Banks that recognize the unique characteristics of farmers as customers and adapt their businesses using financial and skill-based support from donors will be best positioned to address the huge gap in demand for smallholder financing.
For smallholder farms, expenses come early in the season before the planting while income arrives only several months later with the harvest. How, then, can these farmers access the cash they need to plant their crops and, more importantly, to survive between harvests?
Even though making information “mobile” can increase outreach to smallholder farmers, the potential of mobile information services far exceeds farmers’ current demand for it. Mobile phones are not a panacea, and many farmers prefer more traditional sources of information.
Smallholder farmers are among the most financially excluded of all client segments. Understanding their particular needs is an important step in helping financial service providers to develop appropriate and effective products that serve them effectively.
Examining the cash flows of coffee and sugar farmers in Uganda for a CGAP-commissioned project revealed a seasonal cycle that is unsuited to monthly accounting practices. There are many ways that financial services could be designed to assist these farmers.
Cellulant developed a mobile wallet network in Nigeria that extends to some eight million farmers. With more than 40 million transactions in just two years, smallholder farmers in Nigeria are poised to adopt digital financial services more broadly.
On paper, digital financial services can sound like a silver bullet to reach millions of rural, underserved smallholder farmers. In reality, the challenges can be greater than the deployment of a low-tech solution.
Although Gideon, a participant in CGAP's financial diaries of smallholder families research, is technically a rice farmer, much of his income is comprised of income from other crops and and non-agricultural activities.