Due to the continued rise in global population, investing in agriculture has become a necessity. The dietary requirements and preferences in frontier and emerging markets continue to move toward higher value foods.
It is estimated that, the world demand for food will increase by 70 percent by 2050, and at least $80 billion annually in investments will be needed to meet this demand. Another expectation is that most of this investment should be coming from the private sector. Without records, are our farmers ready for this investment? Will the private sector be happy to lend to farmers who do not have a track record?
The Herald recently highlighted the plight of farmers in the remote areas of Zimbabwe. Some areas are not remote, but they are just closer to the border and farmers are opting to smuggle and remain excluded.
As the farmers indicated they are closer to the selling points in Mozambique than they are to selling points in Zimbabwe.
After receiving inputs some farmers are opting to sell their harvest across the border, not for a better price but for cash. To the farmers the costs associated with such decisions, in terms of money, time and the risks associated with border jumping are irrelevant. Cash is King long live Cash!
The reason why we have the National Financial Inclusion Strategy (NFIS) is to ensure that as a country, Zimbabwe is Cash-light. A noble idea if we consider the risks associated with cash.
The long term benefits to the farmers will be seen when private sector starts investing and lending to farmers. That mobile money account, or any other account record will be invaluable.
The NFIS was promulgated as a result of a need in the economy and the realisation that exclusive growth is detrimental to economic development.
There was a need to ensure that every citizen from every corner of the country is participating in the development of the economy, hence the term inclusive financial system.
Over and above that inclusion ensures that financial transactions are recorded making it easy for monetary and fiscal planning.
The Agriculture Value Chain
The plight of the farmers brings to the fore issues that need to be addressed if the country is going to achieve its goals as set out in the NFIS document.
Something really needs to be done so that the agriculture value chain is not lost in the financial inclusion journey. The country is Agro based and there is need for a multi-pronged approach to ensure farmers are not over reliant on cash.
Cash received in such a way, in as much as it improves family welfare and community welfare, is not recorded.
Zig Ziglar in one of his many famous quotes states that we should “stop selling and start helping”. The Financial inclusion strategy may fail to achieve its goals due to the failure to reach the bottom of the pyramid.
Some of the issues raised by the interviewed farmers have shown that, financial inclusion should never be left to the private sector alone. Financial inclusion should never be sold, it should not be led by profit motive alone.
The private sector’s bottom line is measured financially whereas government and the non-profit sector is concerned with positive outcomes at whatever cost.
Policymakers must come in to remove systemic barriers, which hinder access to financial services by placing peasant farmers at the centre of all policy interventions.
Things to do with network coverage should not affect service delivery to the peasant farmers. Legislature should come up with policies that ensure all farmers are covered. Interoperability is a hot issue in Zimbabwe but for the sake of financial inclusion it maybe the best solution in some areas.
Farmers queried that shop owners, clinics and schools are not yet comfortable with this life changing technology, Mobile Money. It’s over six years since the launch of Mobile Money in Zimbabwe and they are sectors that are still reluctant to accept it. It’s a financial literacy problem that needs addressing from a national perspective. Private sector alone may not invest enough in this program hence the need for a national strategy on financial literacy. Farmers need training on the ‘how to’ and the benefits of using digital financial systems.
Financial literacy is needed in this sector for farmers to appreciate the long run benefits of being included. Climate change is real and farmers need the knowledge to appreciate agriculture insurance.
If there is going to be an investment in irrigation or other agriculture infrastructure this will all be done based on data of produce. Even when leasing companies come through, no company would want to lease its machinery to a farmer who does not have data.
Farmers need to appreciate that the cost of transacting using cash is high. Farmers have been observed running around looking for cash after receiving payments into their accounts, in the process incurring some additional cost. Yet they can transact using cheaper cashless options.
Policymakers must come up with regulation on financial literacy that wiensure Zimbabwe produce that is funded by us is enjoyed by us. If it is exported it has to go through the normal process. It is critical that farmers are protected from potential abuse and are treated fairly by providers and agents. Overly there is need to protect consumers by establishing rules for disclosure, fair treatment, and recourse
A financial literacy policy will help farmers make informed financial decision, and avoid risk behaviour such as border jumping in order to access cash as well as over indebtedness.
Powers that be should also put in place regulations that limit abusive business practices (that are rejecting digital payments) and make recourse mechanisms easily available.
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