With a Smartphone Through Africa
Africa's start-up scene is driven by innovators in the field of digital media and IT. Some of them met through Ampion.
With 60% of Africa’s population working in agriculture, innovations like Esoko’s pricing apps promise to improve conditions of smallholder farmers
Esoko provides African farmers in currently ten countries with market price as well as weather information and further advisory content via SMS-based and voice-based phone services. DDD had the chance to interview Esoko’s country director for Ghana, Daniel Asare-Kyei. He points out how liberalized information transfer and cooperatives can empower African smallholder farmers to compete better in the local and the international market.
DDD: The Esoko story sounds like a real success story. It was founded more than 10 years ago, and according to your profile, you have already reached 350,000 farmers and are active in 10 countries. Mobile technology is not the first thing that comes to my mind when I think about farmers. How did Esoko manage to get these farmers actively involved and what were the main obstacles you had to overcome?
Daniel Asare-Kyei: In the beginning we tried out different models, then decided in favour of the B2B model. This model sells services to projects, businesses, or NGOs. So you sell the services business to business, not directly to consumers. We realised that trying to acquire farmers one by one is more expensive, so we decided we wanted to reach out to all businesses, projects and NGOs that already have farmers in their networks. In the B2B model, you identify projects, businesses, and NGOs who already have a pool of farmers they are working with. Then we go out to train these partners on how to deploy the technology to improve their activities.
If a farmer cannot read, someone else can be trained.
We have encountered a number of challenges. You alluded to technical and digital illiteracy. Africa has a high illiteracy rate, and many candidates for our services don’t know how to read or write. To meet this challenge we actually trained members of a farmer’s household if the farmer could not read and write. If a farmer receives a message and he or she cannot read, they can show it to someone in the house, the children or a neighbour, who can interpret the message. That is how we approached illiteracy. It is a simple principle: If a farmer cannot read, someone else can be trained. Initially the messages only went out as SMS messages.
We have now decided to introduce voice-based services, so that a farmer can listen to the messages on the phone in his or her local language.
We have now decided to introduce voice-based services, so that a farmer can listen to the messages on the phone in his or her local language. This is how it works: The farmer’s phone rings, they take the phone call, and the message is delivered to the farmer in his or her own local language. This is an improvement on the message being sent as a normal text that would be useless if there is no one to read it. The most difficult technological issue we face is infrastructure. We go to areas where mobile connectivity is very poor. So if farmers want to access our services, they might not have access to the network that they need to receive our content. Electricity is another infrastructure challenge. There is no electricity in most rural areas, so many farmers don’t have mobile phones at their disposal. These are the challenges that we faced in the beginning and we are still grappling with some of them today.
DDD: What information is most beneficial for farmers?
We provide farmers with weather information, market prices and advisory services. In my experience, the market prices are most beneficial. Additionally, we have a lot of farmers who talk positively about the weather service.
In Ghana, for instance, we cover 58 commodities in 42 markets countrywide.
This is how the market prices work: We have agents in some of the most important markets in the country. These agents go to the market every market day to record the prices of the various commodities traded in the country. In Ghana, for instance, we cover 58 commodities in 42 markets countrywide. That market price information is sent to the farmers as an SMS on their mobile phones. When they get this information, they can make informed decisions on how to market their farm products. Farmers are able to negotiate better, discover new markets or time the sale of their commodities. In the past, farmers did not have this type of information; they did not know what the prices even were at the nearest market. So when someone came to them, they would just sell to him or her at any price. Now though, the buyers know that the farmers have the market information and so they have also changed their bargaining strategy. This means farmers can get more profit and can also identify new market segments.
The weather information means they can even better schedule how their labour force should be used on their farms.
We also realized rainfall patterns, very important for farmers when planting crops, have become highly variable. Often crops will fail to germinate due to lack of rainfall. Farmers kept asking for precipitation forecasts. Now, we offer weather forecasts on whether it will rain or not, for example. This information allows farmers to plan better. They can do the economic calculations regarding labour scheduling, fertilizer or insecticide application. The weather information means they can even better schedule how their labour force should be used on their farms. This has also helped a lot.
DDD: When farmers get better information, it seems competition then also increases. Are there people who are not benefiting from this process because they cannot keep up with the new market prices? How are these people reacting?
…overall farmers and traders are satisfied and believe that every value chain actor wins.
I would say that this innovation brings a lot of transparency and people are usually happy about it. But occasionally there are some traders who don’t want the farmers to get this information and some may complain about the service. But the majority is very happy about farmers getting access to market price information and the increased efficiency that market transparency brings. There was one example of a renowned trader in the North of Ghana who told us that market price information has made his relationship to his farmers very strong and farmers now trust him due to improved transparency in commodity trading. Of course, not everyone likes the fact that everyone is fully informed now and the improvement in market transparency, but overall farmers and traders are satisfied and believe that every value chain actor wins.
