UNCDF through its programme MM4P is running a pilot, started in August 2017, to digitize payments made to dairy farmers in Uganda. To this end, MM4P works with the so called ‘supply side’: the dairy cooperatives, shifting from cash payments to their members to digital bulk payments (one to many). To make these payments possible, MM4P assists cooperatives with the digitization of their workflows; transitioning records on delivery and sales which are currently kept in notebooks, to digital platforms.

Next to the supply side, MM4P also works on building the use-case for the demand side: illustrating the value proposition of mobile money to the farmers, who receive their pay on their mobile phone.

Because farmers are used to receiving their pay in cash – and that works just fine for them – not all farmers immediately see the need to receive their pay digitally. Stephan Waiswa, Digital Financial Specialist at MM4P is currently focusing on this challenge.

“We need to convince farmers that getting paid digitally makes sense and has value for them. And so now, in four new cooperatives that we have on-boarded in the pilot, we have started with partial digital payments. Farmers get paid only a very small amount of their pay on their phone. Just to get used to this new practice. They can then convert this money on their wallet into airtime (voice). When you buy airtime with your mobile money account, the mobile network operator gives you a bonus; free minutes. A perfect way to illustrate that there is value in mobile money. Very simple: more minutes for the same price.”

And the strategy seems to be working. At the end of January around 500 farmers received their first partial digital payment. That time of the year coincides in Uganda with the beginning of a new school year and the time to pay school fees. Some farmers went to their cooperative and asked for a larger chunk of their pay on their mobile wallet instead of cash. “Now that I received UXG 100,000 on my mobile wallet, I was able to pay for my son’s school fees using mobile money. This saved me the time that I would usually need to go to school to pay for the fees myself”, says famer Wilson. By experiencing the added value of mobile money, Wilson is now a convinced user of mobile money. And more farmers will follow and slowly change their behavior.

Of the farmers that signed up to receive part of their pay digitally, in January 134 people used mobile money to buy airtime. 118 people used mobile money to send money to someone else. The payments partially consist of remittances and school fee payments, as most school fees are paid directly into the school head master’s mobile money account. In February 180 of these farmers bought airtime from their mobile wallet and 132 person-to-person transactions were made; a large part of these payments will be school fee payments. Figures that highlight a slow but steady increase in the usage of mobile money by the farmers targeted in this pilot.

Together with partners SNV and Agriterra, a total of 30 cooperatives are expected to go digital by the end of March this year. At the same time, booster teams are educating farmers on the usage of mobile money. Booster teams assist people with any issues they may have; such as how to sign up for mobile money, how to send and receive money, how to save money on their digital wallet. For this pilot ten teams, each existing of 20 people were deployed in the area. And they have signed up over 25,000 people for mobile money since the start of the pilot in August 2017.

MM4P is using a full array of interventions (both on the demand and supply side, including customer education to increase mobile money literacy) to ensure the creation of a digital ecosystem for famers who sell milk. A digital system that is accepted by farmers, because they see the value it has in their daily lives.