For Mary Makkazi, growing maize is a profession that she grew up in. Her parents were smallholder maize farmers, and today, she grows maize and beans on a small farm outside Mityana, Uganda, to support her five children as a single parent. Until very recently, her approach to farming, known as subsistence farming (literally farming for one’s own food), had changed little.
She made enough money to keep her family fed, but there wasn’t much for anything else. Her resources often run out when it’s time to pay her children’s school fees, forcing Makkazi to swallow her pride and beg school proprietors to let her kids stay in school until she can pay the tuition at next harvest.
But this year, she’s excited about new progress she’s making with her farm. About a year ago Makkazi and her neighbors heard about Opportunity International, which offers small loans, access to training, extension services, savings and insurance programs, and other essential financials never before available to rural, smallholder farmers in her area. Her neighbors organized into a loan group, and asked Opportunity to extend its services into their remote, rural area.
Customer Service Officer Clean Chendera with clients in Mchinji, Malawi.
Group members each had individual goals for how they wanted to use Opportunity’s services. Makkazi received a loan for about $180 (500,000 Ugandan shillings), to purchase fertilizers, pesticides and higher quality seeds for her farm.
As part of Opportunity’s programs, Makkazi also took advantage of the organization’s connections to ensure that these inputs were legitimate. “This is an important asset, because it’s not unusual to be sold counterfeit seeds and fertilizers in this part of the world,” said John Magnay, head of agriculture at Opportunity International.
Makkazi said the program worked for her. Due to improved inputs she’s earning more and was able to build a home for herself and her five children—ranging in ages from 8 to 18—and also for her sister and her two children.
“I have just one loan, but I plan to get another loan soon,” Makkazi said. “I have seen my life improve dramatically from my Opportunity loan and that’s why I’d like to get some more money.”
“I have been able to build my house with the money I made. The benefits of that loan you can see when you visit my home. I feel proud of myself for being able to support my family,” she said, grinning.
Makkazi is equally proud she was able to pay back her loan. With a second agricultural loan, she plans to expand the land that she is able to till. She also is hoping to receive education loans to help pay for her children’s tuition and other school fees. This is another popular financial product Opportunity has introduced to support families.
GPS plotting provides precise information about his land,
including plot boundaries, altitude and access to water. From this survey, Asuman can accurately gauge seed, fertilizer and labor needs, as well as predict his sugarcane yield. GPS mapping helps farmers plan and manage their farms, increasing efficiency and income. Where farmland is often fragmented, knowing the exact acreage of their tillable land enables growers to utilize the latest agricultural practices for maximum productivity and environmental sustainability.
Opportunity International has been offering small loans, averaging about $150, to community entrepreneurs in the developing world since 1971. Until recently, the loans were only available to clients in urban areas who could visit brick-and-mortar banks.
“After years of successfully offering loans to struggling entrepreneurs who drove taxis, worked as craftsmen and ran food stalls at markets among other trades,” Magnay said, “we realized we needed to do more to address one of the most entrenched repositories of poverty and hunger—rural, smallholder farmers.”
In 2008, when Magnay began working with Opportunity, the organization was piloting agricultural finance programs in Malawi with little success.
“It was a true eureka moment,” Magnay said. “I realized that Opportunity International needed to look at smallholder farmer financing in a completely different way.”
Since it was introduced in 2008, Opportunity International’s agricultural finance program has transformed millions of lives. In particular, the program is enabling access to financial services, savings programs, training, extension services and mobile banking in rural areas of seven African countries: Ghana, Uganda, Rwanda, Malawi, Mozambique, Kenya and Tanzania. Alternative delivery channels—such as mobile banking (trucks that operate as bank branches) and cell phone banking—are some of the most important aspects of Opportunity’s financial services in rural areas. For many of the world’s poorest people—often subsistence farmers in remote areas—the nearest brick-and-mortar bank location may be hours away, meaning that they would have to take a day off work to visit with a banker—something impossibly difficult for people barely surviving.
