Driving Smallholder Savings through Digital Design in Senegal
Financial inclusion initiatives for smallholders have often emphasized credit – whether through microfinance, group loans or commercial banking extensions. An alternative model emphasizes “little-by-little” savings, holding that savings discipline and prudent expense management may be a more compelling and responsible approach that doesn’t burden smallholders with the defaulter penalties and social risks that are associated with credit.
myAgro – a social enterprise in rural Mali and Senegal – has gained traction in applying this layaway model to the smallholder context. It works with smallholders to set a savings goal for the upcoming season to purchase inputs (e.g., high-quality seeds, fertilizer and tools) which are delivered once the savings target is reached. Smallholders contribute incrementally to their layaway account by purchasing mobile airtime-style vouchers from local vendors and sending in a code via SMS.
Working with CGAP, Dalberg recently spent seven weeks on the ground in Senegal, interviewing over 65 farmers and savings groups to understand savings behaviors in depth. The following are some of our key observations that are now informing our human-centered design (HCD) approach to designing of digital financial solutions for smallholder families
1. Smallholders struggle to access quality inputs, technology and training.
Smallholder farmers struggle with access to high-quality seeds and fertilizer for various crops, including peanuts, maize, beans and sorghum. Access to quality inputs also requires additional training around planting techniques. Simply planting high-quality seeds won’t guarantee higher farm productivity without specialized training. Similarly, tools and machinery - precision planters, for example - are also key to improved farm productivity, but are not available or too expensive for the farmers to buy with the income from a single harvest. Mobile-based financial tools could help myAgro customers save for greater quantities and more types of inputs overall, while also providing a means for myAgro agents and vendors to provide recommendations that simplify the menu of choices and that support farmers through the training process.
Mala, a first-time myAgro customer, is a farmer and housewife, taking care of her family of four in Sinthiou Gayo village in Tambacounda. She has been growing peanuts but has not been able to do so regularly over the past few years because she lacks access to quality seeds and fertilizers. She too often rushes to find them from wherever she can during the planting season (when the first rains arrive), rather than planning for them in advance
2. Smallholders find it difficult to save regularly throughout the year.
Smallholder households face irregular agricultural income flows over the course of the year, which makes long-term financial planning challenging. While these households may seek to diversify their income sources - through non-agricultural activities such as informal trading, selling charcoal and investing in livestock – they nonetheless struggle to save for the ‘hunger season’. This is particularly true for lower-income subsistence farmers, who have the most difficulty planning and saving. Extending the layaway model throughout the year is critical to ensuring that smallholders have the option and the incentive to save regularly. Mobile services have a strong potential to achieve this through the use of mobile-based reminders and messaging about incentives and promotions. Interactive voice response (IVR) messaging could be even more effective when dealing with Senegalese smallholders, who have low rates of literacy.
Mariama, a farmer in Touba Tou, contributes regularly to a savings group and individual peanut and vegetable packages. However, she is worried about the hunger season as she has struggled to put food on the table during this period for a couple of years. She is not sure that current packages would give her enough income during the hunger season.
3. Incentivizing model farmers as a way to build brand loyalty.
Many smallholders value myAgro as more than just an input retailer, even more than as a provider of agricultural and financial advice and support. They view myAgro as a partner in improving their communities. They take great pride in having a closer association with high quality service providers such as myAgro, and trust enterprises and initiatives that make commitments to their communities through jobs and training. The most committed of these customers have a latent capability to become “model farmers” – farmers who are progressive and ambitious in their outlook and who want more ways to share knowledge, tools and practices with their communities. Reaching and inspiring these farmers makes a lot of sense for myAgro – these model farmers become brand advocates, helping to drive new enrollment, while also supporting training and community events. Digital solutions can help encourage the evolution to model farmer. They can help create a personal connection with the myAgro service through more frequent and customized communications. They can also support community building by promoting community events and activities and incentivizing collaborative achievements.
Mamuna is an enterprising myAgro farmer in Ngoda Samba, Tambacounda. She believes the greatest reward myAgro could offer her upon completion of a package would be a ‘health day’ for her community, when advice, vaccinations and treatment are offered. She’s more interested in these types of community benefits rather than individual rewards as they enhance her position and capability in the community.
4. Convenience is key to driving usage of digital solutions.
Although these insights suggest compelling ways for digital solutions to improve savings behaviors, they are contingent on farmers having easy and close access to agents and vendors to make payments for their packages. Farmers are more likely to save when agents or vendors are nearby – such as on market days when everyone’s in the same place and extra cash is at hand. Mobile tools can help farmers get closer to agents and vendors. For example, mobile reminders and tracking can help identify the farmers who need the most support and ensure agents and vendors will engage more frequently, and mobile transactional tools – in partnership with mobile money providers and cash management apps – can help increase the number of payment touchpoints with the myAgro platform.
Mame Bousso is a myAgro vendor and passionate community leader in Touba Toul. She is very proactive and engages with farmers to encourage savings even after they have finished their packages. Farmers look forward to her continuous presence.
Applying a human-centered design approach to improving an already innovative digital financial service is promising but also presents challenges. The digital solutions we’re hoping to bring to life will need continuous refinement and iteration to serve the diverse types of farmers that exist even within one region. This is even more true when planning for impact across the country. This means that the behavioral changes we’re hoping to see will take time to manifest themselves and be measurable. We hope that myAgro’s highly promising start and the size of the opportunity in their current markets and new ones will see ample room for further exploration of this innovative model.