unlocking smallholder assets: warehouse receipts and ict...leverage mobile technology to increase...
TRANSCRIPT
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Unlocking Smallholder Assets:
Warehouse Receipts and ICT
Speakers
Judy Payne, USAID Bureau for Food Security
Scott Haller, USAID Development Credit Authority
Erin Connor, Grameen Foundation
Facilitator
Zachary Baquet, USAID Bureau for Food SecurityMay 28, 2014
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Judy Payne
Judy PayneUSAID Bureau for Food Security
Judy Payne is the ICT Advisor for Agriculture
where she helps USAID Missions and projects
use information and communications
technologies (ICT) to increase their scale and
impact in agriculture development. Her work
includes helping USAID find ways to use ICT-
enabled approaches to increase the scale of
agriculture projects in financially sustainable
ways. Payne manages the mFarmer Initiative, a
partnership between USAID and the Bill and
Melinda Gates Foundation, implemented by
GSMA (www.gsma.com/mfarmer) and the the
Connected Farmer Alliance.
Scott Haller
Scott HallerUSAID Development Credit Authority
Scott Haller works at the USAID Development
Credit Authority (DCA) as the Portfolio Manager
for East and Southern Africa, where he
monitors small and medium enterprise and
agriculture loan guarantees in 14 countries
across the region. Before working with
USAID/DCA, he worked as an implementer for
food security programs in Liberia, and as a
Peace Corps volunteer in Micronesia, where he
worked in small business development and
microfinance. Haller earned his BS in
Economics from the Wharton School at the
University of Pennsylvania and his MA in
International Development from the Josef
Korbel School of International Studies at the
University of Denver.
Erin Connor
Erin ConnorGrammen Foundation
Erin Connor is the Kenya Country Manager for
the Grameen Foundation. Since 2011, she has
overseen programs in Financial Services,
Health and Agriculture, programs which
leverage mobile technology to increase access
to financial and information services among the
poor. Connor joined Grameen in 2005, and
during that time, has managed programs and
partnerships across Asia and Africa. Grameen
is implementing an e-Warehouse pilot project to
help smallholder farmers in Kenya optimize the
income generated from their crop yields. The
project is leveraging mobile technology to
provide farmers with access to finance,
markets, and information on grain harvesting
and storage.
WAREHOUSE RECEIPTSThe DCA Experience and Challenges to Implementation
Scott HallerPortfolio Manager E3/DC
Scott Title Slide
Development Credit Authority
picture
7
Through risk sharing mechanisms, DCA encourages local commercial lenders to turn liquid reserves into financing for development.
Development Credit Authority
Warehouse Receipt Overview
Goal: Collateralizing assets/ improving storage
Benefits to farmers:
• Access to credit
o Collateral
• Access to broader markets
• Loss reduction
• Lengthening of sales window
• Turning price takers to price makers
• Quality control
o Marketing/ Branding
• Improved income, security, planning
Trust = Market growth
Support systems + Group training + Cooperation = Aggregate Benefits
Aggregate Benefits = Lower costs and Reliability
Reliability = Trust
Development Credit Authority
Optimum Factors for Warehouse Receipt Systems
9
System Support
• Value recognition
• Acceptance, capacity
• Certification
• Policy, verification
• Appeals system
• Outside of federal court
• Indemnity Fund
• Standardization
• Quality/weight
Market Support
• Market Knowledge
• Understanding of risk
• Price risk
• Borrower risk
• Import policies
• Infrastructure
• Transport, warehousing
• Transparency
Development Credit Authority 10
Where does DCA Engage?
Pre-harvest financing
• Working capital
o Production inputs
o Security
o Transportation
o Registration
• Warehouse construction
Purchase financing
• Initial yield purchases
o (% of farm-gate)
o Warehouse receipt as collateral
Legislation
Support Services
Financing
Development Credit Authority
UPDATE: Uganda and Zambia Programs
Uganda• 3-year, $11.6 million guarantee (2005-08)
o Grain grower cooperatives, traders, processors. o No warehousing-receipt law yet (2006)
o Thin margins for graino No guaranteed prices (domestic market)o Bank issues (buy-in, training)o Capacity issues (Grain Board, Coops, etc.)
Zambia• 3-year, $6.5 million guarantee (2004-07)
o Critical gap in understanding/trusto Fluctuating, uncertain price informationo Lack of training for lenderso Missing infrastructure
• Fraud protection, reliable market information, legislation
In Zambia and Uganda, DCA learned
that credit is not a stand-in for the
enabling environment or the necessary acceptance and
understanding of the system.
Development Credit Authority
“In short, the conditions were not in place to successfully bridge the knowledge gap that would help transform the marketplace to accept warehouse receipts as viable collateral. The banks’ willingness to disburse funds against warehouse receipts in a timely manner is dependent on the creation of just such an environment.”
