kenya ecosystem assessment - mercy corps' agrifin · 2019-05-03 · conduct an ecosystem...

AgriFin Accelerate

Kenya Ecosystem Assessment

July 2015

2

What is current state of the ecosystem?

AgriFin Accelerate aims to take an ecosystem approach to develop mobile-enabled services offering farmers affordable access to financial and non-financial services on digital platforms

• In order to understand the current agricultural, digital, and solutions landscape, Mercy Corps engaged Dalberg to conduct an ecosystem assessment to enable identification of opportunities for AgriFin Accelerate

• This ecosystem assessment will be updated periodically and is conducted across three pillars: (i) the enabling environment, (ii) the smallholder farmers, and (iii) digital solutions currently targeting farmers

Our assessment showed that currently:

• Enabling environment: Kenya’s tech ecosystem and digital financial services landscape has significantly shifted in the last seven years given significant advances in infrastructure that support data-intensive digital services. The tech community is vibrant and growing, with a diverse set of stakeholders supporting startups with funding, technical assistance, and business development services. However funding remains challenge, especially at the seed / conceptual stages. The regulatory environment is supportive to development of digital-based services, however it is still nascent and dynamic as regulators are constantly adapting to address emerging market conduct and ecosystem issues

• Smallholder farmers: uptake of financial products is minimal among SHFs – most farmers use savings and loans products, very little use of insurance products. However, majority of farmers are digitally literate / own mobile phones. As such there is potential to further develop and increase access to financial services on a digital platform. Farming practices, on the other hand, are still very poor and extension services being provided are very targeted and are yet to reach significant scale. Across most value chains, there is a real lack of aggregation of SHFs which constrains market access and commercialization

• Solutions: the solutions landscape is quite robust with a broad range of digital solutions covering both financial and non-financial services. These are provided by players such as banks, MFIs, tech start-ups, NGOs, and MNOs. However, few agri-specific solutions have reached scale

3

What major changes have there been in the last 3 years?

Enabling environment:

• Kenya’s digital infrastructure has developed rapidly over the past three years and has seen the introduction of 4G services as well as a national fiber optic network

• Smartphone penetration has increased significantly, though penetration among SHFs is quite low

• The cost of mobile phones and mobile transactions has decreased substantially

• Mobile money agents are now non-exclusive and NPS mandates interoperability amongst payment systems although this is not yet fully effective

• Internet banking has been introduced, though most users are middle and upper class customers

• Safaricom / M-Pesa is still the dominant player, but the recent approval of Equitel is expected to create a more competitive environment, potentially lowering tariffs

Smallholder farmers:

• The number of formal aggregators has increased substantially, though disproportionately higher in certain value chains (i.e., dairy, coffee, and export products)

• Although the number of financial and non-financial digital interventions focused on SHFs has increased significantly, adoption rates have been unimpressively low

• Government devolution happened in 2010, pushing the delivery of most government services to the county level. As a consequence, most government farmer-support programs pivoted away from pure extension services to projects focused on market linkages and high-value crops

Solutions:

• The number of investments into tech / mobile startups has grown exponentially in the last three years; much of this growth is attributed to the significant advances in infrastructure (discussed above)

• Banks have begun aggressively investing in agent networks as the preferred channel to reach the unbanked population

4

What are key constraints to ongoing evolution of the ecosystem? What changes would we hope to see in 2-3 years?

• Limited interoperability between the MNOs

• Limited smart phone, 3G, and 4G penetration

• Limited risky capital available from angel investors or venture capital firms

• Donors and NGOs are focused on only a few value chains (dairy, coffee, tea)

1. More capital invested at the seed and angel stage, as well as the emergence of active Kenyan angel investors

2. Safaricom and Airtel release APIs that would allow an ecosystem of payment platforms to be created

3. Donor attention expands to unstructured VCs

Enabling Environment

Constraints Ideal changes in 2-3 years

• Very few SHFs are using formal institutions to access financial products

• SHFs lack advanced financial literacy

• Easy market access is limited to a few value chains given most value chain are unstructured and operate in informal markets. Additionally, there is limited SHF aggregation

• Access to high value markets is limited for SHFs

• Poor crop and animal husbandry skills

1. An increase in financial product offerings targeting / tailored to SHFs

2. An increase in the percentage of SHFs who understand advanced financial concepts (e.g., mortgages, collateral)

3. Creation formal aggregators and input providers operating at national scale

4. More sophisticated approached to farming to increase SHF productivity

• Few commercial start-ups are able to reach scale

• Start-ups rely on revenue generated from low tech end-users (e.g., farmers), rather than alternative actors (e.g., input providers paying for marketing)

• Limited partnerships between VAS providers and MNOs

• Limited understanding of the Kenyan SHF to inform product design

1. 3-4 ag-fin or ag-tech start-ups achieve >100,000 farmer users

2. More solutions that are commercially viable and affordable to farmers are introduced to the market

3. More partnerships with MNOs to facilitate monetization and scaling of ventures

4. Better agric TA offered to FSPs and VAS providers to better inform product design tailored to SHFs

Smallholder Famers

Solutions

5

What should other market actors be thinking about?

1. Are there high-risk high-reward value chains that donors can invest in to accelerate progress that helps the poorest farmers?

2. How can donors better fund start-ups to replace the missing angel and seed capital?

3. Given limited 3G/4G and smart phone penetration among SHFs, what program structures can donors use that allow SHFs to access the benefits of digital-based mobile interventions?

Donors

4. Which value chains are ripe for commercial investment? E.g., poultry – the indigenous chicken market could potentially be a high value VC but no private sector players have invested in it; potatoes; currently only 9% of potatoes is processed – potentially a market for food processing such as crisps

5. Is there a better way to quantify the trade-off between investments in farmer productivity and increases in profitability?

Investors

8. How can government encourage Safaricom to lower payment fees on M-Pesa and be more transparent about APIs to promote a more robust digital payment ecosystem?

9. How can government encourage more interoperability between the MNOs?

10. How can government parastatals replace the lack of activity among agriculture commercial actors in certain value chains?

Government Bodies

6. Most SHFs are in unstructured value chains yet they contribute to ~80% of total production in the country – how can buyers access this informal markets? For example, can more buyers adopt New KCC’s approach of introducing real time payments to tap into the informal milk market?

7. Given Kenya is dependent on rain-fed agriculture, can buyers invest in storage facilities in order to stabilize availability of produce and consequently, stabilize prices?

Buyers

6

We adopt an ecosystem view of the agricultural / digital landscape to establish a view of the market and where AFA fits in

ECOSYSTEM FRAMEWORK: A DIGITALLY ENABLED AGRICULTURAL SECTOR

Ministry of Agriculture

ICT Authorities

Parastatals KALRO

[Supply]

[Finance]

[Supply]

[Support]

[Organize]

[Buy from]

[Supply]

NATIONAL LEVEL

LOCAL LEVEL

Agro-dealers

MFIs and SACCOs

SMALLHOLDER FARMERS

Buyers

Processors

Extension programs

[Capitalize]

[Procure]

[Buy from]

[Store]

[Trade]

[Regulate] [Research]

[Represent]

[Support]

GovernmentDigital infrastructure

What changes?

