There is an ever increasing need to invest in agriculture due to a drastic rise in global population and changing dietary preferences of the growing middle class in emerging markets towards higher value agricultural products. Financial services for smallholder farmers are critical to achieving financial inclusion goals. Many Microfinance institutions and banks see potential growth from extending financial services to these unbanked clients, but their traditional approaches must be adapted to capitalize on opportunities in rural areas. It’s interesting to note that the growth of the Financial Technology (fintech) sector provides farmers some options which have been noted in this post.
1) Easy Loans for Farmers
Borrowing money is a common part of any business or farming operation in many nations, and Ghana is no exception. Unfortunately, the situation was less than favourable until now, as farmers couldn’t access funds needed to operate due to the lack of information available too traditional financial institutions. That’s not the case nowadays though, mostly thanks to the efforts of the fintech sector to make finance more available to everyone.
2) Direct Connections
Based on this, farmers now have better opportunities for establishing direct connections with lenders and other institutions that might be key in their operations. This change has the potential to positively impact their work and the availability of food for present and future generation. With available information, fintechs have the ability to provide credit scores for these farmers who would otherwise be unbanked to access loans from commercial banks and microfinance institutions.
3) Ongoing Payment Model
The introduction of Mobile Wallets and payments by Telecom giants has also been a game changer. Additionally, input dealers give farmers the option of not making large upfront payments for seeds, equipment and tools. Farmers now can make payments on their mobile phones. This can introduce a lot of stability in their operations compared to before. By only paying for what they’re truly using, many smallholder farmers now have the ability to organize their finances in a much more efficient manner.
4) Affordable Financial Services
Financial inclusion in the farming sector has traditionally been low in Ghana, but that’s no longer the case today, as digital technology, innovation and financial services are becoming more and more accessible to smallholder farmers. Traditional financial institutions are developing products and services for farmers at affordable rates.
5) Better Insurance
Another problem that’s been prevalent for quite a while but is now starting to get addressed, the availability of farm insurance plans for farmers. Protecting one’s crops and farm investments against the unannounced and worst is no longer such a challenge. Though much need to be done in this space, things are moving forward in the right direction, and it’s mostly happening thanks to the fintech sector.
It is with all this information and the drive to impact such smallholder farmers that the team at Nocofio is working tirelessly towards. We believe that with our product for banks, training in financial literacy and basic bookkeeping for hardworking smallholder farmers will help grow businesses, alleviate poverty and create jobs mostly in the rural areas.
“Connecting finance with farmers”