The majority of the world’s poor are farmers. Most of these farmers cultivate less than five acres of land. Africa is home to a quarter of the world’s farmland, but generates only 10 percent of all crops produced globally. According to Opportunity, most African farms are operating at just 40 percent of their capacity. Under Magnay, Opportunity International is working to develop additional capacity to dramatically reduce hunger in Africa.
After five years of offering agricultural finance to clients, the results are positive. Smallholder farmers have increased their crop yields by up to 60 percent after becoming Opportunity clients.
Opportunity’s agricultural strategy has been supported by a number of leading companies, large foundations, institutions and individuals, such as The MasterCard Foundation, the Caterpillar Foundation, the Bill & Melinda Gates Foundation, the World Bank and John Deere. The MasterCard Foundation initially supported Opportunity’s impactful interventions in rural communities more than five years ago. From 2009 to 2013, this strategic partnership equipped Opportunity to deploy 676 financial access points, disburse 141,000 agricultural loans and open 1.4 million savings accounts in Africa. To scale the innovative work, The MasterCard Foundation and Opportunity expanded their partnership in 2014 through a $22.7 million commitment by The MasterCard Foundation for expansion of agricultural finance and other critical programs through The Africa Growth and Innovations Initiative.
This initiative builds on Opportunity’s early successes by promoting a deeper dive into rural areas to offer more smallholder farmers access to loans, savings programs and other critical financial programs and services. Over the next five years Opportunity will provide financial services to impact the lives of more than 7 million people in eight countries, including the remote Southern Agricultural Growth Corridor of Tanzania (SAGCOT), where they are launching an aggressive branchless banking campaign using mobile money and rural-based loan officers. In this new program, all transactions will take place on cell phones, and cash is never part of the equation. In that way, clients never need to visit a bank branch.
Cell phones offer unprecedented access to rural farmers in Africa. In fact, 80 percent of Africans own a cell phone. This is impressive because buying a cell phone is often not an insubstantial expense for Africa’s poor.
“Cell phones have been quickly adopted across Africa. For example, in the country of Uganda, there are more cell phones than light bulbs,” explained Rosa Wang, Opportunity’s director of mobile money. “Our programs are limited only by the availability of cell signals in Africa, and that’s proven to be no limitation whatsoever.”
Magnay said that the traditional lack of access to any capital at all is a huge burden for the smallholder farmers. It means during the “hungry season”—the name given by these farmers to the months before harvest when money often runs short—many will turn to traditional moneylenders, known as “loan sharks” in the United States for their extremely high interest rates, or they will have to sell their crops to buyers months early, which can cut profits in half.
“For most of the new clients of our agricultural finance programs, this is the first time that they’ve ever had any contact with a traditional bank,” Magnay said. “If you look back just five years into the past, farmers did not have any access to financial services. If you want an African success story, it’s that bank programs are available in places where they never have been before.”
“The clients that we finance have never had a formal bank account before in their lives,” Magnay said. “Opportunity International, as it often has, serves as a pioneer in proving that these programs work—we’re helping people and creating a sustainable banking program where none existed before. While it’s true we have work ahead of us to expand and improve our agricultural finance programs, I think that’s truly a remarkable accomplishment.”
In addition to harnessing the popularity of cell phones on the continent to initiate its mobile money programs, Opportunity International is using new mobile technologies to identify potential client farmers, assess their households for financing and provide them with information on banking services. Loan officers are able to complete loan applications for farmers remotely using a tablet to collect information about the farmer and GPS technology to map the farm, which allows for exact information about the inputs needed for planting.
The growth of Opportunity’s agricultural finance program is impressive, but not to Magnay. “To me it’s really still just a work in progress,” he said. “Whilst we do have a good strategy, it’s still an evolving strategy.”
For Magnay, one of the reasons that he was tempted to join the Opportunity team is that Opportunity’s model is sustainable. While most often Opportunity clients are not asked for collateral for their small loans, because they have no collateral to offer, loans are repaid at the rate of 98 percent, allowing for the Opportunity bank funds to continue to cycle through the community in perpetuity. As a bank, Opportunity leverages each donation so that every $1 donated will grow to $5 in five years.