In a “digitally-enabled system” SHFs become connected and can gain access to a range of new services delivered directly to support their needs; New service providers use new channel infrastructure to design and deliver new services

[Supply]

[Distribute]

E-tracing

E-govt

Warehouses / commodity exchanges

Exporters

Commercial banks

Farmer organizations

Farmer unions

Food companies

Input manufacturers

Importers

TA providersDonors and investors

Accelerators and incubators

MNOs

Mobile phones Mobile phones

MNOs

Tablets

Digital service providers Digital service providers

POS

SOURCE: Dalberg analysis

7

The ecosystem assessment framework will be applied in three key ways for the AgriFin Accelerate program


Focusing AFA on the highest potential areas for impact will require choices that need to take into account the

right factors

Positioning AFA relative to others will be a critical part of developing complementary and supportive ecosystem-building partnerships

Defining what a mature, well functioning digital services ecosystem looks like will be key to understanding

where AFA will contribute

1. Contextualizing impact 2. Prioritizing for impact 3. Establishing positioning

• The framework can be used to define elements of a mature ecosystem

• Ecosystem reviews can then be done against these elements to understand current state and changes over time

• AFA can also clearly demarcate the elements that it directly and indirectly affects and those not affected at all

• Based on the ecosystem assessment gaps can be established where additional input or work is required

• This can be supplemented by a mapping of the activities of other players helping to develop elements of the ecosystem in order to assess where supportive partnerships can be established

• The framework can be used to contextualize the different dimensions around which AFA can choose to focus (e.g. crops, providers, product types)

• Once analysis on these potential areas of focus has been conducted the framework can be used to consider how to prioritize opportunities around these dimensionsH

ow

it c

an b

e u

sed

APPLICATIONS:5

An evolving system: “Applying the digital layer”




ICT Authorities

Parastatals KALRO

[Supply]

[Finance]

[Supply]

[Support]

[Organize]

[Buy from]

[Supply]

NATIONAL LEVEL

LOCAL LEVEL

Agro-dealers

MFIs and SACCOs

SMALLHOLDER FARMERS

Traders

Processors

Extension programs

[Capitalize]

[Procure]

[Buy from]

[Store]

[Trade]


[Represent]

[Support]


What changes?

In a “digitally-enabled system” SHFs become connected and can gain access to a range of new services delivered directly to support their needs; New service providers use new channel infrastructure to design and deliver new services

[Supply]

[Distribute]

E-tracing

E-govt


Exporters

Commercial banks


Farmer unions

Food companies

Input manufacturers

Importers



MNOs


MNOs

Tablets


POS

8



ICT Authorities

Parastatals KALRO

[Supply]

[Finance]

[Supply]

[Support]

[Organize]

[Buy from]

[Supply]

NATIONAL LEVEL

LOCAL LEVEL

Agro-dealers

MFIs and SACCOs

SMALLHOLDER FARMERS

Traders

Processors

Extension programs

[Capitalize]

[Procure]

[Buy from]

[Store]

[Trade]


[Represent]

[Support]


[Supply]

[Distribute]

E-tracing

E-govt


Exporters

Commercial banks


Farmer unions

Food companies

Input manufacturers

Importers



MNOs


MNOs

Tablets


POS

INFRASTRUCTURE:Robust, reliable and open network

infrastructure exists to support services

ENGAGEMENT OF AGRI- ACTORS:The full range of agricultural actors are

integrating and using digital technologies

FARMER AGGREGATION:SHFs are organized and accessible

via aggregator bodies and channels

POLICY & INSTITUTIONS:Supportive enabling policy frameworks and structures exist and are enforced

INVESTMENT:Sufficient, coordinated and targeted capital is available

DIGITAL LITERACY:SHFs are aware of, and capable of

using, digital financial solutions

SOLUTION SCOPE:A broad and constantly evolving set of demand-driven services for SHFs

TECHNICAL SUPPORT:Solution providers have access to services to evolve and scale

SOLUTION SCALE:A critical mass of solutions are

scaling and commercially viable

FINANCIAL ACCESS:SHFs are aware of, can understand benefits, can access A2F products

DELIVERY CHANNELS:Delivery channels (e.g. agents) are well built out to facilitate last-mile coverage

MOBILE AND DIGITAL ACCESS:SHFs have access to mobile

technology and services

What changes in a mature ecosystem to support provision of digital services for SHFs?

Types of elements of a mature ecosystem:

FOUNDATIONS SOLUTIONSFARMER


10

Below are the key metrics we use to assess the Kenya agriculture ecosystem across 3 pillars: enabling environment, smallholder farmers, and solutions

Enabling Environment Solutions

• Digital Infrastructure– Network coverage by region– Cost of coverage (price of SMS, data

bundles, mobile money transactions• Investment

– Volume of commercial, donor, and government funds raised to support digital solutions providers

– Number of donors and investors with focus on agriculture and ICT space (by growth stage where possible)

– Type of partnerships• Policy and Institutions

– Is there an enabling regulatory environment for developing and launching DFS and DIS solutions (type and quality of regulations supporting DFS and DIS)

– What policies are needed?– How important is financial inclusion on

the national agenda?

• Solution scope– What financial and non-financial

solutions are currently offered in market?

• Solution scale and business model– Number of solutions being provided at

scale – Cost / pricing information of these

solutions– What is the payment models of the

solutions i.e., who pays for the service?• Delivery Channels

– Platform providers: number of bank branches ATMs, and POS terminals

– Market actors: number of agro-dealers, input providers, buyers, and distributers

• Technical Support– What technical advisory services are

currently provided?– Who is providing these services?– What is the reach and scope?

Smallholder Farmers

• Access to Finance– # of SHFs using financial products such

as savings, loans, and insurance• Financial Literacy

– What financial literacy programs currently exist?

• Digital Access– Percentage/# of SHFs who own a

mobile phone– Percentage/# of SHFs who use mobile

money, mobile wallet, mobile savings & loans products

• Digital Literacy– Levels of digital literacy– What digital literacy programs

currently exist?• Farmer Training

– # / type of farmer training programs• Farmer Aggregation

– Percentage/# of SHFs that are members of some aggregator body

1

– Number of SHFs registered with non traditional financial providers

1

• Access to markets1

– Access to market & pricing information– Proximity to collection / storage points

1Some data points that are specific to SHFs and market infrastructure will have to be collected in the baseline study conducted by AgriFin Accelerate

11

Digital infrastructureexpected outcome: robust, reliable and open network infrastructure exists to support services

• Kenya’s digital infrastructure in quite robust and has developed rapidly over the last 10 years both in capacity (more people connected to mobile and internet) and capability (3G and 4G access)

• These infrastructure improvements will have implications on the tech startups in Kenya by: (i) reducing set-up costs, and (ii) increasing access to development resources (e.g., cloud-based hosting services, smartphone solution developer toolkits etc.), and (iii) facilitate uptake of products due the increase in number of people who are digital connected

Key Findings Qualitative information Sources

Ph

ysic

al

infr

astr

uct

ure

• 5,565 base station sites in Kenya, 4,988 on-grid, 577 off-grid and relying on diesel generators (2012)

• Current: Government-funded National Optic Fiber Backbone Infrastructure (NOFBI) project expanded in-country connectivity / capacity.

• Future plans: Airtel invested Ksh. 19Bn in 2015 to upgrade network infrastructure; Plans for a technology hub, Konza City, are underway

Kenya Ministry of Information and Technology- The National Broadband Strategy for Kenya, 2013GSMA/IFC/Green Power for Mobile - Powering Telecoms: East Africa Market Analysis

Net

wo

rk

cove

rage

• 38% geographic cellular network coverage, reaching 95% of Kenya’s population

• 4 MNOs in Kenya with Safaricom being the market leader (Safaricom – 64%, Airtel – 16%, Orange –11%, Yu – 9%)

• 91% of the population is covered via 2G, 61% via 3G

• Safaricom recently rolled out 4G network in Dec 2014 targeting Nairobi and Mombasa. With higher capacity networks, mobile operators will be better positioned to support data intensive digital services

GSMA – Kenya Feasibility Study, 2012;Trading Economics – World Bank Indicators;GSMA – Digital Entrepreneurship in Kenya 2014

Co

st o

f in

fras

tru

ctu

re

• SMS costs: Safaricom charges Ksh. 1 to send an SMS to all networks; both Airtel and Orange charge Ksh. 2

• Mobile payments costs: M-PESA charges ~1% of the transaction value, charges are capped at Ksh. 25. M-PESA and Orange Money charge ~5% higher in transactions with unregistered users; Airtel Money users send to other networks at no charge

