Digital participation in the agrofinance sector: rural development and women's inclusion

Data security, financing, the automation of loans and the use of alternative data - the digitalisation of financial services in the agricultural sector has many facets, which an international conference with representatives of the agricultural finance sector in Zambia addressed. But how does the digitalisation of financial services contribute to rural development and the inclusion of women?

©GIZ, Ziko C. Banda, 2022

By Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

GIZ

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) is a globally active provider of international cooperation for sustainable development. It has more than 50 years of experience in a wide range of fields.  

All contributions

Multiple crises, climate extremes and the ongoing pandemic have intensified the global food crisis in recent years. Currently, up to 828 million people worldwide suffer from hunger. In many African countries, agriculture is fundamental to economic development and thus of great importance in the fight against poverty and hunger. Over 50 percent of the African population is engaged in this sector. However, most agricultural and agri-based businesses have little market orientation and are hardly integrated into the cash economy.

 

Banks and financial institutions are mainly concentrated in urban areas. Despite progress in the past 20 years, there are few financial services adapted to the needs of farmers.

 

These include, for example, seasonal conditions, such as the availability of loans adapted to the planting season, as well as weather risks and associated uncertainties and corresponding insurance, such as weather index insurance. This lack of rural inclusion inhibits or prevents investment in agriculture-based value chains.

 

On the one hand, they enable financial institutions to better access rural areas and more easily adapt financial services to the needs of the agricultural sector. On the other hand, they offer the rural population the opportunity to spare themselves long journeys and high transaction costs. However, this presupposes that the necessary digital infrastructure is already in place.

 

Mobile money in particular has become an important factor for sustainable financial inclusion. The World Bank's Global Findex Database 2021 notes that ownership of accounts at a bank or regulated institution, such as a credit union, microfinance institution or mobile money service provider, has increased by 50 percent globally over the past 10 years. In sub-Saharan Africa, an increase in accounts is largely due to the introduction of mobile money.

 

Digital applications are also being used to develop alternative credit scores. As Nathan Were, agri-business advisor at the World Bank explains, the best guide to assessing creditworthiness is a client's repayment history. But this is a dilemma, because if a potential borrower cannot access credit, he cannot build a credit history. The collection and evaluation of "alternative data", such as mobile data usage behaviour, can help to assess creditworthiness even without a bank history.

 

These and other topics, such as data security, financing, the automation of loans, skills development of staff, a critical questioning of data analyses and the use of alternative data in agricultural financing were dealt with in depth at the international conference in Lusaka. The global project "Promotion of Agricultural Finance for Agri-based Enterprises in Rural Areas" (GV AgFin) commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by the Gesellschaft für Internationale Zusammenarbeit (GIZ), organised this in October 2022 on the topic of "Digitalising Agricultural Finance". The event was mainly attended by representatives of financial institutions from nine sub-Saharan African countries. Together, they addressed the questions of how digital strategies in the agricultural finance sector need to be refined and new digital applications integrated to be able to offer a comprehensive range of financial services in rural areas.

 

The inclusion of the rural population in general and that of women in particular received special emphasis. Women often have limited or no access to digital devices, know-how, and services. Other barriers to setting up a mobile account are lack of knowledge about mobile money and financial skills in general.

 

By adapting financial services for women and their multiple needs, such as the provision of group loans, low-threshold loans, alternative collaterals, the consideration of und appropriate reaction to social norms, and digital literacy trainings, the risk of unintentionally discriminating against women through digitalisation can be counteracted.

 

One example of the digital integration of rural women into the agricultural finance sector is the microfinance institution MicroLoan Foundation (MLF), with which the GV AgFin cooperates in Malawi. MLF gears its financial products exclusively to the needs of women farmers. The aim is to enable them to end the cycle of poverty. To this end, MLF offers training in business and financial skills in combination with the provision of needs-based loans. Financial services developed in partnership with GV AgFin include, for example, working capital loans for female rice, soybean, and groundnut producers. The combination of credit and mobile money for disbursements and repayments spares the women the long and often dangerous journey to the few branches in rural Malawi.

 

In the following interview, Joseph Kaipa, deputy CEO at MLF explains why MLF works specifically with women, what concrete measures are being taken to integrate women into the agricultural financial sector, and why digital financial services are an appropriate tool to support rural women. Finally, he elaborates on the achievements. With the support of AgFin, training and coaching methods specialised in agricultural finance were carried out with the staff and clients. The result is a loan repayment rate of 98 percent.

 

Farmers from Zambia, Malawi and Burkina Faso illustrate in the following video how digital financial services, can contribute to the development of rural areas. References to poor internet connections or missing product information make it clear that the digital transformation of the agricultural sector is still ongoing. However, the success stories show that digitalisation can contribute to rural development, although special care must be taken to ensure that women and marginalised groups are not left behind.

