How Does Digital Technology Make Lending to Farmers More Viable? (Early Findings)

The Learning Lab – an initiative of The MasterCard Foundation, jointly implemented by GDI and Dalberg –  is researching the Business case for digitally-enabled smallholder finance, specifically: what role do digital tools play in successful business models for lending to smallholders?  This blog highlights a few takeaways from the study to date. There is also a presentation from a Sep. 2016 workshop where Dalberg and the Lab discussed the results with MasterCard Foundation partners and selected financial and digital service providers.

The Business case for digitally-enabled smallholder finance is concerned with how digitalization can enable financial service providers (FSPs, broadly defined) to more profitably and sustainably serve small holder farmers. The goals of the research to date have been:

  • Build an initial knowledge base of the current and projected use of digital tools by FSPs serving smallholders
  • Begin to explore the impact of digitalization on the financial performance of FSPs
  • Identify key constraints to digitalization and areas of opportunity to accelerate digital integration
  • Identify requirements for building out a more robust business case for digitalization over the coming years

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[VIDEO] Devang Vussonji On Solutions to Unemployment with CNBC Africa

Devang Vussonji, Partner and Tanzania Office Director at Dalberg, joined CNBC Africa to discuss the link between education and unemployment in East Africa.

Devang explained that there is a disconnect between the skills employers look for, and the attributes schools develop. Strengthening relationships between employers and schools to develop apprenticeships and project based learning is crucial to boosting employment across the region.



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New Report: Small Merchants Offer Big Financial Inclusion Opportunities

There are more than 180 million micro and small merchants operating in developing and emerging markets globally. These merchants serve the world’s lowest income customers at a scale that is staggering. Every day, small merchants interact with more than 4.5 billion customers. While individually each merchant generates low revenues, they collectively influence the global economy significantly; the financial transactions they conduct total an estimated U.S. $6.5 trillion annually.

Since small merchants generate low transaction values and often run their businesses informally, little effort has been made by financial service providers to incorporate them into the digital economy. However, given the number of financial transactions and their vast customer network, small merchants have the potential to spark huge growth in digital financial services. If these merchants were to adopt cashless payment systems, and therefore encourage their customers to use digital payment accounts, they would provide a critical pathway toward financial inclusion for themselves and their low-income customers. The movement to digital payments would also present a substantial commercial opportunity for the financial sector; transaction fees alone could amount to an estimated U.S. $35 billion a year in additional value for financial service providers.

While the potential impact of small merchants adopting digital payments is huge, most of the current systems offer few obvious benefits to the merchants. Fewer than one in 10 small merchants in the developing world are using cashless payment systems, and those who are often find the process frustrating, time consuming and unreliable. Broadly speaking, customers and small merchants alike still prefer to use cash, and it will take a concerted effort from governments, regulators, financial services and businesses to change this reality.

A new report, Small Merchants, Big Opportunity: The Forgotten Path to Financial Inclusion – commissioned by Visa and authored by Dalberg and the Global Development Incubator – explores how financial service providers can engage micro and small merchants to unlock the social and economic potential of digital payments. Drawing on conversations with more than 300 merchants and 75 key financial sector stakeholders, the report concludes that digital payment systems must be improved to meet the specific needs of small merchants. These improvements include simpler and less expensive card terminals, effective support and customer services, increased merchant protections around chargebacks, faster processing times, and reduced costs. Creating cashless systems that suit small merchants is crucial for both the merchants and financial service providers, as cashless systems are often the first step toward increased uptake of more sophisticated financial products such as loans and insurance.