• The high cost of mobile money transfer can be quite inhibitive, especially for those in rural areas given they tend to send very small amounts

Safaricom, Orange, and Airtel websites

SUMMARY

12

Investment landscapeexpected outcome: sufficient, coordinated and targeted capital is available

Source: Dalberg Analysis; GSMA - Digital Entrepreneurship Report, 2014

• A significant number of start-ups are self-funded, resulting in slow progress as they struggle to find resources to support their ventures

• Few investors are working at the early stages making funding at the prototype and seed stages inaccessible• Biggest financial costs that face tech start-ups is the high cost of operator resources, especially given currently only ~11% of

start-ups have partnerships with mobile network operators

SUMMARY

Current Funding Landscape Key Findings

Fun

din

g So

urc

es

• Majority of tech start-ups are self-funded• <10% of entrepreneurs have received funding from VC or

angels• ~40% of mobile start-ups receive less than $1,200 of funding

and ~93% have received less than $120,000• >60% of entrepreneurs are interested in equity financing but

have not approached an investor• 70% of start-ups earn ≤$2,900 hence cannot work fulltime

or hire proper marketing user designer resources

Inve

sto

r La

nd

scap

e

• Majority of the funding is at the seed and growth / expansion stage (18 out of 22 investors)

• Only 7% of venture capital is targeting ideation and prototype stage opportunities

• Funding from investors (VC, angel) ranges from: Prototype: $10,000 - $25,000 Seed: $25,000 -$250,000 Growth / expansion: $250,000 to >$2.5M

• Funders tend to invest in more than one start-up e.g., 88 mph at the prototype stage funds 17 startups, Africa Media Ventures Fund at the seed and prototype stage funds 5

Competition

2%3%

Bank / SACCO

Venture capital

Grant

1%

Self-funded

7%

20%

60%

Other AngelFamily / friends

2%4%

7

11

112

Seed Seed & Growth / Expansion

Prototype Prototype & Seed

Growth / Expansion

# of investors by entrepreneurial stageTOTAL = 22

13

Policy and Institutionsexpected outcome: supporting enabling policy frameworks and structures exist and are enforced

Credit Reference Bureaus: Creditinfo Credit Reference Bureau Limited, Credit Reference Bureau Africa Limited, Metropol Credit Reference Bureau Limited

• Given mobile money is still in its infancy stage, the regulatory environment is nascent and dynamic, with new regulations being introduced to guide market conduct and protect the consumer

• NPS has codified regulatory practices developed since the inception of mobile money in 2007 and is currently addressing emerging market conduct and ecosystem issues, such as competition, interoperability, consumer protection, and governance

Key Findings Sources

Pla

tfo

rm m

anag

emen

t • Interoperability: Kenya’s National Payment System Regulations 2014 (NPS) require the utilization of open systems capable of becoming interoperable with other payment systems – this is not yet fully effective

• Agent exclusivity: as of 2014, the Kenya Competition Authority ended exclusivity clauses in mobile money agents’ contracts, which has widened distribution networks

• API: Safaricom was to open its API to the public in April 2015 to help developers build platforms that can use M-Pesa for quick payments – this is yet to be actualized

• Network services: the government has issued MVNO licenses to Equitel, Tangaza Pesa, and Zioncell Kenya. This introduces more players in the DFS space and increases competition in the market

Kenya Ministry of Information and Technology- The National Broadband Strategy for Kenya, 2013GSMA/IFC/Green Power for Mobile - Powering Telecoms: East Africa Market Analysis

Cu

sto

mer

m

anag

emen

t • KYC: Kenya has a national identification system which reduces the KYC requirements to open accounts and transact using mobile money

• Customer protection: NPS requires service providers to have disclosure mechanisms, open channels for consumer redress, clear terms & conditions for the service, and maintain customer privacy & confidentiality

• Risk assessment: Currently, there are only 3 credit reference bureaus licensed presently but provide mobile money providers e.g. M-Shwari with real-time KYC

GSMA – Kenya Feasibility Study, 2012;Trading Economics – World Bank Indicators;GSMA – Digital Entrepreneurship in Kenya 2014

Go

vern

men

t co

mm

itm

ent • In Kenya Vision 2030, the government is committed to increase use of ICT in the financial sector.

Additionally, the National ICT Master Plan, 2014-2017 and the Critical Infrastructure Bill are geared towards fostering a globally competitive digital economy

• The Fair Competition and Equality of Treatment 2015 is expected to address market unevenness - Safaricom controls all segments of the market — voice: 84%, SMS: 96%, data: 70%, and mobile money: 67%

Safaricom, Orange, and Airtel websites

SUMMARY

14





















Smallholder Farmers











1


1




15

Access to financeexpected outcome: SHFs access and use of financial products

• In general, there is minimal uptake of formal financial products amongst farmers, most farmers uses informal channels• Transactions and savings are the most commonly accessed services by farmers; whereas, uptake of loans from formal

financial institutions and agriculture insurance is especially very low• Farmers lack awareness of existing agricultural insurance products, or simply do not understand terms and conditions of the

product hence uptake is also marginal


Use

of

fin

anci

al

pro

du

cts

• 32% of farmers have an account at a formal financial institution• 35% of farmers have savings – about half save in financial

institutions, the rest use informal savings platforms such as ROSCAS, ASCAS etc.

• 9% of farmers use loan products from formal financial institutions• 4% of farmers have crop, rainfall, or livestock insurance

• Compared to the general population, farmers are less likely to have a bank account due to perceived high costs of bank accounts and distance to banking facilities

FINDEX 2014

Fin

anci

al s

erv

ice

pro

vid

ers

(FSP

s) • FSPs: 59% of farmers use mobile finance service providers (MFSP), bank: 25%, informal groups: 31%, SACCO: 10%, MFI: 4%

• Transactions: 62% of consumers use mobile money vs. ATM: 20%, current accounts: 17%, or cheques: 2%

• Savings: 32% of the general population saves in a secret place, ROSCA: 21%, friend groups: 12%, SACCO: 11%, bank: 10%

• Credit: 6% of the general population borrows from the shopkeeper, family/friend: 5%, SACCO: 4%, chama: 4%, bank loans: 4%

• Insurance: government NHIF (16%) and NSSF (10%) are the prevalent insurance products in the market, followed by car insurance: 3%, retirement annuity: 3%, and medical: 2%

• MFSPs are the most used providersby farmers

• Mobile platforms are commonplace for transactions but not other financial services

• Borrowing is done via informal channels – formal institutions are perceived to have strict requirement e.g., proof of collateral

• Farmers are generally unaware of insurance products or credit interest rates

FinAccess 2013

SUMMARY

16

Financial literacyexpected outcome: SHFs are aware of, and can understand benefits of, financial products

AMFI – Association of Microfinance Institutions, OI – Opportunity International, PPPs: public private partnerships

SOURCES: Equity and MasterCard Foundation websites; FSDK - FINANCIAL EDUCATION IN KENYA AUGUST 2008


• Awareness of financial institutions: Most people are aware of NSSF:

80% and NHIF: 78% Very few (20%) have heard of a

credit bureau, NSE: 31%, pyramid schemes: 32%

• Awareness of financial terms: Most people are familiar with

budget: 86%, insurance: 81%, cheque: 81%

They are least familiar with collateral: 20%, mortgage: 28%, and inflation: 34%

• More men (78%) than women (46%) make their own financial decisions

• >40% of people do not know where to get the highest or lowest interest rates

• Financial numeracy level are high in urban areas vs. rural (46% vs. 30%)

Delivery Channels for Financial Literacy Programs:Client training:• Private sector: KWFT, Equity, Faulu, Juhudi Kilimo, Rafiki, PostBank, Musoni,

OI*• Public sector: CBK efforts did not reach scale due to cost constraints• PPPs: Equity Group Foundation and The MasterCard Foundation (2011 –

