Mastercard has partnered with Kenya’s Co-operative Bank to launch an online platform that will see local farmers, first, access farm inputs right on time at the onset of plating season and then get their produce to the market upon harvesting.
The online platform which is referred to by the country’s bank name, Co-op Bank Soko is also expected to help farmers access credit using their transaction history to build a credit profile.
It connects various agriculture value chains through which small-holder farmers can directly place their harvests for sale. They can also purchase farm inputs and access Co-op Bank’s financial services at ease.
So far 760,490 farmers, 582 farmer co-operative societies, eight farm input suppliers and three major farm produce buyers have been enrolled on the Co-op Bank Soko platform.
“Perhaps the single biggest frustration to small-holder agriculture in Kenya is that farmers start the production process with none of the key market signals in place. No assured market or a price estimate, no demand projection for their produce nor inputs quality or cost in mind,” said Esther Kariuki, the Head of Agriculture Business at Co-operative Bank.
The Nairobi Securities Exchange-listed lender has strong connections in the agricultural sector, which has many savings and credit co-operative societies catering to farmers producing tea, coffee and milk, among other commodities.
The Co-op Bank Soko platform was originally formed in a partnership with MasterCard and Rabobank –a Dutch multinational banking and financial services provider.
Risks versus returns
According to Esther, the Co-op Bank Soko platform, therefore, seeks to link the farmers directly to buyers and input providers alike, thereby making market signals more visible further enabling participants to do reliable estimates of risks versus returns of their investment.
“This platform is being rolled out using Mastercard’s Community Pass digital infrastructure, an interoperable platform that connects individuals and businesses to essential services regardless of connectivity as a challenge.”
By the single act of sponsoring Co-op Bank Soko, Mastercard has fostered a bold new world of opportunity for Kenyan farmers.
Daniel Huba, the lead for MasterCard’s Community Pass Business in sub-Saharan Africa said the product would further deepen financial inclusion for the growers.
He said when farmers increase their digital footprint, they become visible to financial services firms, which are, to a certain extent, able to determine a farmer’s expected yield using such information as previous harvests and the inputs they have bought for a season.
Such data, Huba noted, is scant, with 60 per cent of all transactions undertaken by individuals being offline.
“Transactions, in this case, go beyond payments and are basically services that individuals are participating in. This includes farmers bringing their produce to a collection centre or a mother taking a child to a clinic. A lot of these transactions are offline today,” he said.
“We believe that for financial inclusion to take place, the foundation of that financial inclusion is what we call digital inclusion.”
Co-op Bank has been leveraging its relationships in the co-operative movement to support small-scale farmers overcome barriers in market linkages, produce prices, quality inputs, infrastructural and logistics and access to financial services.
The lender says it is targeting one million farmers to help them receive higher prices for their produce and better inputs.