Serving Smallholder Farmers: Recent Developments in Digital Finance

This focus note introduces some recent developments in digital financial services (DFS) for smallholder farmers. Through case studies, the note identifies traditional pain points in serving smallholder farmers such as cost and risk of making payments to farmers and delivering subsidized credit. It also discusses how DFS are being used to overcome these pain points. It further highlights initial obstacles and examples of successes in the use of DFS. The case studies covered in the focus note include:

• Crop payments in Ghana with a focus on reducing cost and risk, improving smallholder liquidity management, and commodity payments in Ghana using DFS. It also highlights the challenges that were involved, both demand-side and supply side, in rolling out mobile-phone enabled payments;
• Government subsidies for inputs in Nigeria with a detailed discussion of the Growth Enhancement Support Scheme which was launched in Nigeria in 2012 to transform the delivery of fertilizer subsidies in the country;
• Other digital finance innovations benefitting smallholders such as electronic warehousing services introduced in Kenya, mobile phone enabled agricultural insurance services in Kenya and Zimbabwe, and the use of farmer transaction data to evaluate their credit worthiness;
• Recommendations for the use of DFS to benefit smallholders.