2014), reaching 620,000 low income/unbanked women and young peopleGeneral public outreach: • Road shows e.g., VISA, MPESA, Equity, Faulu• Exhibits and campaigns e.g., M-PESA, PostBank, Banks, MFIs, AMFI• Media e.g., TV shows (Mediae Co, Faida Investment Bank), radio broadcasts

(Jamii Bora Trust/EDC), Newspapers (The Daily Nation, The Standard)

FinAccess 2013;FSD Kenya, - Financial Education in Kenya, scoping exercise report, August 2008

Training Models / Platforms:• Direct farmer training through during applications for financial services e.g.,

Faulu, Juhudi Kilimo• Indirect farmer interaction through training of lead farmers who then work

with farmers e.g., Equity• Trainings are either done traditionally (i.e., verbally or using charts) or

digitally using tablets (Equity, Faulu), phones / SMS-based (Juhudi Kilimo)

Dalberg Analysis, 2015Organization websites

• Most smallholder farmers are not financially literate and are likely to make poor financial decisions – this is one of the factors to that limits access to credit facilities for SHFs

• Current financial literacy programs are primarily run by financial institutions and are quite nascent. They are yet to reach scale, both in terms of number of customers reached and depth of learnings i.e., mostly around savings and loan products

• Service providers are beginning to use digital platforms to facilitate training sessions: these are currently limited to use of tablets and mobile phones

SUMMARY

17

Digital accessexpected outcome: SHFs are aware and use digital solutions

1Using rural farmers as proxy for smallholder farmers; ITU-D – The Telecommunication Development Sector

• Mobile phone and mobile money penetration is quite high with over 80% of the population using mobile phones and / or mobile money

• Aside from voice and text, majority use their phones for mobile transactions and banking. Mobile internet penetration is high except in the rural areas


Mo

bile

/ D

igit

al

Acc

ess

• 71% of Kenyans own mobile phones• Smartphone penetration pegged at 67% compared to 18%

for the whole of Africa (2014)• About 60% of Kenyans living on less than $2.50 a day have

access to mobile phones, vs. national average of 80.5%• 52% (23.2M / 45 M) of the population uses the internet

• Mobile ownership (and smartphone penetration) is expected to increase with the cost of phones decreasing steadily

TechRepublic – March 20, 2014; OnDevice Research, 2014; iHubResearch: The insider’s guide to mobile Web marketing in Kenya, 2012; IT News Africa, April 16, 2014

Mo

bile

/ D

igit

al U

se

• Almost 80% of Kenyans with mobile phones use them for mobile payment and banking

• ~55% of SHFs own mobile money accounts1, - vs. the national average of 80%

• ~85% of mobile money account users use it to deposit money, 98% to withdraw money. Only ~10% use MM accounts to pay bills

• SHFs claim poor infrastructure i.e., break down of mobile network –(53%) or agents’ systems (55%) are the biggest challenges facing MM users

• 1 in 4 BoP mobile phone owners use internet on their phones

• Mobile money services available in Kenya: M-PESA, Airtel Money (mobile wallets), Lipa Na M-Pesa (C2B,B2B), Lipa Karo (C2B), Lipa Kodi (C2B), M-SHWARI (savings and loans)

• There is no difference in mobile phone activities between men and women other than mobile internet usage, which is dominated by educated male youth

• BoP tend to use pay-as-you-go internet vs. data bundles

TechRepublic – March 20, 2014;Communications Authority of Kenya;Financial Inclusion Insights;OnDevice Research, 2014;iHubResearch and RSA: Mobile Phone Usage at the Kenyan Base of the Pyramid, 2012

SUMMARY

18

Digital literacyexpected outcome: SHFs are aware of, and capable of using, digital solutions

• Digital literacy is relatively high in Kenya given the penetration of phones and mobile money• However, there are a number of digital literacy programs, though nascent, run in Kenya in order to bridge the gender digital

gap that exists especially in rural areas


Dig

ital

Lit

erac

y Le

vels

• Digital literacy levels are high with over 50% of mobile users using their phones to send and receive money, and / or refill credit

• Kenya has a small gender gap of 7%1 - women are frequent users of M-Pesa, similar to men although more likely to receive than send money

• Rural areas have a wider gender digital gap with 43% of women reporting trouble understanding their mobiles vs. 28% of men

• Use of phones is still basic amongst women: only 43% use mobile internet vs. 61% of men

GSMA 2015: Bridging the gender gap: mobile access and usage in low and middle-income countries;Daily Nation March 9, 2015

Dig

ital

Lit

erac

y P

rogr

ams • Public private partnerships: Intel’s “She Will Connect” digital literacy program (2014 – 2016), partnering

with USAID, Rockefeller, Safari Connect, and ICT Authority. The Women and the Web Alliance, a partnerships between USAID, NetHope, World Pulse, World Vision, UN Women, and Women in Technology works in Kenya and Nigeria

• Private sector initiatives: ITU-D promotes digital literacy for women and girls at the BoP e.g., through Nairobits School of Digital Design

• Public / Social sector initiatives: In June 2015, the government finalized the roadmap for the National Digital Literacy program. The program will be coordinated by the Ministry of ICT through the ICT Authority

ICT Authority

SUMMARY

1Gender gap in ownership (%) =Male phone owners (% of male population) – Female phone owners (% of female population)

Male phone owners (% of male population)

19

Farmer training and extension programsexpected outcome: SHFs are well equipped with proper farming techniques to increase productivity

1 IFPRI – Demand driven extension, Journal of Extension – 2014 ASDP: Agricultural Sector Development Support Programme, KAPAP: Kenya Agricultural Productivity and Agribusiness Project, NALEP: National Agriculture and Livestock Extension Programme, KALRO: Kenya Agriculture and Livestock Research Organization, KARI: Kenya Agricultural Research Institute

• Farmer training programs currently offered in Kenya are primarily value chain specific or focused on specific service offerings such as agronomic practices (for example use of improved seeds, use of fertilizers, and better land preparation etc.)

• The level of farmer capability and training programs varies significant across value chains i.e., structured VCs like dairy and coffee have a lot of actors providing farmer training, whereas unstructured VCs like poultry and potatoes have minimal focus from extension service providers / trainers


Farm

er T

rain

ing

and

Mar

ket

Lin

kage

s The national ratio of frontline extension workers to farmers is 1:1000, however e-extension services improve the ratio to 1:12.51. As of 2011, there were 5,470 government extension workers in Kenya• Public sector led: provided at county level by government extension services. E.g.: ASDP strengthens

market linkages and pre and post harvest production capacity building. KAPAP promotes PPPs for competitive demand driven extension service delivery, and promoting production for market rather than market for production. NALEP – the govt. e-extension service. KALRO / KARI conduct research and provide training through commodity-specific institutes

• NGO led: typically value chain specific and offer training to farmers and / or farmer groups. E.g.: TechnoServe (# of farmers reached = dairy: 200,000, fruit: 37,000, poultry: 12,000, coffee: 6,000 coffee), SNV, EADD (136,000 farmers in Ph. 1, 200,000 expected in Ph. II), and One Acre Fund (135,000 farmers)

• Private sector led: mostly value chain specific (Pwani Feeds, Mukurwe-ini Dairy, New KCC, Amiran) or specific in service offering (Syngenta, Yara). Mostly work with farmer groups, agricultural input companies, and out-grower schemes

IFPRI – Agricultural extension and advisory services worldwide; Company websites

Trai

nin

g /

Mo

del

s

• Direct farmer training through demo plots, field days, field visits from extension officers e.g., TechnoServe, Syngenta, EADD, JoyWo, Pwani Feeds, Amiran

• Indirect farmer interaction through training of trainers who then work with farmers e.g., One Acre Fund, GoK

• These training are either done traditionally (i.e., verbally or using charts) or digitally using tablets (Syngenta, GoK), phones, SMS-based reminders

