Creating a digital ecosystem for dairy farmers in Uganda

  • August 30, 2017

  • Nabitanga, UGANDA

Meet Godfrey. Godfrey and his wife are dairy farmers in a small town in central Uganda. Together they own six cows and about thirty goats. His wife mainly looks after the goats, which are sold for meat and Godfrey looks after their cows.

These six cows give a little less than ten litres of milk a day. Every morning, Godfrey takes the milk to the Nabitanga Dairy Cooperative (see location). Here, milk from about 120 smallholder farmers is collected every day, which is then sold to a larger milk company that processes, packs and distributes the milk. Since a few months, these milk farmers can receive the money for their milk digitally on their mobile phones. Godfrey was one of the first farmers who signed up for this.

In ongoing efforts to introduce bulk digital payments in agricultural value chains across the country, UNCDF is also collaborating with players in the dairy industry. Such as dairy cooperatives for example, who collect milk from smallholder farmers, which is then sold to larger dairy companies.

“I used to get paid in cash. Every two weeks someone from the cooperative would call me and tell me that my money was ready for pick up. I would then get a boda-boda (local motorcycle taxi) to take me to Nabitanga, which is about three miles away. A round trip that costs me UGX 10,000 (around USD 2,75). Just to collect my payment of around UGX 100,000”,Godfrey explains.

Now that he gets paid digitally on his mobile money account, Godfrey explains that it offers him a lot of advantages:

  • the privacy that receiving his payment on his mobile phone gives him. No one else in line can hear or see how much he is paid;
  • the fact that he doesn’t have to spend money for transport just to collect his payment;
  • he no longer has to worry about his safety when travelling with a large sum of money;
  • and the cooperative also doesn’t have to worry about their security measures when it is payday, which is normally a big burden as there is no local police station.

Godfrey also explains how he spends his income. This information is crucial to develop improvements to the digital payments eco-system, such as digital school fee payments and merchant transactions.

“Generally, I spend money on groceries, school fees for our four children, the agro vet, clothes and for medicine when someone is ill. And I also try to save some money on my mobile money account. I like saving money on my phone because I can easily access it in case of an emergency.”

UNCDF is currently exploring opportunities to create a more compelling eco-system for digital payments in Nabitanga. This includes introduction of mobile money merchant payments at the agro input store, the local boda-boda repair shop and the pharmacy amongst others. This way people can keep their money on their phone account and there is less need for withdrawals, and thus reduces the cost that comes with cash-outs. Godfrey, however, says that he doesn’t mind the cash-out fees as these outweigh the benefits for him.

“Receiving my pay on my phone works perfectly for me. There are no big challenges. I can easily send some money to family or pay school fees to the head-master directly. Mobile money is mobile, it keeps moving with you, it travels with you”.

The UNCDF pilot of testing digital bulk payments in the dairy value chain will run for the next months. During this project UNCDF also supports the dairy cooperative in digitizing their administration and accounting system. More about this activity will be shared in the months to come.