Ditching cash in favour of mobile payments for loan repayments provides huge benefits to Kenyan farmers, reducing costs, uncertainty, inefficiency and insecurity, a new UN study shows.
Written by the UN-based Better Than Cash Alliance, the paper shows how agriculture non-profit One Acre Fund and Citi Inclusive Finance helped farmers reap the benefits of digitising their loan repayments.
Of 250 Kenyan farmers quizzed, 100% say that they prefer using M-Pesa mobile payments to cash, citing transparency and convenience as the main benefits. Processing times for repayments have been slashed from 12 to 16 days to two to four days, with farmers knowing immediately when their payments are received.
As one farmer explained, in the old system, "you didn’t know if the money had arrived, and you used to get confirmation after a week. Now, the very day [after I make a payment] I get an SMS with my name on it, and my balance has reduced."
Meanwhile, One Acre says that mobile has contributed to an 85% decrease in the instances of repayment fraud, with anecdotal reports indicating farmers (particularly female farmers) and staff feel safer because the risks of holding cash are reduced. Mobile technology has also contributed to an 80% fall in processing costs, while the amount of time staff spend working on collections has fallen 46%.
Oswell Kahonde, Africa regional lead, Better Than Cash Alliance, says: "Digital payments are essential to building sustainable business models and creating long-term impact. By enabling smallholder farmers to make and receive payments digitally, we are creating transparency and accountability which translates to numerous benefits and empowers people to take control of their finances.”
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