AfDB's e-wallet project in Togo – a rousing success with farmers
Agriculture, which employs 70% of Togo's workforce and contributes nearly 39% of the country's Gross Domestic Product (GDP), is the mainstay of Togo’s economy.
In the effort to modernise agriculture, the government received assistance from the African Development Bank (AfDB) which enabled the creation of an e-wallet project that has transformed the lives of many of the country's agricultural producers.
"The project is such a success that the government plans to extend it to the energy sector by providing solar electricity kits to the rural population. The Togolese people are proud of the e-wallet's success and commended the African Development Bank's president, Akinwumi Adesina, for communicating the idea to the head of state," said Serge N'Guessan, AfDB Resident-Representative in Lomé.
The idea was developed in November 2015. During an official visit to Lomé, the Togolese President, Faure Gnassingbé, requested the AfDB's assistance and advice from the institution's president, Akinwumi Adesina, to help reduce corruption in Togo's agricultural sector. This included helping the Togolese government to optimize the marketing of subsidized fertilizers sold to farmers by introducing a mobile phone device, based on a similar experiment implemented in Nigeria when Adesina was Minister of Agriculture.
The AfDB's national office in Togo (TGBO), its Agriculture and Agro-Industries Department (OSAN) and West Africa Department, connected the Togolese side with the Nigerian federal ministry responsible for agriculture. The private company that developed the electronic mechanism for fertilizer distribution in Nigeria also assisted. Several trips between Lomé, Abidjan and Abuja followed. The result: thanks to close cooperation with mobile phone operators, Togo Cellulaire and Moov, the agricultural e-wallet, called “AgriPME”, was launched.
AgriPME's goal is to provide efficient fertilizer grants management system for vulnerable farmers and that would enable a simple secure and transparent payment of grants. The project will also ensure traceability and the possibility to make payments to farmers in need. AgriPME provides real-time information about the market and available fertilizer inventory in the country. It also increases the private sector's involvement and encourages job creation, as well as the gathering of significant data on the sector and its specifics (age, gender, location, arable surface area, seeds selected, among others.)
Thousands will benefit
The project is destined for producers in Togo's five regions. In addition to providing approximately 150,000 vulnerable producers with a grant of 3 - 50kg sacks of fertilizer each, the project also:
- Provided fertilizer and increased grain production to 1.34 T/ha in 2016, compared to 1.22 T/ha in 2015.
- Made the fertilizer market subject to the rules of the economic market, eliminating excessively costly official channels. Digitalising the payment process for fertilizer, reduced the cost to the farmer by 4% by eliminating the requirement to go through several government intermediaries.
- Created 325 indirect jobs through the extension of "mobile money" distribution points (payment by telephone), extending the use of mobile phones in a rural setting and creating fertilizer distribution businesses, including repurposing shops across the entire country.
- Payment for fertilizer by mobile phone, thereby reducing the use of cash, which in turn reduced corruption and the misappropriation of fertilizer.
- Finally, the country is faced with an inadequate level of structural transformation, its economy being dominated by agriculture, which accounted for 39% of GDP in 2016. Agriculture employs 70% of the labour force of which 72.6% live below the poverty datum. By increasing productivity through the improvement of fertilizer distribution in Togo, the value added per year and per agricultural worker grew from US$996 in 2015 to US$ 1,004 in 2016.
To successfully implement this project, teams travelled across the country to individually identify the most vulnerable farmers, gather pertinent information (age, gender, arable surface areas, among others), which were then fed into an agricultural information system.
Once all vulnerable farmers were identified, the government provided the total grant funding amount to the mobile telephone operators (Moov and Togo Cellulaire), for conversion to electronic money. Both operators created electronic wallets for registered distributors from whom farmers would purchase fertilizers with their grant.
Thereafter, the funds are credited and transferred to each farmer's electronic wallet. In concrete terms, each farmer received CFAF 9,000 on his or her AgriPME. The government grant covers 30-50% of the required input while farmers provide the remaining amount. Under the scheme, the farmers are required to upload the balance to be paid into their electronic wallets, or pay the amount due in cash directly to the distributor. Thus, payments for inputs are made via transfer from the farmer's electronic wallet to the distributor. One of the many advantages is that the distributor may request that the mobile phone operator transfer the amounts collected via his or her electronic wallet through a specified payment method (cheque, direct deposit, cash).
AgriPME, a project that could be of interest to other African countries
In light of the project's rousing success, the Bank plans to replicate it in other Regional Member Countries (RMCs). "Digitalisation is a good tool for the African economy. Increasing Africa's digitalisation will help in modernising the region's economies," President Adesina said.
In addition, the project will help to improve how to manage public assistance in the agricultural sector, providing efficient and transparent management of grants meant for vulnerable farmers. It will both encourage needed actions to create reliable data on recipients identified within countries and promote financial inclusion within the farming community. Specifically, beyond sharing experience with the Nigerian side, the Bank's support included technical support in the form of guidance throughout the project's life from development, implementing; the AgriPME and the liberalised process fertilizer distribution process in Togo. The government financed this pilot phase at the estimated of CFAF 1.22 billion from its budget.
The Bank's financial support will be included in the budget, currently being prepared, in order to strengthening and institutionalise this initiative and make it possible to reach a larger number of farmers. In collaboration with the Togolese government, the Bank is also preparing a solar electricity project based on the mobile payment system and AgriPME platform for the rural population.
Opportunities for vulnerable people
Despite the unfavourable natural conditions (a caterpillar invasion and negative impacts of climate change), Togo's 2016/2017 agricultural season was clearly better than the 2015/2016 season, because of the efficiency of the fertilizer distribution system and its timely availability. For example, production of corn, an essential food for Togolese families that is widely grown by vulnerable farmers increased from 794,661 tons during the 2015/2016 season to 826,896 tons in 2016/2017. Furthermore, with the same grant amount (CFAF 1.5 billion) allocated by the Togolese government for the purchase and distribution of fertilizer for every agricultural season since 2009, for the first time, 44,000 tons of fertilizer were available locally at the end of December 2016, compared to an average of 30,000 tons of fertilizer over the years 2009 to 2015, an increase of 45%.
Finally, the project identified 151,143 vulnerable farmers. After verification of information provided by the farmers, only 77,542, including 30,485 women (38%), received a grant via their mobile phone. Recipients are considered to be vulnerable farmers who qualify for support based on the following criteria:
- Resident in a village in the past three years
- Agricultural workers aged between 18 and 60 years
- Ownership of 0.25 to 1 ha of arable and geo-localised land for growing one of the project's eligible crops (corn, rice, sorghum, etc.)
- Ownership of local technical infrastructure and being open to innovation
- Growing improved seeds
- Willingness to restock subsidized input kit each year
- Beneficiary of village or district program supervisory committee support.
The AgriPME project is an unprecedented opportunity to provide access to payment systems and financial services for vulnerable people over the long term. It is also allowed input of up to 3 million targeted and identified persons in the AgriPME’s electronic database. Approximately 40% of vulnerable producers are women, an indication that the project can potentially make a big impact on the financial inclusion of vulnerable women.