Dalberg Analysis, 2015Organization websites

SUMMARY

20

Farmer aggregationexpected outcome: SHFs are organized and accessible via aggregator bodies and channels

1Using rural farmers as proxy for smallholder farmers

*Actual numbers to be collected during the baseline study

• The primary channels of farmer aggregation in Kenya is through agricultural cooperatives and farmer self help groups• Most value chains however are unstructured or too small to have cooperative societies specific to the value chain; majority of

farmers are in multi-produce societies• There are a few farmer business groups that are value chain specific; these typically act as bulking/collection points for

produce, provide access to finance and markets, as well as providing extension services


Co

op

erat

ive

Soci

etie

s

• As of 2012, there were an estimated 4,988 cooperative societies and unions directly involved in agriculture, non-agricultural societies made up ~66% of all COOPs (total = 14,882 in 2012); 20% of all Kenyans are members of a COOP

• Coffee, dairy, sugarcane, and pyrethrum have the most number of value chain specific COOPs, representing about 26% of all COOPs (Coffee: 594, dairy: 343, sugarcane:191, pyrethrum; 148). Multi-produce COOPs make up 40% of COOPs

Economic Survey 2013

Farm

er B

usi

nes

s G

rou

ps* • Donor-led: USDA sponsored and run by TechnoServe, the Smallholder Poultry Agribusiness Development

(SPADE) initiative aims to sustainably improve the livelihoods of 12,000 poultry producers of indigenous chicken. EADD aggregates dairy farmers in COOPs and helps them build sustainable business hubs – worked with 136,000 farmers in Ph. 1 and targeting 200,000 expected in Ph. II

• Private sector led: TechnoServe has created producer business groups (PBGs) for banana farmers and provides micro loans to these groups. The groups are made up of 30 – 50 farmers. Syngenta, through Uwezo Project is working with rural farmers. Pwani Feeds aggregates dairy and poultry farmers

• Government initiatives e.g., JoyWo is an NGO working to empower women economically and enhance household food security – provides financial services through table banking schemes. JoyWo is currently reaching 200,000 women

Dalberg interview with Kenya dairy sector experts

SUMMARY

21





















Smallholder Farmers











1


1




22

Solution scope – financial productsexpected outcome: a broad and constantly evolving set of demand-driven services for SHFs

Notes: The product landscape analysis reviewed all agriculture specific products and general products that could be used by farmers offered by the top 10 commercial banks and the top 3 MFIs by number of customers as well as tailor made MFIs not regulated by the CBK, all products have some digital compatibility (in some cases only limited M-PESA integration). Source: Dalberg analysis based on secondary research and stakeholder interviews April – July 2015

1

1

2

2

2

3

4

4

5

15

17

21

33

Supplier management

Crop and livestock insurance

Seasonal based loan

Asset financing

Index insurance

Working capital

Non-agriculture general loan

TOTAL 110

General savings products

C2B transactions

C2C transactions

B2C transactions

Trade financing

Personal insurance

4

8

9

10

12

17

50

Donor/ NGO

110

MFI

Government

MNO

Insurance Provider

Tech Start-up

Commercial Bank

TOTAL

Sample providers of common financial products:• Working capital: Chase,

Coop, Equity, KWFT, Rafiki• Asset financing: AFC,

Chase, Equity, Juhudi Kilimo, KWFT

• Seasonal based loans:Coop, KCB, Musoni, One Acre Fund, Rafiki

• Crop & livestock insurance: APA, Britam, CIC, UAP

Sample service providers:• Commercial Banks: CFC,

Chase, Coop, Equity, Family, Jamii Bora, KCB

• Insurance: APA, Britam, CIC, UAP, Takaful

• MFI: KWFT, Rafiki• Government: AFC• Tech: KopoKopo, Lipisha,

MobiPay• Donor/NGO: CFA, ACRE, One

Acre Fund, Opportunity International

• MNO: Safaricom (M-Pesa, M-Shwari, Linda Jamii), Airtel

• The most common financial products are working capital loans, followed by asset financing, seasonal-based loans , and crop and livestock insurance products

• Technology service providers are the most common type of service provider identified, followed by formal service providers such as insurance providers and commercial banks

• The top banks by deposit accounts have on average 5-6 agri-specific products; these tend to be value chain specific, especially in dairy, tea, coffee, sugarcane

SUMMARY

Number of Service Providers by Types of Financial Product Offered Classification of Service Providers

23

Solution scope – non-financial productsexpected outcome: a broad and constantly evolving set of demand-driven services for SHFs

Source: Dalberg analysis based on secondary research and stakeholder interviews April – July 2015

1

1

1

2

3

4

6

8

26

Farmer helplines

Distribution management

Ag information services

Digitally extension services

Traceability systems

TOTAL

Trading platforms

Working capital

Supplier management

2

2

3

19

26

MNO

Government

TOTAL

Tech Start-up

Other

Sample providers of common non-financial products:• Ag. Info: Airtel, Esoko,

K24, Mediae, M-Shamba• Supplier mgmt.: CFA,

Echo Mobile, FarmDrive, Virtual City

• Trading platform: Green Dreams, M-Farm Ltd., mFarmer Kenya, Sokopepe

• Digital extension services: Green Dreams, KenCall, MoA

• Distribution mgmt.:Bihar, M-Farm Ltd., Virtual City

Sample service providers:• Tech: Esoko, M-

Shamba, Virtual City• MNO: Airtel, Green

Dreams• Government: Kenya

Ministry of Livestock Dept., Ministry of Ag.

• Other: Shamba Shape-up (Mediae), Kilimo Biashara (K-24)

• The most common products are information and extension services. Over 50% of the information and extension service products are bundled and offered by one provider

• Technology service providers are the most common non-financial service provider followed by government bodies who are beginning to adapt traditional non-financial services to digital platforms

SUMMARY

Number of Service Providers by Types of Services Offered Classification of Service Providers

24

Solution scaleexpected outcome: a broad and constantly evolving set of demand-driven services for SHFs

*This list is not exhaustive – represents data that is publicly available

SOURCE: Dalberg Analysis, 2015

67,607

102

5,000

6,000

7,000

13,000

25,000

40,000

42,000

50,000

150,000

203,600

iCow

350,000

180,000

Esoko

One Acre Fund

Acre Africa

M-Kilimo

Musoni

Ensibuuko

Airtel Kilimo

SokoPepe

Takaful Insurance

iProcure

M-Farm

Juhudi Kilimo

Kenya OtherScale* Launch Year

2005; operates in 10 countries

2006

2011

2009

2013

2009

2012

2009

2009

2010

2013

2013

2014

• Most solutions are still nascent and are yet to reach significant scale; majority have less than 400,000 users, with some reaching only a couple hundred farmers. Consequently very few tech start-ups have broken even – although majority have been in operation for about 3 years hence still too early to assess profitability

• Financial products (e.g., Acre Africa, Airtel Kilimo, Musoni, Ensibuuko) seem to have better traction than non-financial products (e.g., M-Farm)

SUMMARY

25

Solution landscape – types of partnership between solution providersexpected outcome: a broad and constantly evolving set of demand-driven services for SHFs

Source: Dalberg Analysis; GSMA - Digital Entrepreneurship Report, 2014

• Despite the geographic proximity of the growing tech community in Kenya, there is minimal collaboration across the different service providers

• The disconnect is on both sides – Safaricom and Airtel are selective about partnerships and start-ups are reluctant to share their intellectual property with MNOs

• Greater awareness of and training on intellectual property rights is needed to repair trust between MNOs and start-ups

SUMMARY

Current Engagements / Partnerships Key Findings

• The solution landscape inn Kenya is quite unique, in that, tech start-ups and support organization are in close geographic proximity (e.g., the Bishop Magua building in Nairobi has been the cornerstone of Kenya’s digital entrepreneurship ecosystem and is host to *iHub_, Nailab, m:lab East Africa, Savannah Fund, GSMA, as well as several startups)

