Colombia is well known for the quality of its coffee around the world. During an international coffee award (the Cup of Excellence) the jury described the Colombian coffee as follows: A taste with a floral, jasmine aroma, has a lingering creamy aftertaste, background notes of vibrant cherries and an “effervescence” that lends the java a robust and round sweetness.
But the coffee growers economy in Colombia hasn’t always had the ‘jasmine aroma’, with many challenges for coffee growers associated with undeveloped rural areas and unstructured banking systems.
Facing the challenges of undeveloped rural areas with unstructured banking systems, the National Coffee Growers Federation (NCGF) in Colombia embarked on a transformational programme with its 384,000 coffee grower families.
The NCGF conceptualized a mobile banking system that would allow coffee growers access to banking services without leaving the farm.
The project faced many challenges, which included but were not limited to the following: type of platform, supporting bank, subscription process, transactions security, cash withdrawals and payment points.
Aldeamo, an international mobile software company, established a co-operation with the NCGF in order to provide an easy to use and secure mobile platform for the coffee growers.
The project was also supported by Fredskorpset (FK), a Norwegian Peace Corps, through the project management and launching process.
In 2012, the platform went live with the training of 1,000 coffee grower families in two departments and four coffee towns.
The technology used a menu that worked over USSD (mobile interactive menu) and started with the following transactions:
- Check Account Balance
- Check Subsidies
- Purchase
- Withdraw
- Coffee Price
- Account Movements
- Buy Airtime
- Change Password
Most of the coffee growers saw the advantages of the mobile transactions, because it enabled them to know the price of the coffee at the buyer agencies.
This transaction was important for two reasons. First, due to the frequent price changes at the agencies (up to four times daily) as it is dependent on prices in New York.
The second is because each purchasing agency can have a different price depending on the amount of coffee that is being bought.
This means that previously, the coffee grower had to leave the farm with the harvest without knowing which agency has the best price or whether it is better to wait with the harvest at the farm because the price of the coffee is increasing.
Since the mobile banking service was introduced, these challenges have been managed and coffee growers have a better control of their transactions.
These advantages set a remarkable difference when one has worked more than 6 months or even a year for their coffee harvest and in addition he/she has to pay for the transport from the farm to the agency (generally 1-2 hours away).
Purchases and Withdrawals have become quite popular transaction types as well. The Purchase transactions allow the coffee grower to make payments in subscribed establishments.
The most common payment made is for the fertilizer and insecticides used in coffee farming.
Before this mobile service, a coffee grower had to travel to the closest urban area to access an ATM, make a withdrawal and pay to the supplier.
This translates to loss of man-hours of half a day or more, as well as the risks involved with carrying cash in rural areas.
In practice, the coffee grower accesses the menu on his phone, dials the supplier code and makes the transfer to the supplier’s account.
In the case where coffee growers need some cash, they can go to an authorized kiosk that operates as a Non-banking establishment, where the correspondent dials the kiosk code and gets the cash.
The money is transferred from the coffee grower account to the kiosk account.
Finally here are some tips on how to overcome the challenges of mAgri projects, such as this:
- Design the project only if it can be self-sustainable in the long term (more than a year).
- The number of potential users has to be large enough so that the transaction costs don’t limit access to the system. Therefore, select only the most popular activities in the country.
- Have a strong educational campaign about the service and let users get used to it. During the process of implementation, include feedback from the end user. Answer these questions: Is the service friendly and easy to use? Is it available on every phone? Can you include different information? Why will the end user like it?
- Get the right partners. The mobile network operators have no other goal rather than to make the project succeed. Hence, launch the project with the operator who has the end users. Don’t try to push the end users to change their SIM cards.
- Free launch is a good idea but remember the system has to be self-sustainable.
- Charge by subscription with unlimited access to the platform. In this way, the end user will feel the freedom to use in the platform and every month will remember that the service is active.
- Make follow up meetings after 3-6 months and 1 year after launch.
The most important advice is to develop the solution with passion and be proud of making the world a better place to live in!