Like Makkazi, most loan clients are a part of Trust Groups—a loan group and support group with weekly meetings that include training programs on business, finance, savings, budgeting, marketing and even life skills. During that meeting, the Trust Group members make their loan payments and talk about business. Makkazi said that she enjoys getting advice from her peers and her loan officer. If one Trust Group member is unable to make a loan payment one week, the other Trust Group members will help cover it.
The training that is provided during Trust Group meetings is not only about banking—like how to write a check—but also on budgeting, business, family life and preventative health. As a result of the successful Trust Group system, Opportunity banks have set up sustainable, life-changing programs.
“This isn’t project-based philanthropic development where a charitable organization launches an operation in an area with many smallholder famers and they spend millions of dollars to train farmers to meet a series of goals, and then, once those goals have been met, they pull the money out and say, ‘We’ve done it!’ They haven’t done it,” Magnay explained. “Farmers need continued services. Opportunity International is committed to building financial institutions in rural areas to deliver services and financial help. Those agricultural finance banks are sustainable, so they’ll continue to deliver help long after I retire.”
Opportunity is an international organization that establishes strategic partnerships with generous donors, corporations, foundations and institutions in the United States, Canada, Australia, the UK, Germany, Singapore, Switzerland and Hong Kong. Funds provided by strategic partners—which can include a $50 donation from a school bake sale—are used to expand programs in developing countries around the world, including the DR Congo, Ghana, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zimbabwe, Colombia, the Dominican Republic, Honduras, Nicaragua, Peru, Macedonia, Romania, Serbia, China, India, Indonesia, and the Philippines.
Just as The MasterCard Foundation has been an essential partner to Opportunity, the Caterpillar Foundation has also played a critical role in supporting the delivery of impactful financial services to Africa’s smallholder farmers. The Caterpillar Foundation has partnered with Opportunity International for over 20 years, committing nearly $30 million in grants that will impact an estimated 18.3 million lives. John Deere has also developed a program to offer financial incentives to help deliver tractors into the areas of Africa where Opportunity International is helping smallholder farmers increase their production, acreage and skills. Earlier this year, Credit Suisse similarly invested in Opportunity’s programs.
Opportunity’s programs are also constantly being monitored to ensure that they work properly. In fact, the organization conducted a study in 2013 to understand the impact that its agricultural finance programs have on the lives of smallholder farmer clients in Uganda, Malawi and Ghana—farmers like Makkazi. The organization interviewed 1,200 clients growing 10 different crops, sampling randomly from bank branch areas where the greatest number of farmers worked.
The study’s findings were very positive, showing that the services were improving the lives of clients. The vast majority of farmers in the study experienced positive results in crop yields and productivity. For example, farmers who grew Ghanaian maize or Ugandan coffee saw crop yield increases of 38 and 67 percent respectively, compared to farmers who were not working with Opportunity banks. The inference drawn from these results is that the Opportunity clients were accessing improved agricultural inputs, following agricultural best practices taught by extension service providers, enjoying greater access to market channels, and selling their crops for a higher price.
The Opportunity International survey of clients showed that they were also better able to meet food expenses, build assets and invest in income-generating activities. Just like Makkazi, their lives, as a result of Opportunity International, were being transformed.
AAM: First, I want to quickly thank you for taking the time to consider these questions. I believe there is a great story here. There have been scores of articles written on this topic over the past couple months. We’ll begin with a brief summary of the facts we already know about Spinlet. But then hopefully go a little deeper, I have the following questions:
First I have a personal question directed at you. I read that gender empowerment is an issue close to your heart. What are your thoughts on the effects emerging media and mobile accessibility could have on gender issues in developing nations? In my opinion the accessibility of technology as leveled the playing field in some regards. I’m curious as to what you think.
Nkiru Balonwu: Gender empowerment is indeed close to my heart, as an African woman. Historically, and not just in Africa, women have had fewer opportunities than men and have only recently increased in self reliance. I think emerging media and mobile accessibility have democratized (or leveled the playing field) in many aspects of African living. Previously inaccessible content/information has become available as a result of tech advancements opening up a wide array of resources and increasing opportunities in many areas including education, business and healthcare.