• Despite this, there is minimal partnerships between tech start-ups to bundle their services – majority of the partnerships are outward facing and target mobile operators, banks, and other businesses

• Most tech start-ups view partnerships with MNOs to be the most important in facilitating monetization and scaling their venture. However, currently only 11% of start-ups have these partnerships

• This lack of commercial partnership is largely due to lack of trust and concerns about sharing ideas freely, especially given little awareness of intellectual property rights

% of Kenyan start-ups with partnerships

NGOs

Banks

Government

6%

Industry associations

11%

3%

Mobile operators

8%

4%

Other large businesses

3%

Other small businesses

4%

26

Business models for non-financial productsexpected outcome: a broad and constantly evolving set of demand-driven services for SHFs

SOURCE: Dalberg analysis 2015

• Most extension services are typically provided for free by donors, the government, or service providers• On the contrary, farmers / the end-user incur the cost of receiving informational services provided on a digital platform• The cost of receiving the information is usually at a premium value, for example iCow charges Ksh. 3 per SMS vs. the Ksh. 1

cost of a normal SM on Safaricom

SUMMARY

Cross-subsidy / Business Investment Subsidized ModelsCommercial

• In this model, the end-user (farmer, COOP, farmer group, business) incurs the cost of the service

• End-users do not pay for the cost of service; cost is incurred by the service provider, who gets to promote their products in the market

• End-users do not pay for the cost of service – this is typically incurred by a donor or the government

Farmers receive 3 SMS tips per week at Ksh. 3 per SMS

For Soko+, farmers pay for the cost of SMS to receive market prices and farming tips. Sokotext aggregates demand from sellers – farmers pay for the texts to pre-order produce

New KCC offers extension services, but these services are paid by the farmer i.e., deducted from the price of milk

Through the SPADE and STRYDE programs (funded by USAID), TNS provides extension / capacity building services to farmers

The ministry of agriculture provides extension services to farmers

In conjunction with TechnoServe and Yara, they provide agro training for farmers and market access. In the process get to market their produce

Kakuzi and Vegpro provide extension and aggregation services for their outgrowers thus ensure better quality of produce

27

Delivery channels – platform providers (MNOs & top tier commercial banks)expected outcome: delivery channels are well built out to facilitate last-mile coverage

Source: Helix Institute of Digital Finance. Agent Network Accelerator Survey: Kenya Country Report 2014

KCBCo-op Bank

1%

Airtel 4%

Family Bank

Safaricom

79%

Others

1%Equity Bank8%

3%5%

Market Presence of National Agent Network (2014)

Agent Demographics:• MNOs make up majority of the agent network in Kenya

(accounting for 85%, while banks account for 15%)• Only 26% of agents are exclusive to their provider• Although 75% of the population is rural, only 22% of

agents are in rural areas

Agent Operations:• Majority of agents (72%) agents conduct more than 30

transactions a day (MNOs: 46, banks: 25)• 11% of agents are not profitable and report dropping

revenues• 45% of agents report facing service downtime 2x a month

Training:• 89% of agents report to have received training, compared

to 92% in 2013. • Majority (~90%) received training from their employers,

the rest from aggregators and / or super-agents

Key Metrics

Safaricom’s footprint has dropped from 90% in 2013 to 79% in 2014; Equity has gained a bigger market presence at 8% in 2014 from 1.3% on 2013

• Safaricom is the largest provider in Kenya i.e., measured by the market presence which is defined as the proportion of cash-in / cash-out (CICO) agents by provider

• Banks are aggressively expanding their agent networks and currently make up 21% of all agents (from 10% in 2013)

SUMMARY

28

Delivery channels – market actors (input providers and buyers)expected outcome: delivery channels are well built out to facilitate last-mile coverage

NCPB: National Cereals and Produce Board, KTDA: Kenya Tea Development Board


Input Providers:• Over 10,000 agro-dealers in Kenya, evenly distributed across the regions • Agro-dealers provide the following services: (i) selling inputs (seeds, fertilizers, drugs etc.), (ii) training for

farmers (group training, farmer-to-farmer training, technical assistance, demonstration plots, field days), (iii) output marketing services (providing display space, brokering produce), (iv) credit services (i.e., deferred payment on inputs on a short-term basis), (v) some agro-dealers have established links with savings schemes

• A few players have started to work through agro-dealers to deliver services to SHFs: AGRA set up the Agro-dealer Development Programme (ADDP) to develop national agro-dealer networks and credit guarantees to improve access to inputs by agro-dealers and SHFs. Syngenta is also working with Agrodealers to deliver extension services

Future Agricultures, Policy Brief 045 | Feb 2012 – Can Agro-dealers deliver the Green Revolution in Kenya;World Bank – Developing Rural Agricultural Input Supply Systems for Farmers in Africa;International Center for Research on Women (ICRW) Agrodealerships in Western Kenya

Buyers and Distributors:• In structured value chains, farmers sell to COOPs, farmer groups, processors, wholesale traders, and

aggregators (e.g., NCPB, KTDA)• In less structured value chains, brokers and traders buy products directly from farmers and sell in open

markets or to processors and major aggregators

Dalberg analysis, 2015

• Agro-dealers are fragmented and operate small business but are the main point of contact for SHFs, providing a wide range of services (selling inputs, trainings, savings and credit services, and market linkages). As such they play a significant role in initiatives targeting smallholder farmers

• Most smallholder farmers operated in unstructured value chains and primarily sell to brokers / traders or to customers in open air markets. In structured value chains, they sell their produce through COOPs or farmer groups

SUMMARY

29

Technical assistance landscape – support for tech firmsexpected outcome: Solution providers have access to services to evolve and scale

SOURCES: GSMA digital entrepreneurship 2014, donor and investor websites, Dalberg analysis

NOTE: this TA landscape does not include investors – covered in the investment section under “enabling environment:

2

2

2

4

15

Academic institutions

Co-working spaces

Challenge funds

Startup incubators

Sector funds / donors

Category Examples of Organizations Services Offered

• Savannah Fund, Nailab, Village Capital, Growth Hub, ACCION, iBiz Africa, 500 Startups, 88 mph, Afrilabs, IFC SME Solution Centre

• Seed level funding for early stage high potential tech startups

• Mentorship and training through experts• Physical working space and resources• Business development services (BDS)

• The Kenya Polytechnic University College, JKUAT, Kenya Institute of Management

• Mentoring, consultancy services, market research services, and BDS

• ACEF, PIVOT EAST• Grant funding for startups at various development

stages• Minimal training and BDS

• Kenya Feed the Future Innovation Engine, Fund for Rural Prosperity

• Grant funding for both nascent and established business

• Minimal training / mentorship and minimal BDS

• iHub, :lab, Nairobi Garage, Gearbox, The Hub East Africa

• Provide peer-to-peer training and organized lectures.

• Provide physical space, minimal BDS

• The TA support landscape for tech firms is relatively deep in Kenya – incubators and accelerators provide holistic services including: funding, mentoring / training, business development services, physical working space, consultancy services etc.

