Cash to digital: How mobile money is reshaping farming communities
Article written by Carolina Pirola
The use of mobile money continues to grow within the agricultural sector. According to GSMA's latest State of the Industry Report on Mobile Money, there are now 1.75 billion registered mobile money accounts worldwide, marking robust double-digit growth in recent years. In 2023 alone, the global transaction value surpassed 1.4 trillion USD, reflecting a year-on-year growth rate of 14%.
Sub-Saharan Africa plays a leading role in this expansion, with countries like Nigeria, Ghana, and Senegal driving remarkable growth. In 2023, the region hosted 156 active mobile money services, with registered accounts reaching 835 million – a 19% increase over the previous year. While growth in East Asia and the Pacific is somewhat slower, mobile money recorded significant gains in the region, with a 3% increase in registered accounts in 2023 compared to 2022, and a transaction value of 196 billion USD, up by 14%.
This dynamic ecosystem has led coffee companies to pilot and integrate digital payment solutions with their partners and suppliers across different regions, positioning these as the future of business transactions. But what are the benefits for companies and farmers, and what does a successful case look like?
Credits: UGACOF/Sucafina
Safety and traceability for companies
UGACOF, Sucafina’s coffee processor and exporter in Uganda, decided to go digital with their payments a couple of years ago. “Our direct supply chain grew exponentially in terms of farmers participating,” says Sjaak de Bloois, Head of Agronomy and Sustainability at UGACOF. “Imagine what happens if payments to these many thousands of farmers are all made in cash – for our employees, it’s not safe to be working in the field with that much cash on them.”
This sentiment is echoed by Julius Kalulu, founder of Ugandan coffee processor and exporter Just Know Your Coffee Cup (JKCC), who describes digital payments as “a safe way to have a working relationship with the farming community and a way to reduce the risk of cash transactions.” He explains that not only his staff benefits from not carrying cash but also farmers, as word of cash payments spreads quickly in rural areas and instances of robberies and violence are common.
Personal safety is also highlighted as a primary benefit by Hugo Verwayen, founder of PasarMIKRO, an Indonesian social enterprise focused on creating and scaling up sustainable value for farming and fishery commodities. In Indonesia, most coffee collectors are women, and digital payments enhance their safety.
Digital payments are also a way to keep better track of company funds. “If you don’t do things digitally, you lose financial traceability,” says Sjaak. “Digital payments are a way of ensuring true, traceable and verifiable remittances. The added benefits are that they improve safety, efficiency and accounts reconciliation.”
Timely and full payments for farmers
While safety certainly is a top benefit, UGACOF’s experience shows that a range of other aspects of mobile money are highly desirable to farmers. The exporter commissioned global impact measurement company 60 Decibels to conduct a study to better understand farmers’ experience with digital payments. Between January and March 2024, 500 phone interviews were conducted with farmers across the UGACOF network. Results showed that the most valued aspects for farmers were timely payments and access to full payments.
Traditionally, when farmers bring their coffee to collection points or processing centers, they receive only a portion of their final payment in cash – typically 20 to 30% – while the rest is withheld until the coffee reaches the buyer, sometimes weeks later. With digital payments, farmers supplying coffee to UGACOF receive the full amount within a day or two of depositing their coffee at their local aggregator. This process is facilitated by UGACOF’s comprehensive database, which includes every farmer’s mobile phone number. The process of making a payment is, hence, simple, says Sjaak: “You enter the number in the system, and automatically the payment request comes through.” Sjaak also notes that farmer information is kept strictly private and protected.
However, some farmers reported experiencing delays in receiving payments. “Fast is never fast enough, almost,” says Malavika Rangarajan, Senior Associate at 60 Decibels. “If you see the difference between when farmers got the payment versus when they expected it, at best it was 24 hours apart. But the study told us that that is a very significant window for a coffee farmer.” Setting realistic expectations with farmers is essential, says her colleague Aayushi Kachalia, Agriculture Strategic Initiatives Lead: “Farmers think that if it’s a digital payment, you should be able to get it immediately. However, someone needs to be at headquarters to process it. So, if the headquarters are closed, or it’s a holiday, farmers see that as a delay.”
Credits: Photo by Ruang Lampu. Location: Semarang, Central Java, Indonesia, 2023
Access to credit and saving opportunities
In its mission to support farmer livelihoods, JKCC identified another significant opportunity with digital payments: easier access to credit. “Our SACCO [Savings and Credit Cooperative Organization] cannot finance someone who is not bankable”, Julius explains. “With digital payments, there is no chance of forgery. You can see a bank statement, a transaction, there’s proof”. This transparency means that farmer bankability is increased, and farmers can more easily and quickly secure loans for farm investments or personal expenses. Sjaak agrees: “When you need an emergency loan, you get interested in digital payments because you can knock on a door and show proof that you are reliable.”
Beyond access to credit, farmers also report improved financial discipline with digital payments. Indeed, according to the 60 Decibels study, 69% of farmers use their mobile money accounts for saving. “If they have cash in their pocket, it’s easy to spend it”, says Julius, whereas mobile money requires a specific reason to cash out or spend. “It’s a transformation.” Hugo has observed a similar trend in Indonesia: “Initially it was 100% people cashing it out, and now that’s changing -- they increasingly keep it in their accounts.”
Considerations for digital payment adoption
Despite the benefits of digital payments, 28% of farmers in the 60 Decibels study still preferred cash over mobile money. “We were surprised by [this] coming up so much. These were farmers who seemed digitally savvy and use mobile money very often for day-to-day expenses,” says Malavika.
In addition to perceived delays, costs associated with mobile money are a concern, primarily taxation. “Tax collection is easier with mobile money, so the Ugandan government is on board, too,” Julius says. “A cash economy does not support this.” Even when governments levy no taxes, though, cash-out fees remain a significant barrier for mobile money adoption among farmers. To overcome this, UGACOF decided to absorb the fee, which the 60 Decibels study shows contributes to high satisfaction rates among farmers.
Another approach to bridging the gap for farmers unfamiliar or uncomfortable with mobile money is to innovate around access to digital payments. PasarMIKRO did just that. “We explored the simplest entry point for smallholder farmers,” says Hugo. “We developed an app, but also created a WhatsApp integration through which the farmer gets messages on their phone. There they can press a button and agree to a price and sale. This is important because it’s what they use every day; it’s very easy and intuitive.” Another effective strategy is linking digital payments to financial services, as demonstrated by JKCC.
Nevertheless, covering cash-out fees, being creative, and connecting digital payments to other financial services alone will not convince farmers to fully embrace digital transactions. Multiple factors need to align to effectively implement digital payments with partners. UGACOF “is the ideal case”, says Aayushi, but replicating its model in other countries is challenging. In Uganda, for example, farmers have used mobile money for nearly a decade for everyday transactions, and the country has a well-developed ecosystem with various providers and high levels of digital and financial literacy.
For companies, applying insights from one pilot location to another is a valuable starting point, yet these examples highlight how each country’s unique context ultimately determines the success of such initiatives.
Carolina Pirola
Carolina is a researcher and communications specialist based in Madrid, Spain. A personal interest in sustainability led her to investigate coffee farming communities in the Canary Islands and northern Argentina, which launched her into a research and communications career in the coffee sector.