Questions on Spinlet
AAM: What are the potential roadblocks for Spinlet? More specifically what makes your model different than the existing mobile music services (i.e Spotify, iTunes, Rhapsody, Beats Music) and, furthermore, tell us about the predicted demand for your project in Africa.
Nkiru Balonwu: The streaming and downloads business, as it mostly operates today, is structured for societies with reliable and affordable mobile internet, rigorous intellectual property prosecution and enforcement, seamless online payment systems and being accustomed to spending considerable sums of money on building a music library. With mobile Internet and payments still in their infancy, streaming and buying music in Africa is not quite the same experience as in Europe or the US. We think however that with a strong focus on African content, we have ready markets in Africa and Africans in the diaspora, and we also see increasing demand from non-English speaking countries like Mozambique and Angola.
AAM: You said in an interview with Forbes that “We found there was about 85% of music landscape (in Africa) was undiscovered.” is this a core concept for your business model in Africa? Do you plan to monetize this undiscovered talent? Can you tell us some more about how you’ll integrate that staggering statistic into your platform.
Nkiru Balonwu: Well, it certainly is a huge part of our strategy going forward. We think that increasing the quantity of indigenous music that is available will drive subscription numbers up, particularly when you consider that a lot of this music is old, nostalgic music that is yet to be digitized and simply isn’t widely available anymore. We certainly plan to monetize as much of the content as we can, not just for ourselves but also for the benefit of artists who haven’t earned royalties since music stopped being widely distributed on vinyl and 8-track tape in Africa.
The key to integrating the music on our platform is assisting with remastering and conversions to digital formats, and possibly producing such collaborations as we did in 2013 with the hugely successful “Baby Mi Da” by veteran musician Dr Victor Olaiya, featuring modern day sensation 2Face Idibia. We think this is a model that will prove as successful across other African countries as it has in Nigeria.
AAM: The service you’re providing sounds quite like Rhapsody (est. 2001), a company which has it’s ups and downs. Is your team in communication with their leadership, or the leadership of any other established music streaming services?
Nkiru Balonwu: The music streaming industry is part of a fairly small ecosystem, so we’re well aware of the different challenges each unique model is facing and how some services are trying to innovate away from pitfalls previously experienced by others.
AAM: I’ve read that Spinlet wants to move beyond just being a music platform, but also supply news and other media. Would there be any possibility for partnership with Africa Agribusiness Magazine to help supply media content for the new dynamic Spinlet app?
Nkiru Balonwu: We’re looking at delivering a more rounded entertainment package – a one stop shop, if you like, for music and related media. This is still in its development phase but yes, we would be looking to partner with publications such as yours in achieving this target.
AAM: There is no denying that mobile banking is on the the rise in Africa, however, “On Device Research” found that “25 per cent of users say they do not make mobile payments because of slow network speeds” and “those with 4G connections only 64 per cent have made a mobile payment,” (Human IPO) What are your thoughts on this?
Nkiru Balonwu: Not being in the mobile banking industry per se, my perspective is the layman’s, but I would say that apart slow networks and other issues of poor infrastructure, there’s also a lack of trust in the system coupled with a perceived inability to fix problems quickly. For example, where a mobile payment is declined and yet the payer is still debited, the fact that reversing such a transaction is often a cumbersome and lengthy process does not help in building trust in the system.
AAM: Do you think mobile infrastructure is expanding at a sufficient rate to support you current venture’s goals?
Nkiru Balonwu: The rate of expansion could be quicker but we can’t really complain. We also expect that as more African countries establish more stable and regular supplies of electricity and, consequently, telcos spend less on backup power and have more to invest on infrastructure, things will improve.
AAM: In your opinion what are some of the pros and cons of mobile banking as opposed to the conventional “western style” of commerce?
Nkiru Balonwu: The biggest pro, as seen in the success story that is Mpesa, is that people in the urban centres can send money safely to friends and relatives in the rural areas. In the wide support structure that African culture promotes, this is a welcome development. Another is the way in which it brings “informal” money into the formal economy, seeing as a significant segment of the African population is unbanked or without access to financial services. To my mind, the pros far outweigh any cons. Mobile banking is increasingly safer, more convenient, faster and more accessible for many, a win-win situation all round.