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How Nigerian Businesses Can Help Save Newborn Babies

By Dalberg’s Erin Barringer, Sylvia Warren, and Ian Warthin; Olufunke Fasawe of Clinton Health Access Initiative,; USAID’s David Milestone, Joseph Monehin, and Nikki Tyler 

Each year, over 250,000 newborns die in Nigeria within their first 28 days of life – and most of these deaths are preventable. The Federal Ministry of Health has been paying attention and has developed strategies and implementation plans to help newborns survive and thrive. To be successful, these plans require participation at all levels – the Federal Ministry of Health, State Ministries of Health, professional associations, non-profits, and families and mothers themselves. But saving newborn lives hinges on the involvement of one group in particular: the Nigerian private health sector.

Why the private sector? First of all, the private sector is where the patients are. Many Nigerians access healthcare services and products via the private sector by visiting proprietary and patent medicine vendors (PPMVs), chemists, and private health facilities. It is also where the bulk of the spending is: 75% of the money spent on healthcare in Nigeria is in the private sector. Furthermore, the Nigerian pharmaceutical market is one of the top ten largest in Africa – with a number of local manufacturers producing health commodities.

It is also in the private health sector’s best interest to help reduce neonatal mortality. Nigeria is projected to be the third largest country in the world by 2050, and each healthy newborn expands the private sector’s future customer base. What’s more, mothers with high-risk babies can be some of the hardest consumers for the private sector to reach for reasons such as location and income levels. By joining public sector efforts targeting these mothers and babies, the private sector can expand its consumer base – particularly in rural areas with high birth rates – and serve customers at a lower cost. What’s more, every dollar spent on reproductive, maternal, newborn and child health has a potential return of US$20 in economy-wide benefits. Such an increase in economy-wide benefits can result in more disposable income and additional investments in business – all of which can benefit the private sector.

Read the full article on Ventures Africa.

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Why aren’t we designing cities that work for women, not just men?

In The Guardian, Andrew Fleming and Anja Tranovich explain why government officials, development organizations, and private sector partners must prioritize gender-inclusive infrastructure planning across the world’s cities.

In the 1990s, a simple survey in Vienna led urban planners to rethink their whole approach to infrastructure development. The questionnaire asked residents why and how they used public transportation, and the results were striking because men and women had very different responses. Men’s typical route was short and simple: often to and from work. Women’s responses, however, were complex and varied, usually including multiple trips a day on the metro as well as on foot: dropping off children at school, going to the doctor, getting groceries, visiting an older family member, back to school for pick up.

This prompted a moment of realisation for Vienna’s city planners: infrastructure has a gendered aspect to it; women and men have different needs and uses for public structures and systems. As a result, the planners adapted transportation projects to women’s needs, adding street lights so women were safer walking at night and widening sidewalks to make it easier to move around with walkers, strollers or wheelchairs.

Read the full article on The Guardian  

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Las Mujeres y la Web

Cerrando la brecha de género de internet para crear oportunidades nuevas
Destacados del reporte de Dalberg

El Internet ha transformado las vidas de miles de millones de personas, desde activistas en Egipto hasta campesinos en Colombia. Sin embargo, a pesar del reconocimiento generalizado de los beneficios del internet, y grandes inversiones – de Facebook y Google entre muchos otros – para expandir el alcance a las áreas sin cobertura, las mujeres y niñas aún carecen de acceso, y por ende, de la información, las oportunidades y el empoderamiento que el Internet facilita.

El informe de Intel y Dalberg en el 2013, “Las Mujeres y la Web” encontró que, en el mundo en desarrollo, casi 25 por ciento menos mujeres que hombres tienen acceso a internet, y que esta brecha varia significativamente en cada región. La brecha digital alcanza un 35 por ciento en Sur de Asia y casi 45 por ciento – una diferencia sorprendente – en África Sub-sahariana. Reportes más recientes presentan una imagen aún más grave; por ejemplo, la Alianza para un Internet Asequible (A4AI, por sus siglas en inglés) encontró en una encuesta en el 2015 en nueve países en desarrollo incluyendo Colombia, “Derechos de las mujeres en línea: traduciendo acceso a empoderamiento”, una brecha de género en el uso de Internet del 50 por ciento.

