Financial inclusion fit to size: Customizing digital credit for smallholder farmers in Tanzania

For the fourteenth briefing note in a series from the Initiative for Smallholder FinanceDalberg’s Design Impact Group (DIG) explores the causes of low uptake in digital credit for smallholders to better understand how we can develop concrete product solutions to jump-start adoption of digital credit products by them.

[Download the full briefing here] 

Digital credit products represent an important financial inclusion opportunity for smallholder farmers in Tanzania, where close to 80% of the workforce is engaged in farming. Uptake of these products by smallholder farmers, however, remains limited.

To address this challenge, Dalberg’s Design Impact Group used a human-centered design (HCD) approach across three regions of Tanzania to produce behavioral insights around smallholder farmers’ interaction with, and demand for, digital credit products.

Based on insights collected during their research, DIG designed and prototyped a new digital credit product for smallholder farmers and evaluated their response to it. This idealized digital credit product builds on existing products available in the Tanzanian market, but has five new components, each with multiple differentiated features, that meet the unique credit needs and behaviors of smallholders. These new components include:

  • Design enhancements to the core product to make loan sizes and repayment terms more relevant and manageable for smallholder farmers
  • Supporting features to improve customer engagement with the product
  • Ideas to increase the effectiveness of marketing, customer training, agent support, and other functions that drive product adoption and usage

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James Mwangi on the Development Plan for the 21st Century – Podcast

James Mwangi, Executive Director of the Dalberg Group, joined the ‘Maintaining the Momentum for the SDGs’ event, convened by The Guardian around the UN’s General Assembly in New York.

James joined the first panel discussion on ‘How to Implement 17 Goals and 169 Targets’, and detailed the increasing need for tri-sectoral athletes: people who feel equally comfortable across civil society, government, and business.

A podcast summarising the key takeaways of the event is now available.


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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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