AAM: Is mobile banking safer, more secure and faster than conventional payment methods?
Nkiru Balonwu: I wouldn’t say that mobile banking is safer or more secure but I would think that it is significantly faster yet offering a good standard of safety and security.
AAM: Do you think there is a role for mobile banking outside of the developing word, say in the US or EU?
Nkiru Balonwu: Yes, I definitely think there’s a role for mobile banking in developed economies. Don’t forget there are a not insignificant number of people living in similar situations as the unbanked or informal economies found in the developing world. But also interestingly, mobile banking in the west is relevant for a different reason, more advanced customer service i.e. deeper customer relationships and superior customer experience. In the end, whether developing or developed, mobile banking can play a pivotal role in increased customer satisfaction. It is also particularly attractive to the younger more tech-savvy generation. And, really what easier way is there to check your balance or pay a bill.
AAM: Is it possible that once a safe banking infrastructure is in place will this mobile banking revolution could be a fad that fades away?
Nkiru Balonwu: I doubt it. It seems to me that the more convenient and efficient mobile banking becomes, the more likely that it would become less a fad and more the norm.
AAM: Topics I would like to discuss could include Spinlet’s plans for rapid expansion in Africa during 2014-15.
Nkiru Balonwu: Content acquisition drive, diversification of product offering and product interface, working with artists to promote their on-platform music more.
AAM: Additionally, I would like to talk about the role of digital media in emerging markets.
Nkiru Balonwu: Digital media is extremely relevant in emerging markets and the developing world primarily because it solved the distribution problem. Until recently, viewing 24-hour news, drama series, movies etc required expensive, and often unreliable, satellite TV equipment and high subscription costs. Original music also required expensive physical medium for mass delivery. For books and magazines, it was paper or you were out of luck. These constraints essentially placed a very low upper bound on the size of the entertainment market. Digital media eliminated these limitations and enabled the concept of content streaming. While distribution was a major headache for large scale content providers, the smaller players and individual consumers faced a crisis of access. Prior to the introduction of digital media it was nearly impossible to put out material without incurring prohibitive costs. The requirements for advertising, placement, and promotion meant that this sort of activity was entirely in the domain of large providers. Digital media has also enabled the on-demand paradigm which has been a revolution in its own right. The notion that a consumer can only access content at a time predetermined strictly by the provider is counterproductive from a business standpoint and unnatural from a philosophical point of view. Finally, digital media has greatly simplified content consumption by eliminating the assortment of incompatible standards that proliferated during the analog era. For example, there were more than a dozen standards for delivering color information in television broadcast such as NTSC 3.58 (US), PAL B/G (Australia, NZ), PAL I (UK), SECAM (France) etc. These standards all required dedicated equipment and very often meant that even when content was physically available it was still inaccessible. Digital media essentially unified the content space freeing the consumer from the tedious chore of managing hardware compatibility requirements. All these fall within the mission and business profile of Spinlet which is to provide an on-demand content stream.
AAM: I would like to like to show how the use of mobile technology in the developing world differs from that in the western world.
Nkiru Balonwu: The use of mobile technology does not particularly differ geographically presently and that is because there has been significant success in creating a universal user experience for commercial products. Perhaps the only place that a marked difference exists is why the technology is relevant. In the western world it has become dominant mainly owing to convenience and portability – compared to the developing world where existing communication infrastructure was, at best, poor. However, the unifying theme in the mobile technologies today is on-demand presence and user behavior is shaped around that irrespective of geographical location. In any case, the world is becoming more of a global marketplace so consumers are being targeted with, broadly speaking, the same products and solutions.
AAM: Finally, I would like to know his opinions on “Africa as a 99 percent pre-paid economy,” I am veryfascinated about how this effects the economic climate in these regions.
Nkiru Balonwu: Prepaid was probably the best option to break digital services into the continent because of the following reasons:
· No credit histories (but this is gradually changing)
· Very few national identification schemes
· Poor address mapping
· Slow, laborious judicial process (for enforcing contracts)
These factors affect not only services but such things as rent (payable in advance, sometimes 2-3 years), acquisition of assets (e.g. Electricity generators, vehicles, etc., all payable in advance).