• Entrepreneurs however lack existing partnerships with MNOs – only 11% of startups in 2014 had partnerships with MNOs who remain reluctant to open APIs to developers

SUMMARY

30

Technical assistance landscape – support for financial service providersexpected outcome: Solution providers have access to services to evolve and scale

Examples of Organizations Sources

• BMGF and World Bank are funding the Agriculture Finance Support Facility (AgriFin) to support strengthening and scaling up of agriculture finance business models and actively promote peer-to-peer learning and networking among agriculture finance practitioners globally. The topics range from lending to farmers and assessing agricultural risks, to designing products and services for agricultural clients

AgriFin – Agriculture Finance Support Facility

• FAO and Dutch Rabobank Foundation have partnered to improve smallholder farmers’ incomes, enhance access to financial tools, and increase their ability to invest in more efficient production of food crops. The project is being run in Kenya, Tanzania, and Ethiopia

• FAO understanding of agriculture and farmers will complement Rabobank Foundation's experience in risk management, agricultural credit, investment funds and producer organization strengthening, in order to inform product design

FAO website;ReliefWeb

• Core mandate is to develop the capacity of the financial services industry – they are working directly with financial institutions, business services providers and support institutions. Examples of their work in Agriculture include: FSD Kenya partnered with Rockefeller to develop and test the market viability of index

based weather insurance (IBWI) products to reduce the impact of weather risk on SHFs and pastoralists in Kenya

FSD Kenya supported East Africa Grain Council (EAGC) to develop a warehouse receipting system to enable short-term lending to grain farmers

FSD Kenya website

• There are few organizations providing support to financial service providers to develop agriculture finance capabilities, and few FSPs themselves are investing heavily in agri-finance expertise

• To expand into agriculture, FSPs require provide support on product design, market segmentation / information, and development of alternative delivery channels

SUMMARY

31

Annex

32

Kenyan TA programs address all constraints, however there is more support on market linkage strengthening compared to other farmer constraints

Programs

Financial Literacy

Farm Management

Market Linkages

Description

Government Extension ServicesWorking directly with SHFs to increase productivity and market linkages across VCs

Value Chain Development ProgramsValue chain focused programs to develop productivity and linkages to local and regional markets

Certification ProgramsValue chain programs focused on creating premium product markets

Private Sector ProgramsCorporate programs focused on strengthening sustainability and supply

Financial Literacy ProgramsTA programs designed to support specific agricultural financial services

SOURCES: Dalberg analysis

Trends in Kenya

Government extension services have moved from the national to the county level. USAID and GoK have budgeted for e-extension services to be rolled out in each county

Donor funded programs are moving away from classic extension services to holistic VC development programs. The largest of these are ASDPS and Kenya Agricultural Value Chains Enterprises Project, bothnational (county implemented) programs

Certification programs in Kenya are primarily confined to the tea and coffee sectors, where farmers are increasingly becoming certified in order to capture higher prices for their crops

Private sector companies are investing in VC development programs, particularly exporters who require farmer traceability and input providers developing markets for their products

Over the last 10 years financial service providers and agriculture development funds have begun pushing agricultural financial products and making strategic investments TA to support agricultural finance

Digital Literacy

Digital Literacy ProgramsTA programs designed to support digital literacy building

Although digital literacy programs exist and have been supported by local and international donors in both the public and private sector, they primarily focus on traditional digital literacy rather than mobile literacy

33

Training and Extension ServicesInternational and local service providers offer a range of modules to various players in the value chain

Notes: The names of some of the modules have been modified due to space constraints, *more information on digital literacy can be found in Annex

SOURCES: Dalberg analysis, interviews

Rec

ipie

nt

Farmer Cooperative Lender

Farmer Intermediary

Input provider

Top

ics

and

mo

du

les

Fin

anci

al

Lite

racy

Farm

ing

Pra

ctic

es

Mar

ket

Lin

kage

s

Budgeting and record keeping

Loan application and credit management

Accounting and cash flow management

Optimal pre-harvest practices

Optimal harvest practices

Optimal post-harvest practices

Quality and certification

Providing market information – weather

Providing market information – sales and pricing

Farm input usage

Business registration and compliance

Health, nutrition and hygiene

Developing links with other producers

Buyer

Developing links with input providers

Developing links with lenders

Marketing to buyers Farmer-buyer links

Farmer-lender links

Farmer-input links

Dig

ital

Li

tera

cy* Basic mobile literacy

Mobile internet literacy

Mobile technical literacy

Advanced mobile internet literacy

Traditional literacy

34

There are multiple local and international public and private sector actors implementing or funding these TA programs*

Notes: * Illustrative examples of large players including players in prioritized value chains, not exhaustive

SOURCES: Organization websites, Dalberg analysis

Provider based in Kenya implementing TA programs

International provider with permanent delivery offices in

Kenya implementing TA programs

International or local private sector actors implementing TA

programs

Organizations providing funding for TA program implementation

(limited individual implementation)

National service providersInternational service

providersPrivate sector actors

Mo

del

d

escr

ipti

on

Ad

van

tage

s

1 2 3

Top

ics

and

mo

du

les

Dig

ital

Li

tera

cyFa

rmin

g P

ract

ice

Mar

ket

Lin

kage

s

Funders

4Fi

nan

cial

Li

tera

cy

No international service providers

35

What services are delivered through which delivery channels?

Channel

Physical –commercial

Agent networks of MNOs, banks, MFIs

Agro-dealers, agri-vets

Input producers (e.g. animal feeds, seed, etc)

FMCG and other retail distribution networks

Major buyers/ offtakers (structured VCs)

Physical –non-commercial

Extension workers

NGO programs

Cooperatives and farmer organizations

Community Groups

SOURCE: Interviews, Desk research, Dalberg analysis

Key: Usually delivered Rarely delivered Never delivered

Financial Non-financial

36

Delivery channels – platform providers (MNOs & top tier commercial banks)expected outcome: delivery channels are well built out to facilitate last-mile coverage

Notes:*Co-operative bank figures are from 2013 annual report, ** FOSA = front-office service points

SOURCE: Interviews, Firm websites, Desk research

• Safaricom, Airtel, Equity, Cooperative Bank, and KCB have expansive reach both within Kenya and East African countries. • Safaricom dominates both the voice and mobile money markets• Equity and KCB are leading banks working with lower to middle class consumers

Potential partner Reach of Network Size of Network Geographic coverage Extent of AFA impact

• >22.1M connected users• >19M M-PESA users• >9M M-SHWARI users

• 81,025 agents• 122,000 Lipa na M-PESA

merchants• >400 bulk payment users

• 2G network covers 92% of Kenya’s population

• 3G network covers 69% of Kenya’s population

N/A

• >5.5M connected users• >3M Airtel Money users

• Over 10,000 agents N/A

• 9.6M customers in Kenya, Uganda, Rwanda, Tanzania and S. Sudan

• >665,000 Equitel users

• 17,523 agents• 166 branches• 24,223 POS devices• 602 ATMs

• Kenya, Rwanda, Tanzania, South Sudan and Uganda

• Limited coverage in the ASAL and Coastal areas

N/A

• >4.1 million customers• 0.5M KCB/M-PESA users

• 10,102 agents• 242 branches• 16,000 POS devices• 962 ATMs

• Kenya, Rwanda, Tanzania, South Sudan and Uganda

• Limited coverage in the ASAL areas

N/A

• >2.3 million customers* • 7,099 agents• 134 agents• 540 SACCO FOSA** outlets• 532 ATMs

• Kenya, Ethiopia, South Sudan and Uganda

N/A

37

Delivery channels – platform providers (second tier banks & MFIs)expected outcome: delivery channels are well built out to facilitate last-mile coverage

Notes:*Co-operative bank figures are from 2013 annual report, ** FOSA = front-office service points

SOURCE: Interviews, Firm websites, Desk research

• Family and KWFT are the most established MFIs with a base of over 1 million customers each• KWFT and Faulu have a wide geographic reach, covering most of the 47 counties in Kenya

Potential partner Reach of Network Size of Network Geographic coverage Extent of AFA impact

• 1.6 million customers • 3,000 agents• 84 branches• 146 ATM, another ~1,150

through Kenswitch and 65 through PesaPoint

• Operating exclusively in Kenya, mostly concentrated between Nairobi and the Western region

N/A

• 1.1 million customers • 150 agents• 248 branches• ~1,150 through Kenswitch

• Has a presence in 45 counties in Kenya

N/A

• 400,000 customers • 77 branches• Contracted through

Kenswitch and PesaPoint

• Has a presence in 44 counties in Kenya

N/A

• 375,000 customers • 48 branches• 23 ATMs

• Operates exclusively in Kenya, concentrated between Mombasa and Eldoret

N/A

• ~75,000 customers • 18 branches • Operates exclusively in Kenya, mostly concentrated around Nairobi