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Reconstruir el Campo Colombiano Sembrando Paz

Escrito por: Maria Paula Gomez y Felipe Amaya

El siguiente post fue publicado antes de que los Colombianos votaran “No” en el plebiscito para apoyar los acuerdos de paz. Sin embargo la necesidad de una reforma agrícola efectiva, tal y cómo está descrito a continuación,  sigue siento crítica para Colombia, sin importar el estatus de los acuerdos de paz.

El acuerdo de paz que acaba con 52 años de conflicto armado en Colombia representa una oportunidad significativa para el crecimiento económico. El campo puede generar un incremento anual promedio cercano a 0,6% del PIB en los próximos 10 años, pero para lograr esto se tendrán que superar varios desafíos.

El conflicto armado en Colombia entre el Gobierno Colombiano y las Fuerzas Armadas Revolucionarias de Colombia (FARC) empezó hace 52 años y se acabó en agosto de 2016, con la firma del acuerdo de paz. El acuerdo tendrá que ser ratificado por la población colombiana con la votación de un plebiscito el 2 de Octubre. Este acuerdo está compuesto de seis puntos – (i) reforma agrícola, (ii) participación política, (iii) fin del conflicto armado, (iv) erradicación de narcotráfico, (v) reparación a victimas e (vi) implementación – enfocados en la reconstrucción del país.

El primer punto del acuerdo fue la reforma agrícola. En Colombia, el campo fue olvidado durante décadas. Los principales retos nacen de una distribución desigual de tierras agrícolas que sigue hoy en día, por ejemplo, en el 2013 menos del 1% de terratenientes eran dueños del 46,5% de tierras agrícolas, mientras que dos tercios de los campesinos eran dueños de sólo 4,2% de estas tierras. Esta brecha crea ineficiencias en el uso de la tierra, cómo la sobreexplotación de los pequeños agricultores, la subutilización de grandes terratenientes e infraestructura rural deficiente. Sin embargo, esto sólo es una mínima parte de los problemas en el campo. Los campesinos han sido uno de los grupos más afectados y segregados en la historia colombiana. Más del 83% de los hijos de campesinos no van al colegio, tan sólo un 1% llegan a la educación superior, y más de 6 millones fueron desplazados cuando se les despojaron 8 millones de hectáreas ilegalmente durante el conflicto. El resultado es un sector agrícola que produce a niveles inferiores a su potencial: tan solo el 50% de las tierra agrícola disponible son utilizadas y el 27% de la tierra que actualmente se usa para el ganado sería más productiva en cultivos.

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Pequeños Comerciantes, Grandes Oportunidades para la Inclusión Financiera

Escrito por: Tim Carlberg y Maria Paula Gomez 

Existen más de 180 millones de micro y pequeños comercios (MyPCs) en los países en desarrollo – tiendas de barrio, peluquerías, vendedores de periódico y comida. Aunque pequeños de forma individual, estos comercios tienen un impacto significativo en la economía global (+6.5 billones de dólares al año en transacciones) además de contacto diario con sus clientes, en su mayoría de escasos recursos. Por estas razones, el segmento representa un vehículo ideal para promover la inclusión financiera. Sin embargo, más del 50% de los MyPCs carecen de acceso a servicios financieros y dado que la mayoría son informales se sabe muy poco sobre ellos.

Dalberg, con el apoyo de Visa Inc., realizó un estudio global sobre las barreras y oportunidades para aumentar la aceptación de pagos digitales en MyPCs en mercados emergentes. El reporte “Pequeños Comerciantes, Grandes Oportunidades” hace un llamado a la acción paraaumentar la coordinación de esfuerzos entre el sector privado, gobiernos y la sociedad civil.

Los servicios financieros digitales permiten a los consumidores y comerciantes ahorrar y gastar dinero de forma segura y generar un historial para acceder al crédito. Para las instituciones financieras, expandir los pagos digitales al nivel del promedio global, podría generar más de 35 miles de millones de dólares al año en comisiones financieras a nivel global.

