Buying unprocessed agricultural products without cash

We're paying an increasing number of farming families in Africa by mobile phone. Three questions and three answers on this payment method.

Why does gebana pay farming families in Africa by mobile phone?

Paying by mobile phone ensures that the farmers actually receive the amount we pay them. It's a personalised, direct method of payment precisely because it's linked to a phone number. Middlemen are no longer able to pocket a share of the money that would otherwise be paid out in cash.

Each mobile phone payment is documented, which makes it easy to see who paid whom and how much. This helps with our bookkeeping and puts a stop to money laundering, a widespread practice when purchasing unprocessed agricultural products.

Our employees also don't need to carry as much cash with them when they go to see the farming families. This lowers the risk of being robbed, for both them and the farmers.

And it's easier for the families to manage their money. Their mobile phone serves as a kind of bank account, since most people in Burkina Faso don't actually have one. In fact, only 22 per cent of the population had a bank account in 2017.

How do cashless payments by mobile phone work?

The method of transferring money by mobile phone that we use in Burkina Faso and Togo has been around since long before smartphones. So in many African countries, it is quite common for people to use their mobile phones to send money, pay bills or even make cashless purchases.

The money is sent to the phone by SMS. And in the larger villages and towns, there are shops known as cash kiosks, where people can load money onto their SIM cards or have an existing credit paid out to them in cash.

One of the ways we tested cashless payments was in Burkina Faso as part of our revenue sharing programme. We worked with a local service provider, Orange Money, which would process a large batch of payments for us in one go. This allowed us to share our revenue with 1,325 farming families between November 2019 and January 2020.

However, when we buy goods like raw cashews, we pay the women farmers individually. And in regions where it is not possible to pay for the goods this way, we transfer the money to our local staff by mobile payment. They go to the nearest cash kiosk to have the cash paid out to them and then take that cash to the cooperatives and farmers.

What are the biggest challenges gebana faces with this payment method?

As mentioned, the payments are linked to the farmers' mobile phone numbers. This means we can guarantee direct payment, which is great. But unfortunately, these farmers change their numbers frequently, which means we have to check their numbers carefully each time before making a payment. This takes a lot of time.

Another challenge is the acceptance of this payment method. Even though a lot of people already use mobile phone payments, we still need to teach farming families how to use digital money and explain the advantages to them: it's more secure, there's no middlemen, it's transparent and confidential, and the money lands on their mobile account.

The poor network coverage in the rural areas in Burkina Faso occasionally throws a spanner in the works. It can sometimes take several hours before the money comes through on their mobile phones. And then there is the fact that there are no cash kiosks near remote villages.

It can be difficult if we miss a mistake and send the money to the wrong phone number – in other words, to someone who isn't entitled to it. It's often impossible to get that money back.

Even if we overcome all these challenges and disregard those beyond our control, there are still the transaction fees to consider. Each time you transfer money by mobile phone, there is a fee. This fee is payable by either the sender or recipient, or they can share it.

When we pay out a share of the revenue, we deduct the transfer fee from the final amount. In other words, the farmers pay the fee.

But when we're paying for goods, we can't do it that way. Nor would we want to. Instead, we want to share the fees with the farmers. For now, though, we pay the fees in full so that we can increase acceptance amongst the families and make them aware of the benefits of this payment method.

We do get pushback from the cooperatives and their presidents, as well as from the village elders and collectors. They feel that direct payments by mobile phone circumvent them. They lose some of their control and power and can no longer pocket a share of the purchase price for themselves. Naturally, they want to prevent this.

Payments made by mobile phone as at September 2020

• Burkina Faso: 1,325 out of 2,554 farming families received their revenue share via mobile phone payment
• Burkina Faso: raw cashews purchased from 164 farming families paid by mobile phone
• Togo: Unprocessed agricultural products purchased from approx. 250 farming families paid by mobile phone