This is the first in a publication series of three interview pieces with the three finalists for the European Microfinance Award on Financial Inclusion through Technology.
Advans Côte d'Ivoire (Advans CI) is a NBFI in the Ivory Coast which offers payment, saving and credit services enabled by an Advans account linked to a MTN mobile money account. Advans CI has responded to traceability and safety issues faced by cooperatives paying cocoa farmers, as well as low school enrolment due to lack of regular cashflow among farmers, by offering its digital savings and payment solution, with wallet-to-bank and bank-to-wallet transfer services, enabling producers’ cooperatives to make digital payments to farmers for their crop revenue. Since 2017, Advans CI has been also providing small digital school loans, based on an algorithm reflecting farmers’ cashflows. Advans CI also successfully negotiated free MTN transfers between mobile wallets and Advans accounts for their farmer clients.
e-MFP: How is the technology initiative that you presented for the Award particularly innovative?
Advans CI: Advans CI’s technology-enabled-services are innovative because the target clients are an underserved segment. There are currently about one million small cocoa farmers in Côte d’Ivoire. 72% of farmers are still below the poverty line and less than 10% have an account at a formal financial institution. Low financial inclusion among farmers leads to several crucial challenges: cooperatives often pay their farmers in cash, creating security problems with a high number of violent robberies and lack of transparency because payments are difficult to trace.
Our solution is based on a value chain approach. Advans partners with cooperatives that then help to promote the service to their farmers. This has two main benefits: 1) it prompts farmers to open a personal bank account and receive their crop revenues on this account; and 2) it reduces operational costs: cooperatives build awareness on the benefits of services for farmers.
The solution is also designed with client needs in mind: the mobile banking service comes at minimal charge so as to limit the cost for farmers. The digital school loan is specially designed to fit the farmers’ calendar, with the loan being delivered at the start of the school year during the ‘hunger gap’ period but loan instalments paid during the three months of crop revenue. Finally, it enables clients to gain control of their finances: the solution is focused on increasing farmers’ account usage thanks to a full range of tailor-made services; increased financial literacy thanks to dedicated training sessions, and adapted delivery channels.
e-MFP: Could you give one or two examples of challenges you’ve faced in implementing your initiative, and how you have had to change or adapt your activities as a result?
Advans CI: Financial education is key. Producers are accustomed to being paid in cash and lack trust in financial institutions. 47% of the cocoa producers Advans serves are illiterate, with 21% having left school before the Secondary level. Providing financial education was therefore essential to the delivery of the service and to building trust with the farmers. In 2017, we deployed a network of financial inclusion field agents. Their role is to increase awareness amongst the farmers of the importance of the savings through workshops on the field and the USSD mobile solution, and assist the cooperatives in setting up the digitalisation of part of the cocoa payment flows. Their coaching role is essential in order to increase the success of digital financial services in rural areas.
Secondly, we had to give farmers access to cash at low cost. Even if producers are paid electronically, they need to be able to carry out simple cash transactions. As they have limited resources and are reluctant to pay for services, these transactions need to be as low cost as possible. Because producers are remote and dispersed, we had to find a reliable partner to offer these cash services. Since 2014 we have developed a strong partnership with MTN, the MNO providing Mobile Money through a network of 12,000 agents. Advans CI built up a tailored wallet-to-bank and bank-to-wallet transfer service, enabling farmers in remote areas to access these accounts directly from their mobile phones and withdraw or deposit money at the closest MTN Money cash point. We also succeeded in negotiating that the transfers between mobile wallets and Advans accounts should be free for the producers.
e-MFP: What are some of the (general or specific) risks that are possible when using technology to serve clients, and what do you think the financial inclusion sector can do to protect those clients or institutions from those risks?
Advans CI: One risk is client protection when using digital channels. This includes whether the client understands the service they have signed up for – especially for credit services, with high levels of credit risk for digital credit providers and clients being blacklisted by credit bureaus. Secondly, for clients with low literacy skills, even simple menus can be difficult to use. Finally, because the client-institution contact is mainly digital, the client may not know how to complain about the service or who to turn to if they have a problem. These issues can be addressed by financial institutions properly educating clients on the terms and conditions of the services and their commitments.
e-MFP: What are some of your future plans to further utilize technological opportunities in serving your clients?
Advans CI: Advans CI aims to capitalise on its experience with the current branchless banking solution in order to continue to increase its outreach and improve the range and quality of services on offer for farmer clients. We’ll look to scale up the digitisation of crop payments for farmers by rolling out the branchless banking solution in other value chains. We’ll also improve the quality of services on offer through the current mobile solution via developing a more extensive range of tailor made products and services for farmers; improving the training of Advans staff and agents and communication tools to ensure that clients are adopting and using services; and further developing alternative delivery channels and digital finance services for farmers to increase proximity and ease of use.
The winner of the €100,000 European Microfinance Award 2018 will be announced during the ceremony which takes place on the 15th November in Luxembourg in the framework of European Microfinance Week.
For further details on the Award visit the European Microfinance Award website.