“Digital payments can be a game-changer for farmers”

1. Why is the World Cocoa Foundation joining the Better Than Cash Alliance?

By joining this global partnership, we’re recognizing the potential benefits of replacing the use of physical cash with digital payments. The cocoa and chocolate sector wants to share lessons learned in transitioning to digital payment systems, notably for smallholder farmers, to promote financial inclusion, increase transparency and efficiency. We believe that the effort required to mainstream digital payments in cocoa-growing countries is best done through a concerted effort by the industry and in coordination with the local authorities.

The World Cocoa Foundation (WCF) is the world’s leading industry organization for cocoa sustainability. Our vision is a sustainable and thriving cocoa sector - where farmers prosper, cocoa-growing communities are empowered, human rights are respected, and the environment is conserved. Partnerships are at the heart of everything that we do. We have more than 100 members representing 80% of the cocoa and chocolate industry. We work with our company members, governments, donors, and civil society organizations on programs and initiatives to promote cocoa sustainability.

2. How are farmers benefiting from making and receiving digital payments? Could you share any story of a farmer you’ve met and talked about how mobile money, or other digital channels, are making a difference in his / her life?

Digital payments can be a game-changer for farmers. We’ve recently spoken with Edward Addo, a cocoa farmer from the Sefwi Humjibre in the western region of Ghana. He has been receiving mobile payments from Cargill Kokoo Sourcing limited for his sale of cocoa beans for the last two years. He told us: “I am very excited to receive mobile payments. It helps me keep money on my mobile wallet, and I withdraw it only when needed. My wallet is topped up whenever I sell additional beans. This is a form of savings for me. I only withdraw money when it is time to buy inputs or pay school fees, pay for healthcare for a family member, or pay for any family need. I get interest on the money I save on my wallet. Mobile money also keeps my money safe, unlike physical cash which could be stolen from me.”

© © World Cocoa Foundation

© World Cocoa Foundation

3. How does this new partnership fit into CocoaAction’s efforts to collaborate with 9 leading cocoa companies, 2 governments and dozens of stakeholders to make the cocoa sector sustainable?

Launched in 2014, CocoaAction is a voluntary strategy that aligns the world’s leading cocoa and chocolate companies, origin governments, and key stakeholders on regional priority issues in cocoa sustainability, such as productivity and community development. Early in the development of CocoaAction, digital financial services were identified as a tool to improve the lives of cocoa farmers and their families.

In 2015, CocoaAction funded a study on mobile money to identify specific challenges faced by cocoa farmers in Côte d’Ivoire and Ghana. Further experience was gained by CocoaAction companies from pilots and smaller projects. We have learned that to make mobile money and other digital financial services succeed on a broad scale, a better ecosystem and infrastructure for digital services is needed.

Through the new partnership with the Better Than Cash Alliance, WCF hopes to collaborate with a large network of stakeholders (including industry, cocoa farmers, governments, banks, mobile network operators, service providers, and more) to make digital financial services a reality for farmers.

Simultaneously, WCF is partnering with USAID Feed the Future and industry on the African Cocoa Initiative II (ACI II) that falls under the CocoaAction strategic umbrella. ACI II is increasing access to high quality planting material and supporting financial inclusion in West Africa. ACI II’s financial inclusion efforts are coordinated closely with USAID’s Global Development Lab and will complement the Better Than Cash Alliance partnership.

4. Can you share any numbers about the growth of mobile money in the cocoa sector? What do these numbers tell us?

The world’s top cocoa-growing countries -Côte d’Ivoire and Ghana- can tell us a lot about the potential for mobile money growth.

There were 8 million active mobile money accounts in Ghana in 2016, and an additional 3.5 million new accounts should be created by 2020, according to GSMA. These will come from both business-to-person and government-to-person payments. Though growth in the use of mobile money obviously favors urban areas and populations, we expect that the importance of cocoa to the national economy will incentivize similar growth in rural areas.

In 2014, Côte d’Ivoire had the highest mobile money penetration in West Africa, with a quarter of the adult population holding a mobile money account. Côte d’Ivoire also has the most mobile money providers among West African Monetary Union countries according to Finclusion Lab. Though few Ivorian cocoa farmers have bank accounts, a majority of those who do use mobile accounts. GSMA predicts that around 1.3 million new mobile money accounts could be added by 2020.

5. Where do you see the impact of digital payments in your sector in the next ten years?

We see three areas of impact:

First, digital payments will increase access to financial services for many unbanked cocoa farmers. For most cocoa farmers, there is a need to access financial services—not just the ability to accept payments for cocoa beans or make payments for agricultural inputs, but also to save in digital savings accounts and, for example, take out crop insurance. The resulting impact on financial inclusion also clearly contributes to progress toward the Sustainable Development Goals. Secure and efficient digital payments will incentivize an array of value chain actors to enter the digital space.

Second, digital payments will help cocoa buying companies address challenges in their supply chains. By supporting digitization among cocoa farmers, companies will gain real-time visibility into the flow of inputs, services, and products at the farm level, driving more transparency in the industry. The resulting feedback loop will strengthen farmer loyalty, increase security, and drive timely delivery of projects and services to the farmer.

Finally, a digital ecosystem catalyzed by e-payments will give public and private service providers real-time information, demand signals, and communication channels with farmers. Much of the current delivery system is hampered by a lack of understanding and responsiveness to farmer needs and financial behaviors—traditional barriers that will benefit from the growth of digitization.