Back to overview

Similar articles

Feminist development policy – A new beginning?

An Interview by Journalist Jan Rübel

Cameroonian gender and peace activist Marthe Wandou on the role of women and girls in development policy – then and in the future.

Read more

Small cup, big impact

A Contribution by UFULU and GIZ

A menstrual health pilot in Rural Malawi empowers rural women in Agribusiness through hygiene products and helps to improve working conditions in rural areas.

Read more

What connects gender and the environment

Women can play a vital role in the change process both when it comes to climate protection and adapting to climate change. But the reality is often still not quite like this: women and girls are particularly badly affected by the climate crisis. Is the topic of gender getting enough attention at the upcoming climate conference? Questions for Bettina Jahn from UN Women Germany.

Read more

Why organic is a „blessed” method

An Interview by Claudia Jordan

Three female entrepreneurs from Mozambique, Sri Lanka and Uganda tell their stories about starting organic businesses from scratch, now selling Baobab Oil, Gotukola powder and Shea butter in international markets. And they explain why their business is almost 100 percent female.

Read more

Nutrition is not just a women’s issue

A contribution by GIZ

When women have control over the resources of a household and manage the income, it usually leads to a more balanced and healthier diet for the family. But often the decision-making power lies with the men. How can this gender inequality be addressed? The GIZ global project Food Security and Resilience provides insights into project work on gender-transformative approaches finances by the Federal Ministry for Economic Cooperation and Development (BMZ).

Read more

Towards Climate Justice: Securing Women’s Land Rights for a Resilient Tomorrow

A Contribution by TMG

In the midst of global climate discussions, a resounding call emerges: Women's land rights must be the cornerstone of our climate actions. They're not just pieces of the puzzle; they form the foundation for true climate resilience. TMG Think Tank for Sustainability reports from the first African Climate Summit.

Read more

Learning from Each Other

An Interview with Dr. Jacqueline Mkindi

Partnerships are needed to face the multiple shocks for food systems. This is what Dr. Jacqueline Mkindi, president of the Agriculture Council Tanzania (ACT) and CEO of the Tanzanian Horticulture Association (TAHA) states.

Read more

Gender Justice – a Precondition for Resilience

A contribution by IFPRI

Women and girls in poorer countries are affected in particular ways by the multiple crises the world is currently facing. Uncovering the linkages between gender, resilience and food security, experts from International Food Policy Research Institute (IFPRI) look at ways to support women and girls’ capacity to respond to crises.

Read more

Shu Wen Ng, the Clear-Sighted

An Interview with Shu Wen Ng

Shu Wen Ng is a health economist. She knows what is best suited to go on a plate. But how can this be achieved on a mass scale in countries with lower incomes? "The solutions to gett there already exist," she says, "but what is often missing is courageous leadership to implement them."

Read more

Stick together and learn from each other

By Claudia Jordan

During the Women Leadership Programme in May 2024, around 20 women from African countries and Germany met again for a one-week workshop in Bavaria, Germany to become fit for leadership in their organisations. One topic that concerns the women across countries is climate change, but also violence against women and their discrimination in agriculture.

Read more

Against all Odds

A Contribution by Claudia Huber

Rose Okello is a Matoke farmer and single mother living in a village near Mbarara, a town in southern Uganda. To ensure that she can pay for her family's food, her children's school fees and other expenses on time, Rose uses various financial services. Her story portrays hurdles but also hope for women in agribusiness.

Read more

Uprooting the Norm

A Contribution by GIZ

As a passionate social scientist and entrepreneur from Malawi, Ngabaghila Chatata knows that she can overcome any challenge. Her story stands out in a country faced with high unemployment, particularly in its rural areas. As the managing director of Thanthwe Farms, she has set out to inspire the next generation of young agripreneurs – proving that successful business starts with the right mindset, not only capital.



Read more

Ebay Against Hunger - How an App Supports Crop Sale of Rural Small Holders in Zambia

Small holders around the world are often forced to sell their harvests below market value due to a lack of market and pricing information. A new app by the UN World Food Programme (WFP) is going to change this.

A project of WFP

Read more

Silicon Valley for Africa’s agricultural start-ups

A contribution by Michel Bernhardt (GIZ)

The project “Scaling digital agriculture innovations through start-ups” (SAIS) supports Africans going into business in the agricultural and food sector in scaling their digital innovations and thus reaching out to a larger number of users.

Read more

How can the private sector prevent food loss and waste?

An interview with David Brand (GIZ)

From a circular food system in Rwanda to functioning cooled transports in Kenya: The lab of tomorrow addresses development challenges such as preventing food loss and waste

Read more

City, Country, Sea: 6 Innovations in the Fight Against Climate Change

A listicle for climate-neutral agriculture

Vertically growing plants, magnetic cotton. Hairy leftovers fertilizing fields, tractors running on algae? These six innovations could lead agriculture’s next Green Revolution!

