Digital Financial Services for Cocoa Farmers in Côte d’Ivoire

The World Bank
Corinne Riquet



Smallholder farmers, even those in structured value chains such as cocoa farmers in Côte d’Ivoire, are largely unable to access banks, microfinance institutions and other formal financial institutions. Providing meaningful financial services to these customers in an affordable and sustainable manner is a great challenge.

The first of many challenges in Côte d’Ivoire is to move away from payments in cash, so that farmers are linked with financial institutions. The digital channel offers a unique opportunity to transition from cash to digital payments, but the value proposition for farmers must be strong.

This is the challenge that Advans Côte d'Ivoire is committed to addressing, and results of a pilot project – implemented in the past 22 months by Advans with the support of CGAP – are promising.

After identifying the best branchless banking solution for cocoa farmers through a feasibility study, Advans decided to offer cocoa farmers a remunerated digital savings account in partnership with MTN, a mobile network operator (MNO), and using the USSD channel accesible on all phones and more usable for illiterate farmers.

Transactions between the Advans savings account and e-wallet are free. Advans also chose to only partially digitize payments from the cocoa cooperatives: Farmers have to decide how much money they want to receive in their personal Advans’ savings accounts, and the remaining payment is made in cash.

Today, more than 7,000 cocoa farmers from 58 cooperatives have subscribed to the service and now have a savings account in a formal financial institution. Among those, 2,700 have been active during the small cocoa harvest in April and May 2016.

“With this Advans Account, my money is better kept, I don’t spend money impulsively because I don’t have all the cash on me,” said N’Goran Koffi Lucien, one of these cocoa farmers, as he explained the benefit of having a savings account and how the digital channel works. “I manage better.”

We can drawn several interesting lessons from this pilot project:

1. The use of a USSD channel is currently the best option for the adoption by smallholder farmers of a digital channel. USSD works with any mobile phone, only a limited number of steps are needed to make a transaction and numeric menus limit the need for literacy among users.
   
2. An adapted pricing is key in a context where farmers need to be convinced by the additional benefit of cashless solutions, and where trust and awareness need to be built with these farmers. A shared vision between Advans and its mobile money partner – MTN – was required, as well as the flexibility of MTN to adapt the pricing and business model to the specific target clientele. MTN also adapted mobile money account deactivation rules, allowing farmers – whose work is seasonal – a longer period of inactivity.
   
3. A gradual implementation of a cashless solution is essential because the ecosystem of mobile money payments is still under construction. It is not currently possible to pay goods electronically in rural areas, and the agent network is not dense enough and liquidity remains a challenge to support withdrawals from farmers in the short period of time when they receive their cocoa payments.
   
4. Effective and strong partnerships take time but are very important. Advans benefited from MNO, trader, and cooperative partners who acted as advocates for the project, adapting business models to promote acceptance by cocoa farmers. Support from cooperatives and cocoa traders in the registration and training of farmers has been essential to reaching objectives. These relationships and agreements take time to build and effectively structure.
   
5. Financial institutions need to structure their staffing to support the project in the long term. A dedicated and well-trained team is essential for successfully conducting such a project in the field, including communicating and training farmers, cooperatives’ staff, as well as cocoa traders’ staff. A back office team also needs to be dedicated to the project, to support the accounts creation process in a context where Know-Your-Customer procedures are done remotely.
   
6. A strong capacity to innovate along the way, especially regarding processes, is essential. Project partners must be willing to quickly adapt imagined processes to the field realities.
   
7. Ensuring farmers are at ease using a mobile channel is still a long journey. A lot of training is required to empower farmers for the use of a mobile channel. The ability of illiterate farmers to navigate a USSD menu needs to be closely monitored, and the relevance of introducing adapted technology like interactive voice response must be assessed.
   
8. Providing only savings accounts and payments services will not be sufficient to retain farmers. Farmers’ needs for financial services go beyond savings products. They express the wish to access other services that financial institutions should consider offering. This will also be key for financial institutions working to secure this customer segment.

The opening of 7,000 accounts for cocoa farmers is the first step in a long journey, but represents a key achievement. For Advans, the challenge is now to scale and provide these farmers with a positive experience and additional services to meet their financial needs – and in a sustainable way for the institution.

Advans can serve as an example for stakeholders involved in other agricultural value chains in Côte d'Ivoire and elsewhere where payments are mostly made in cash.