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Deals That Can Break Poverty Cycle Afflicting Smallholder Farmers

By Edel Were

It’s one of the most widespread mantras of Africa’s economic development: unlocking smallholder farmer potential will secure Africa’s food production and improve the livelihoods of millions… if only farmers had fool proof ways to increase productivity and turn their small-scale farms into large scale businesses. Tanzania is a model example of this challenge. Often hailed with the potential to be “the breadbasket of East Africa”, the country falls far short in agricultural productivity compared to its potential. In Tanzania, where over 80% of farming is carried out by smallholders, maize production yields an average of 1.4 metric tonnes (MT) per hectare. This pales in comparison to South Africa’s average yields of 4.5 metric tonnes per hectare. Considering that Tanzania has double the amount of land under maize production (5 million hectares to South Africa’s 2.5 million) the capacity for increased productivity is enormous.

Smallholder farmer productivity in Tanzania is constrained by a range of factors, including poor-quality or non-existent inputs, geographic fragmentation and limited access to finance. For many Tanzanian farmers the production and harvest cycle suffer from minimal value addition. Most farmers only access or afford low-quality or even counterfeit seeds. Fertilizers are found in insufficient volumes, incorrect combinations, or not at all. Small-scale rural farms sit at far distances from one another and from important value chain players like wholesale input suppliers and reputable buyers. Roads are sparse and unreliable, and transport is expensive. Moreover, with little to no physical assets to offer as collateral, farmers are often barred access to finance that would enable them to overcome some of these barriers. This is especially true in Tanzania with its history of communal land ownership. Together these factors mean that farmers struggle to sell produce profitably; as a result they are also less able to invest in better quality production and higher productivity.

Forward buying contracts aim to break this cycle by linking farmers with buyers in a stable, planned-out scheme. In these schemes farmers and buyers sign a contract for purchase of a predetermined commodity volume and price, to be executed at a future date. Some more complex schemes involve multiple buyers, input suppliers, and large aggregations of farmers. One coordinated by the WFP in Tanzania, the Patient Procurement Platform (PPP), even provides credit lines for farmers to purchase higher-quality inputs.

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Who Stands to Benefit From the TICAD Summit in Nairobi? Everyone, If We Can Forge the Right Partnerships

By Edwin Macharia and Naoko Koyama

Nairobi recently hosted the 6th Tokyo International Conference of Africa’s Development (TICAD) conference (27th – 28th August 2016). Everyone is curious to see what benefits emerging discussions from the conference will bring the continent and the country. TICAD was launched in 1993 by the Government of Japan, to promote Africa’s development, peace and security, through the strengthening of relations in multilateral cooperation and partnership.

Commitments during the recent summit were impressive with the Japanese government promising $30bn in public and private investment to Africa over the next 3 years focusing on three key pillars, (i) Diversification of the economy and industrialization, (ii) Strengthening health systems and (iii) Building human capacity (on-the-job training for youth, training infectious disease specialists, factory managers etc.).

Few might know this, but this was the first TICAD conference held on the African continent. All previous conferences have been held in Japan. The significance of this geographical shift should not be lost on us. This year it was clear that private sector investment played an important role as evidenced by a large number of Japanese corporates (over 100) that were in Nairobi for the summit, led by Prime Minister Abe.  TICAD, for the first time in its history had a significant series of discussions between private sector players in Japan and in Africa.

The private sector plays a significant part in Africa’s growth. This is evident from the fact that Foreign Direct Investment (FDI) inflows to the continent are almost at par and sometimes surpass Official Development Assistance (ODA) inflow. Private Sector Partnerships (PPPs) are becoming the norm in infrastructure – mostly in power, transport, telecommunications, water and sanitation. Private investment into agriculture, commerce and other industries have been steadily increasing too. Job creation, the biggest agenda for most African countries, is driven by private sector growth.

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