European Microfinance Week 2017

PRESENTATIONS

Davide FORCELLA, from CERMi, opened the session by highlighting some challenges to improving the global food system: biodiversity loss, rural poverty, access to food, climate change, scarce access to finance for agriculture production and investments. He stated that ICT has the potential to deliver some solutions to manage these challenges and support more productive, resilient, and environmentally friendly agriculture thanks to the implementation of climate smart agriculture practices, and support the access to financial and non-financial services for smallholders thanks to climate smart lending methodology. He then gave the floor to the panellists.

Michaël DE GROOT provided the Rabobank Foundation's perspective on ICT: connecting the 450 million smallholder farmers (SHFs) that are responsible for 70% of global food production with financial services in the context of climate smart agriculture. Gathering his insights from various Rabobank Foundation partnerships, such as with Soil Cares and the Geodata for Agriculture and Water Programme, de Groot described real life, ICT-based solutions for management of production, compliance and insurance.

Stefan ZELAZNY shared Mobisol's off-grid energy solutions. Zelazny explained that the growth of his company can be attributed to the high uptake of mobile payments and coverage, mobile internet, the increased interconnectivity of devices through the internet and the falling price of solar panels. He described their model being a Pay-As-You-Go (PAYG) approach, combined with a ‘lease to own' payment plan. Zelazny described Mobisol as an ‘MFI against will' due to their PAYG back office software that handles basic but automated financial transactions such as flexible repayments, balance sheets, and financing on mobile phones that is also available to third parties.

Christoph JUNGFLEISCH of YAPU Solutions, a company dedicated to develop and commercialize software solutions for data and climate smart finance, introduced a digital software solution that can build a crowd-sourcing data ecosystem by integrating MFI and FinTech product offers to clients into a single platform. This platform is also useful for sharing local knowledge and know-how. Jungfleisch described this tool as a B2B
solution offered as a software service (SaaS) that connects with existing infrastructure, acts complementarily to other banking systems and offers strong API connectivity in a decentralised manner. The promise is to reduce operational costs, improve risks and information management for FIs, while introducing climatic and environmental dimensions into the core business of FIs.

DISCUSSION

A member of the audience asked the panel to explain if (soil) information can be gathered from satellites and be integrated with the other sources of information, such as soil testing on the ground. De Groot answered that this integration is already taking place, but that innovations are currently making it more accessible and affordable for SHFs as well. Jungfleisch added to this by stating that for SHFs, even mapping the plot is difficult. Connecting the data opens opportunities for automated remote monitoring, so that a bank or MFI can also have an idea of where the plot is, and what the expected harvest data of a plot are. This is possible as satellite imaging is also becoming cheaper and cheaper. Another member of the audience asked the panel to shed some light on mobile providers' potential to provide important weather data by connecting weather stations to their system. Zelazny expressed that he indeed had heard of this development for quite some years, but that innovations have made it cheaper over time.

A member of the audience asked about the technical aspects of the off-grid products and how to ensure that clients in remote areas are able to pay back. Zelazny stated that the system's efficiency is continuously growing. In 2011, a standard energy pack carried about 8 watt, which was enough for a couple of lights, a radio and a torch. Currently, the standard pack comes with up to 12 lights, a 24-inch TV, radio and even an iron can be added to it. He also elaborated on the importance of the user having ownership of the product, which ensures that they take care of the product after the payment is completed.

Forcella asked the panellists to explain how the presented models are scalable in the sense of empowering the smallholder farmer and increasing financial inclusion. De Groot explained that through bringing the cost of these technologies down, more subsistence farmers can transform into entrepreneurial farmers. Zelazny added that capturing more lessons and building better track records would contribute towards profitability and growth. Jungfleisch stated that to scale up the work with the financial sector, local partners and other providers need to interact and share information.

Another question from the audience concerned the exact use of all the collected data. Zelazny shared that there are many potential opportunities to reach scale. For example, customers can be better informed, targeting marketing for both input and output markets and the development of early warning systems that prevent large scale food losses. De Groot added that these data can fulfil the sustainability of the value chain to allow for greater transparency, compliance control and trust, thus reducing the amount of paperwork. For the bank specifically, this opens the opportunity to follow the chain and hence better analyse risks.

To conclude, each panellist gave their vision for the next five years. Zelazny shared the belief in connective data ecosystems, where data flows help create greater common goods especially in rural areas. Jungfleisch said he expects to see a tremendous rise in agricultural production due to improving technology. De Groot stated that an ongoing transformation will disrupt and radically change financial sector services.