DDD: You still focus on smallholder farmers who normally wouldn't otherwise have access to market prices. So Esoko targets individuals, smallholder farmers. Is this a promising approach when you have huge companies competing against these farmers? Will these farmers then be able to compete with more industrialized companies?
Farmers will be able to compete with commercial farmers if they work together. By that I mean if they form cooperatives, they can do what we call collective marketing schemes.
If the smallholder farmers form cooperatives, they will be able to produce the quantity required to compete.
When you want to compete on the international market for instance, there are two criteria that count: quantity and quality. If the smallholder farmers form cooperatives, they will be able to produce the quantity required to compete. And this structured system means they have access to product certification and technical advice which then helps them to meet the standard of quality that is required. So through these cooperatives, structured out-grower, or collective marketing schemes, the smallholder farmer will be able to compete in the international market.
DDD: The markets that are accessible and how markets are connected are two important political issues. In Europe we are currently debating economic partnership agreements, which would require African countries to open their markets to highly subsidized products from the North, especially agricultural products. What is Esoko’s position here? Would this harm the development you have achieved so far? Or do you take a more relaxed view and feel the local markets are strong enough?
We believe that no matter where they are in the world, farmers should have common peasant rights and operate from a common platform. So if farmers in the North are getting subsidized inputs, farmers in the South should have the same subsidized inputs. If they cannot have the same access to these subsidies and if such policies don’t exist, then the smallholder farmer is hugely disadvantaged and cannot compete. The African smallholder farmer doesn’t have access to modern technology, so the costs of production are already very, very high. If you have a group of farmers producing at very high costs on the one hand, and farmers producing at very low costs on the other hand, then you cannot liberalize the market. That would always be at the cost of the smallholder farmers.
…more commodities will come in from the North and farmers in the countries in the South will not be able to compete with the very competitive prices.
I talked about the fact that smallholder farmers should be able to form cooperatives if they want to operate in a bigger scale. All of this requires access to inputs and technology. If you do not have access to these two things, then you cannot compete with subsidized farmers or farmers who are very well positioned because of institutional support. Let's take a country like Ghana: Even if you have one hundred percent access to the European market and even if people in European markets can afford anything you produce as long as it meets the required quality, if your productive base is weak, you cannot take advantage of the high demand out there. Ultimately what will happen is that more commodities will come in from the North and farmers in the countries in the South will not be able to compete with the very competitive prices. This kind of pure capitalist system crowds out indigenous small businesses and the smallholder farmer in the developing world will continue to be uncompetitive, thus continuing the downward spiral of poverty.
DDD: What is the discussion about EPAs like in Ghana? Is there an alignment of local groups, maybe of farmer unions who have joined together? Is the private sector also cooperating with these groups?
I do not believe that Ghana’s agreement was only at the expense of smallholder farmers, but also all local businesses…
There was a lot of debate locally here in Ghana where civil society, the NGOs, and the farmers were strongly against adopting the EPA. What finally happened was that the government did not have many options because of the conditions tied to the EPA and had to sign the agreement. Concerning the private sector, I do not believe that Ghana’s agreement was only at the expense of smallholder farmers, but also all local businesses that operate with limited capital and technology.
…there should be mechanisms in place that support the smallholder farmer in operating in structured value chains.
The smallholder farmer cannot produce his or her crops competitively for the international markets and so cannot export them. Before you sign an agreement like this, there should be mechanisms in place that support the smallholder farmer in operating in structured value chains. Smallholders can produce the quantities and qualities required by the international market only when they operate as cooperatives, structured out-grower schemes and/or undertake collective marketing. So we think that before you roll out a program like the EPA, the productive base, which is dominated by smallholders who make up an estimated 60% of the labour force, should be strengthened first.
DDD: Your description of how to form cooperatives and use the apps obviously involves education and a lot of technological knowledge. Does Esoko seek partnerships with governments or NGOs to help farmers get this education? And what are the most promising partnerships right now?
There are some active partnerships to actually implement or deploy our programs to the field. We work with the Ministry of Food and Agriculture in Ghana, for instance, that provides experts to serve as external technical experts to back our call centre and support our e-extension program. We also have a program with them where we are planning to provide our technology to the department mandated to collect market prices.
…we do believe in public-private partnerships; we believe that a powerful institutional partner can help spread our technology.
So we do believe in public-private partnerships; we believe that a powerful institutional partner can help spread our technology. But we also believe that public institutions can benefit from a partnership like this. This can help drive technological revolutions at the public institutions and at the same time create extensive networks that help private businesses, such as Esoko, thrive. ICT for agriculture is sometimes seen as a development tool and the public sector could actually support such a private entity either by providing direct grants to commercialize the services and scale them to other areas or by providing subsidies for smallholders to access these critical information services that have proven to substantially improve livelihoods and reduce poverty.