Read more

Innovate2030: Digital Ideas against Urban Climate Change

A Call by BMZ and Partners

Innovate2030 is looking for creative people from around the world to develop smart and innovative solutions against climate change in cities. Initiated by the Make IT-Alliance.

Read more

What is Our Food Worth to Us?

A Contribution by the TMG Think Tank for Sustainability

Towards integrated accounting standards in the food and farming sector with the help of True Cost Accounting (TCA).

Read more

ICTforAg 2022: Conference

An Initiative by GIZ Fond i4Ag

In March 2022, the virtual conference ICTforAg summons leading actors in the agrartechnology and food sector from low- and middle-income countries to exchange ideas advancing resilience, nutrition and agriculture-led growth.

Read more

Digitalization: The Driving Force in the Future of Agriculture?

A Contribution by GIZ

At the ICTforAg conference in March 2022, the digital agriculture community exchanged on the challenges and opportunities associated with the next green revolution.

Read more

Teaserimage Finals Innovation Challenge

Innovation Challenge Finals

An event organised by GIZ on behalf of BMZ

The finals of the Innovation Challenge “Advisory for Agroecology” took place on 17 May - 2022 featuring six innovations in advisory that provided the basis for a discussion on how to bridge the gap between science and practice.

Read more

Empowering farmers to control their own data

A contribution by GIZ

A new study on the digitalisation of agriculture puts farmers back at the centre of their own sector, identifies market gaps and gives recommendations on how to support relevant actors.

Read more

The goals of transformation should leave no one behind

An Interview with Mareike Haase and Stig Tanzmann

Four interviews kick off the relaunch under the new name „Food4Transformation“, asking the same questions from different perspectives. Mareike Haase and Stig Tanzmann from Brot für die Welt explain why the right to food, inclusivity, agroecology and food sovereignty are the central levers for a successful transformation.

Read more

Agricultural policy belongs in prime time

An interview with Dr. Julia Köhn

Four interviews kick off the relaunch under the new name „Food4Transformation“, asking the same questions from different perspectives. Dr Julia Köhn, Chair of the German AgriFood Society, points out in the interview: Only if innovation and transformation are profitable in the medium term can they close the food gap in the long term.

Read more

How a Nigerian fintech wants to secure 1 billion US dollars for farms

An Interview with Blessing Mene

Small farmers often have a hard time getting financing. An app in Nigeria wants to change that: Founder Blessing Mene about what his app offers - and about the opportunities and limitations of agricultural financing.

Read more

Farmers reap big from Climate Smart Farming

An Article by Angeline Ochieng & Victor Raballa

Journalists Angeline Ochieng and Victor Raballa visited Ms Bilha Munyole, a Kenyan farmer in Kimilili, Bungoma County, on her maize plantation. About the important role of mechanisation in climate-smart agriculture and in building resilience to the impacts of climate change.

Read more

Together #AgainstHunger and #AgainstPoverty

A Campaign of the Federal Ministry for Economic Cooperation and Development

In light of World Food Day, the Federal Ministry for Economic Cooperation and Development launched a campaign: Three women from Kenya, Benin and Ecuador share how their ideas and local solutions are fighting hunger and poverty.

Read more

Agricultural Financing – from a broader Perspective

A Contribution by GIZ

In Sub-Saharan Africa, not all financial institutions (FIs) have access to knowledge about how to implement processes to enhance rural financial inclusion. The pan-African Community of Practice (CoP) plays a pivotal role in supporting these institutions along this transformative journey.

Read more

Agriculture is more than Culture or Tradition

A Contribution by Simeon Kambalame

How can agriculture engage more young people in rural areas? Advocacy and education campaigns can play an important role here. Simeon Kambalame, Timveni Child and Youth Media Organisation, has launched such a campaign in Malawi.

Read more

From Coexistence to Collaboration

A Contribution by Initiative für nachhaltige Agrarlieferketten (INA)

The demand for sustainable products and supply chains is constantly increasing. DIASCA is an alliance that works on interoperability of digital solutions in agricultural supply chains through the development of open standards for forest monitoring, farm income and traceability.  

Read more

Circular Economy: From Innovation to Upscaling

A Contribution by the Project RUNRES

Recycling organic waste into soil amendments and animal feed through a transdisciplinary approach – this is what the RUNRES project, launched in four sub-Saharan African countries four years ago, seeks to achieve. Three of the project's scientists report.

Read more

Cotton of the Future

A Contribution by GIZ

VR glasses are hardly a conventional tool in agriculture: for the past three years, they have been used in rural areas of Burkina Faso and Cameroon as a training tool for sustainable cotton cultivation.

Read more