-Kofi Owusu-Boakye, DCA
quote
Development Credit Authority
UPDATE: Tanzania Model
• AMCOS organization and support services
• AMCOS purchase at 70%, banks take risk on receipt
• Auction, AMCOS pay back final 30%, re-pay loan, distribute 60% balance
CRDB Bank
• 10-year, $20 million guarantee for agriculture value-chains (2008-18)
AMCOS(Ag Marketing
Cooperative Society)
AMCOS
DCA
Guaranee
Yield Purchasing: 70%
Farm-gate Price
use of loanCRDB
AMCOS
After
Auction
Development Credit Authority
DCA Tanzania Results
14
Full facility utilization• $9.26 million to AMCOS in Lindi• 49 AMCOS
• approximately 5,000 farmersImproved system• Better farm-gate pricing
• Negotiated, market-based• Down-payments for auction buyersBank success• Revived Lindi Regional BranchSustainability• Committed $24 million to cashew sector beyond guarantee• Program roll-out beyond Lindi
• Mtwara and Pwani regions• 2009, 20% of avg. auction price went back members
Photo: E3/DC
Development Credit Authority
Comparing the Tanzania Experience
What was similar?
• Price problems
• Limited market understanding
o Government interventions
o Producer expectations
• Limited buy-in from regional governments
• Transportation constraints
• Capacity development
What was different?
• Bank buy-in, accepting risk on receipt
o Led technical assistance
o Helped find buyers
• Mobile unit
o Committed to strategy
• Lender market knowledge
• Engaging government
o Bank partnered with Apex organizations to change policy
Development Credit Authority
Looking Ahead
Access to finance is one piece of many• Enabling environment
o Legislation, trust, reliability• Support services• Market/stakeholder buy-in
Evolution• Importance of tradability
o Improving commodity exchangeso Transparency, reliability, reduced costs
o Access to markets• Advanced solutions
o Receipt databases o E-Warehousing, ICT, mobile certification
• Access to finance to support initiatives• DCA to lower risk, offer Technical Assistance support
Photo: E3/DC
Development Credit Authority
Scott End Slide
Follow Access to Finance Issues Online
• Follow the Development Credit Authority on Twitter @USAID_Credit
• Visit us on Facebook at “USAID Development Credit Authority”
• Subscribe to our monthly e-newsletter, Development Finance Link by emailing [email protected].
FACILITATING ACCESS TO FINANCE AND
MARKETS:
AN E-WAREHOUSE PILOT FOR KENYAN
FARMERS
E-WAREHOUSE PILOT
Leveraging technology to connect farmers to
information services, financing, and markets
E-WAREHOUSE
FARMER PROFILE
Farm size: 2 acres
84% likelihood under $2.50/day
Primary crops: maize, beans
Last Harvest:
Harvested 8 bags; sold 4
Stored crops in plastic bags at home
Sold bags 1 month after harvest at a
local market
Has never received training on post-
harvest management
No credit history
Top 3 information needs: post-harvest
handling, market information, pest
managementJENIFER KARIUKI MUKETHA
CHALLENGES FACED BY
SMALLHOLDER MAIZE FARMERS
INADEQUATE CROP STORAGE
• Allow farmers to delay sale through facilitation of advances against stored grain
LACK OF ACCESS TO FINANCIAL SERVICES
• Provide market information to farmers
• Enable farmers to virtually store and collectively sell at higher prices
LIMITED MARKET ACCESS
• Provide information and training on proper post-harvest storage practices
E-WAREHOUSE SOLUTIONS
HOW IT WORKS:
PRE-HARVEST1
TWO-WAY INFORMATION FLOWS
AGRONOMIC INFORMATION: FARMER REGISTRATION:
• Maize
• Beans
• Cow peas
• Pigeon peas
• Black beans
• Green grams
• Post-harvest
management
HOW IT WORKS: HARVEST
TIME2
HARVEST/
LOAN SURVEY
BANK
Farmer details and information on
quantity and value stored in e-
Warehouse
Issue advance of 50% of
value of grain at
prevailing market price
HOW IT WORKS:
POST-HARVEST3
• On-farm/group/village-level
storage
• Verification checks (mobile
app & farmer groups)
• Market price SMS updates
• Buyer forums and connection
to markets facilitated
BI-WEEKLY PRICE
UPDATE
STOCK MONITORING SURVEY
HOW IT WORKS:
SALE TIME4
SMS CONFIRMATION OF
SALES AND PAYMENT
BANK
Sale details
entered
Farmer loans repaid and balance transferred
via mobile money
SALE SURVEY
WHERE ARE WE NOW?
VKWs recruited and trained
Agronomic content and FCI training digitized and delivered through VKW
network
Mobile survey (registration, harvest, sale) applications and e-warehouse
database developed
Over 5,000 farmers registered in e-warehouse; baseline information collected
Financial product developed and extended in select CVs
• Among the farmers that accessed financing, they sold their grain at prices 35% higher
than at harvest time and realized net financial gain of over 30%
SMS & M-Pesa integration with e-Warehouse developed
M&E Dashboard in development
Program Re-Design for v2.0 underway
LESSONS LEARNED
Challenges in delivering ICT solutions tied to harvest timelines
Unrealistic to provide a fully integrated model and offering by first harvest;
need to stagger tech development and product offering
Need to incorporate change management into program design
There is tremendous demand for more affordable and secure storage
facilities at the village level (general discomfort with home storage)
Financial sustainability: need to prove concept and value to VC players
before able to generate revenue
Build in a budget for the FSP to ensure prioritization of the program until
commercial viability is proven
Human-centered design should be incorporated into technology
development and agricultural offering as well as financial services
Questions
Bullet points
QUESTIONS?
Thank you for joining us!
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