N/A

38

Cooperatives and farmer groups: as of 2012, there were an estimated 5,000 cooperative societies and unions directly involved in agriculture

Overview of the COOP movement

• The cooperative movement was liberalized in 1997 and has recorded an increase in number over the years (6% CAGR between 2008 and 2012)

• Agricultural COOPs make up approximately less than 40% of all cooperatives

• KUSCCO estimates that ~30% of all COOPs are dormant

COOPs by specific value chain

(total = 4,988 in 2012)

SOURCES: Economic Survey 2013; The impact of liberalization on the cooperative movement in Kenya; KUSCCO – Kenya Union of Savings & Credit Co-operatives Ltd. * Non-Agriculture COOPs include: SACCOs, housing COOPs, Service COOPs, Industrial COOPs, Consumer COOPs, Multipurpose COOPs

61

80

116

148

191

343

594

1,436

2,019

# of societies and unions (2012)

Cotton

Dairy

Multi-produce

Other agricultural

Sugarcane

Coffee

Pyrethrum

Farm purchase

Fisheries

12,30611,868

14,123

2008

62% 63%

20102009

64% 66%

13,153

38%36%

34% 34%

37%

+6%14,882

2011 2012

66%

Non-Ag. COOPs*

Ag. COOPsOne average, each COOP has ~1,000 members (Cooperative bank estimates their membership at 12 million members in 10,000 COOPs)

39

Extension servicesNational ratio of extension workers to farmers is 1:1000, e-extension services improve the ratio to 1:12.5

Deliverychannel

Description/Typical Characteristics Notable Examples

Public sector led

• Provided at the county level – based on national level guidelines

• Typically supply side driven

• Offered direct to farmer or through farmer groups by government extension workers

• E-extension services

• National ratio of frontline extension workers to farmers is 1:1000

• ASDSP: 47 counties, 20 million KES to strengthening market linkages and pre and post harvest production capacity building. The interventions focus on prioritized value chains in each county

• KAPAP: 47 counties, promoting PPPs for competitive demand driven extension service delivery; and promoting production for market rather than market for production

• E-extension: 47 counties, equipped and trained more than 4,000 county experts and trainers to reach 50,000 households

NGO led

• Value chain specific

• Incorporates multiple stakeholders including public sector, NGOs, farmer organizations, and private sector

• Use a demand-driven & participatory approach – Offered through farmer groups or farmer to farmer

• TechnoServe: Provides extension services, identification of markets, improved use of mobile solutions, and expanded access to finance, Reached over 200,000 dairy farmers, ~ 37,000 fruit farmers, 12,000 poultry farmers and 6,000 coffee farmers

• Heifer Kenya: East Africa Dairy Development project, a four-year, $50 million project funded by the Gates Foundation to help 180,000 smallholder dairy

• One Acre Fund: In addition to the financing, farmers receive training on modern farming practices OAF have reached over 200,000 farmers. Each officer can service up to 200 farmers in a year

Private sector led

• Value chain specific

• Cooperatives/farmer groups, agricultural input companies, out-grower schemes

• Use a demand-driven & participatory approach – Offered through farmer groups or farmer to farmer

• Mukurwe-ini Dairy: trains high-performing farmers on modern farming practices in a 1v1 setting, the farmers subsequently train other farmers. The dairy has

• Pwani Feeds: The firm provides extension training services to improve the production of eggs per day, and build the business case for enhanced feed, they keep a demonstration farm and invite farmers to visit. 300 Pwani employees work directly with about 3,000 farmers

SOURCES: IFPRI – Demand driven extension, Journal of Extension - 2014, Program and service provider websites, Dalberg analysis

40

Technical assistance landscape – support for tech firms (1 of 3)core providers of technical assistance and business development services

SOURCES: GSMA digital entrepreneurship 2014, donor and investor websites, Dalberg analysis

Startup incubators/ accelerators

Challenge funds and competitions

Sector funds /donors

Co-working spaces/ hubs

• Funding: Provide seed level funding for early stage high potential technology startups

• Mentorship and training: Provide mentorship and training through experts in the field

• Physical space and resources: Startups are housed in the accelerator space

• Business development services: Provide BDS services as part of the program

• Funding: Provide grant funding for startups at various stages of development

• Mentorship and training: Provide minimal training and mentorship

• Physical space and resources: None

• Business development services: Provide minimal business development services

• Funding: Provide grant funding for established businesses as well as startups at various stages of development

• Mentorship and training: Provide minimal training and mentorship

• Physical space and resources: None


• Funding: None• Mentorship and training:

Provide training through peers in the community on a day-to-day basis as well as through organized lectures and guest speakers

• Physical space and resources: Available for the tech community to use at zero, or very limited costs


Typ

ical

mo

de

l se

rvic

es

Pro

min

en

t ex

amp

les

41

Technical assistance landscape – support for tech firms (2 of 3)other less prominent providers of technical assistance and business development services, and investors

SOURCES: GSMA digital entrepreneurship 2014, donor and investor websites

Startup incubators/ accelerators

Community spaces

VC, PE and other strategic investors

• 500 Startups

• 88 mph (now closed)

• Afrilabs

• IFC SME Solution Centre

• Kenya Markets Trust

• Sinapis Group

• Spotone Global Solutions

• Unreasonable Institute

• Upstart Africa

• Nairobi Garage

• Gearbox (hardware specific)

• The Hub East Africa

VC investors

• Africa Media Venture Fund

• Amadeus Capital Partners

• Business Partners International

• eVA Fund

• Fanisi

• Grassroots business fund

• Innovation 4 Africa

• Kitendo Capital

• Mbada Ventures

• SPARK Ventures

• TBL Mirror

• Tech Equity

• Tlcom

PE investors

• Catalyst

• East Africa Capital Partners

• EC Private Equity

Impact/Strategic investors

• Acumen Fund

• Bamboo Finance

• D.O.B. Equity

• GroFin

• Invested Development

• Jacana Partners

• Khosla Impact

• Kukua Fund

• Leapfrog

Other low priority accelerators and community spaces Other long-term or hands off investors in the ecosystem

42

Technical assistance landscape – support for tech firms (3 of 3)academic institutions providing technical assistance and business development services

SOURCES: Services provider websites

Academic or training institutions

Institution Description

• Description: KPUC’s Center for Entrepreneurship Innovation and Technology Transfer (CEITT) provides support to entrepreneurs through an innovation center and technology transfer program. The Innovation Center leverages KPUC’s academic background to support new companies and give entrepreneurs co-working space. The Technology Transfer program helps students transfer academic knowledge into Kenyan private sector enterprises. The program seems focused on current KPUC students

• Technical assistance and business development services: CEITT leverages KPUC’s academic, professional, and alumni networks to support students who want to start a new business. The program offers training programs aimed at addressing skills gaps among its entrepreneurs

Jomo KenyattaUniversity of Ag

and Tech

• Description: JKUAT’s Entrepreneurship and Procurement Department offers continuing education courses for entrepreneurs and middle managers. These courses typically range from 2-3 weeks and are focused on directly applicable topics, such as business planning and social entrepreneurship. The courses cost between KSH 27,000 and KSH 100,000, depending on the length of the course

• Technical assistance and business development services: While the courses are not explicitly incubators or accelerators, they provide entrepreneurs with targeted skills through traditional coursework

Kenya Institute of Management

• Description: KIM operates the “SME Solution Center” (SSC) to promote growth in the SME space by improving entrepreneurial management.

• Technical assistance and business development services: SSC provides capacity building in the form of mentoring, consultancy services, training, and market research for emerging enterprises

kenya ecosystem assessment - mercy corps' agrifin · 2019-05-03 · conduct an ecosystem...

Documents