Field report Zambia
In a society that is largely financially excluded, what role do mobile financial platforms play in enhancing farmers’ capacity to improve their livelihoods?
Zoona is Zambia’s leading money transfer platform allowing users to receive money through a mobile phone. Critically, the service provides a secure and accessible means to finance for the unbanked population, who are predominantly smallholder farmers in rural areas; customers simply walk to a kiosk, and within 5 to 10 minutes, the transaction is complete. With a simple system, South Africa-based financial technology company, Zoona, is affording an opportunity to the even most vulnerable groups to easily send and receive money.
“Zoona has a unique approach to mobile money that makes it ideally suited for farmers’ needs,” says Lelemba Phiri, Zoona’s chief marketing officer in Zambia. “Because it is not owned by a bank or by a cellular provider, Zoona is completely network agnostic, which means anyone can use Zoona, even people without a mobile phone.”
Launched in 2008, Zoona has a long track record of serving Zambian farming communities. One of the platform’s earliest customers was agribusiness company NWK Agri-Services, which used the platform to pay cotton farmers across the country. Zoona also has a long-standing relationship with Zambian Breweries whose customers use the Zoona platform to purchase stock (beer and other drinks). “This model allows Zambian Breweries to receive payments from a broad range of customers who may not have bank accounts, thus improving its service,” says Phiri. “Zoona does not do payments for Zambian Breweries to farmers – but that is a model we have implemented successfully for other corporates through our bulk money transfer product.”
Innovation for financial inclusion
In 2009, a national Finscope financial survey revealed that 63% of the Zambian adult population was excluded from formal financial services. Of this percentage, 66% were estimated to live in rural areas and depend on traditional agriculture. While the picture has improved to about 40% as of July 2016, the majority of the rural populace remains financially excluded, hindering their potential to access credit.
But the Zoona platform looks set to change the prevailing scenario. Last year, Zoona processed over €210 million in domestic money transfer transactions – with a significant portion of that coming from farming and rural communities which, according to Phiri, “represents a significant contribution and impact to financial inclusion.”
Implementing a number of innovative solutions, such as cash-wholesaling, cash-running and electronic credit, Zoona ensures that its agents, who are independent entrepreneurs, are always liquid and able to transact – something that the firm believes other players in the market struggle with, particularly in rural areas. For example, Zoona offers a low-cost overdraft facility and enters into agreements with other business partners to ensure that their agents can go to their premises to withdraw cash when needed.
The firm’s recent consumer data shows that about 20% of its more than 1.5 million active (using Zoona at least once in a sixty-day period) consumers are in the farmer/provider sector or live in a rural community. This percentage is much higher for Zoona outlets (booths) operating in rural areas. According to Lucy Shakaloba, a Zoona agent operating in Monze district, about 70% of her daily transactions involve farmers.
“Most of my regular customers are farmers who receive money for farming inputs from relatives in big towns, while others remotely sell their produce to Lusaka, and are paid through Zoona. I know of one farmer who collects on average 3,000 Kwacha (€280) per week from vegetable sales,” says the 24 year-old teaching graduate who has opted for financial entrepreneurship to teaching.
Supporting the entire value chain
With over 1,300 active kiosks operated by independent entrepreneurs, Zoona has created over 2,500 jobs in Zambia, Malawi and Mozambique, processing over €1.5 billion in mobile money transactions. Raising over €21 million in international investment since 2009, Zoona is on the move and expanding its portfolio of financial services, and so are some of those who have rubbed shoulders with it.
Milambo Maambo is an agro-dealer in Pemba district in Southern Zambia. Thanks to Zoona, he is now a government recognised supplier of inputs under the Zambian Farmer Input Support Programme (FISP) electronic voucher system, which was introduced in the 2015/16 farming season to cut some of the huge costs associated with the government subsidy programme. “My experience with Zoona enriched my CV when I applied for the FISP e-voucher,” says Maambo. “More importantly, the Zoona contract increased my capital which is a requirement for the programme’s designated banks to register an agro-dealer under FISP E-voucher scheme.”
With a capital of slightly over ZK50, 000 (€4,690) in 2015, Maambo earned ZK100, 000 (€9,380) in a contract for supplying inputs to smallholder farmers under Zambia’s Conservation Farming Unit, through the Zoona mobile transfer platform. “The advantage with Zoona is that it only requires one to have a mobile phone, and transactions can be done anywhere for as long as there is network connection – no hustling involved,” says the former government extension officer turned agro-dealer.
Maambo says that the mobile money platform provided a base for growth, helping him to create an easily accessible database (slightly over 5, 000 farmers), and an operating capital of more than €28,140. This, he says, has earned him respect and trust from agribusiness companies that readily supply him with stock from which he earns commission. But more importantly, he adds, “The mobile platform has helped me extend an input credit facility to smallholders. With a reliable database in my custody, I know who can and cannot afford to pay back.”
Patson Chikwanda is a beneficiary of Maambo’s credit facility. “In the past two seasons that I have been accessing inputs on credit, my productivity has increased because I plant and weed on time, improving my overall annual production,” says the 40 year-old farmer of Simbulo village in Pemba district. Asked about one major change in his life, Chikwanda, a husband to three wives and father of ten children, points to his newly built four-roomed iron roofed house. He is proud of this symbol of success from the last two seasons, as well as being able to easily support six of his children at school.
With the recently launched (February 2017) Sunga account – an e-wallet product that enables consumers to keep money safe at no charge and save, for example, for school fees or building a house – Zoona looks set to revolutionise Zambia’s agricultural sector financial inclusion agenda and already has over 35,000 users. A key advantage of a Sunga account is that it requires no paperwork to set it up, requires no minimum balance – an account can be set up with a few kwacha (less than €1) – and there are no monthly fees.
While securing the necessary permits and licenses required to expand business services may pose a challenge, Zoona is continuing to work with partners and government regulators through its Z-Labs project to expand its financial services and develop new products for farmers and agripreneurs. Z-Labs is the innovation arm of Zoona which is working on a number of different financial services – Zoona Sunga was the first new product that they have released. The mission of Z-Labs is to propel Zoona from an over the counter money transfer business to a fully-fledged financial service provider and digital leader that delivers customer-centric products and a superior customer experience.