address cultural aspects behind any unwillingness to share knowledge among agricultural actors.  This action should be followed by introducing frameworks which support the ability to seek and share knowledge.  / /

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0771 859000-5/ 0716 331140-5 / 0739 866 343-6


How agriculture markets are more than just memorizing facts and figures

A close look at informal agriculture markets across Africa shows they thrive on implicit knowledge that cannot be manipulated through software or codified into a manual. Cooperation is the default behaviour rather than competition. Robust information is shared even between actors who are supposed to be furious competitors.  Peers are more influential than experts.  That is why trying to impose standardized procedures and best practices often fails dismally.


The complexity and fluid nature of relationships in these markets requires much greater human interaction and sharing of implicit knowledge, which cannot easily be codified.  Depending on the diversity of commodities flowing into the market, there is often need for novel and untested solutions and emergent practices as opposed to best practices.

The value of critical mass

In these markets, social learning is a critical part of agribusiness. As traders engage in collective activities, they forge vibrant communities of practice. However, the situation is different among farmers whose communities of practice are weaker due to irregular joint activities. For instance, during winter, there are much fewer field days compared to summer and that results in farmers not meeting regularly to share insights.

Financial institutions could create viable businesses by banking on the critical mass of activities rather than resorting to traditional notions of banking. Most communities of practice form around specific agricultural commodities where farmers and other actors engage around diverse agricultural topics. Due to its elasticity, each people’s market has a unique way of responding to laws of demand and supply, different from a formal market which often tries to twist demand to suit its pricing policy. The power of communities of practice is more visible through consumer resistance in response to sudden market shocks like abrupt price increases.  These are some of the issues waiting to be understood by banks. / /

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eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6