And even where credit is presently available, the payment spread is much shorter, with bigger deposits required.
The story of Mamadou Edrisa Njie
If someone had told me that a few years ago that using the social media will one day land me in a job, I would have totally disagreed with that person, be it an expert, a researcher or a fortune teller. In fact, this wasn’t because I didn’t know what social media was all about but mainly because I was ONLY passionately on Facebook to chat with friends with some that I don’t know.
Here I am, have signed a six month-contract with one of the best IT Service Providers in The Gambia to be its “Social Media Administrator”. A post I only knew existed during the signing of the contract.
Being born and brought up in the rural community of The Gambia where young people trek several kilometers to access internet to use the social media-Facebook and Skype, today, I count myself as one of the luckiest to have had the opportunity to access the social media anytime, anywhere with thanks to an IPAD provided by Global Youth Innovation Network (GYIN) International.
Training counts a lot in life and it is the turn-key to potential opportunities, with great thanks to the International Fund for Agricultural Development (IFAD) Communications Division, me and some colleagues were given practical training on social media 101 on how to use Twitter, Google+, blog post and LinkedIn. I was particularly excited for this training opportunity and as a result, today I am a very happy young digitally connected person in and beyond my country.
My sincere gratitude and sincere appreciations goes to Moses Abukari (IFAD Country Programme Manager for The Gambia) who first helped me to use an IPAD and encouraged me to be sharing agricultural and rural development stories focusing on rural youth; to Roxanna Samii (IFAD Manager Web, Knowledge and Internal Communication) and Roxy for exposing me to more social media (twitter, Google+, LinkedIn) at a training organized by GYIN Gambia for Gambian journalists, bloggers and online reporters at the Kairaba Beach Hotel prior to the IFAD 7th Regional Forum in Banjul in November 2012. Since then, I regularly participate in major public events and share information on social media platforms.
Facebook, Twitter, LinkedIn and Google+ have been my favorite’s social media. I have been using the following sites to communicate with the wider world on events happening in The Gambia and beyond with more attention on youth and development in rural areas.
Again, been among the leading bloggers in The Gambia, I manage my blog Mansa Banko http://mansabanko.blogspog.com
With the training and tools, my passion has been driven to reporting and sharing widely with issues of youth, agricultural development, development projects, environmental issues and more general news of public worthy. Sometimes, I feel nobody is reading or even aware of whatever I share with the public. I occasionally get feed-back from one or two peers or audience who say they like what am sharing with the public.
I only started realizing how valuable these little services of sharing information with the public were seen by some entities as opportunity to have wider outreach through real-time information flow. One opportunity led to another and this was the point that I said “is social media such a powerful tool to empower me economically?’’ and why me?
- I have become the key media and communication focal points for all the IFAD-financed projects in the country.
- So on 1st October, 2013, I signed a contract with Biodiversity Action Journalists-Gambia (BAJ-Gambia) as their “ Online Manager” to manage their Facebook, Twitter, Google+, and LinkedIn platform for a period of one year.
- I also signed a contract with Nifty ICT Solutions in The Gambia for a six-month period as their “Social Media Administrator”. This is what the portion of the contract reads… “To advance our strategy and execute more quickly, more efficiently, with greater excellence and profound learning, we need to transform how we organize, plan, work and collaborate. It is a big undertaking that changes our group structure, but will help us achieve our mission, in web designing, and training.
“You have been contracted as one of the individuals we feel has the capability, drive, and commitment to achieve Nifty ICT Solutions’ goals. We would like to welcome you to our team.
“Once again, we congratulate you in your new position and you will be responsible for developing and managing the relationship with the media, general public….and creates a strategy that will drive communications through social media pages- Facebook, and Twitter and other modes of distribution.
“We appreciate your tireless effort and dedication to Nifty ICT Solutions. We look forward to working with you in the upcoming year and ensuring the success of Nifty ICT Solution and a better life for young people.”
With these recognitions and tasks ahead, I have accepted these opportunities and will continue to remain committed to providing the invaluable services for these institutions as well as to advocate and promote further opportunities for youth especially those in rural Gambia to embrace social media as means for their self-empowerment.