Ever wonder where the sunflower seeds inside that bottle of sunflower oil in your kitchen grow? Probably not. But chances are some of these seeds were grown in Uganda. And as way to keep their export supplies going, Mukwano Group of Companies is now experimenting with digital payments to the farmers who sell these seeds to them.

Around 500,000 small holder farmers in Northern and Eastern Uganda grow sunflowers for the seed oil production. Mukwano, one of key players in Uganda’s economy, buys seed from around 72,000 farmers. 40% of these farmers are women.

But Mukwano is not just buying seeds from these farmers. The company wants to ensure high quality seed and greater production by facilitating farmers’ access to premium and affordable seeds, other farm inputs and technical knowledge. And transitioning from cash to digital payments can accelerate the ability of farmers to access these services.

Earlier efforts by Mukwano to engage and negotiate with mobile network operators had little results due to the wrong design of the products and the inadequacy of the digital financial ecosystem that include:

• Low phone penetration in rural areas,
• limited providers presence,
• Low financial literacy levels,
• A weak agent and merchant network,
• Limited liquidity,
• Poor infrastructure, and
• Limited access to electricity to support and absorb digital payments.

Now, with the assistance and expertise of MM4P, Mukwano is rolling out a solution in three sub counties in Northern Uganda (Kiryandongo, Lira and Apac) that will:

• Improve the livelihoods and build loyalty of Mukwano farmers through tailored financial services, products and appropriate channels.
• Encourage and work directly with farmers to sustainably and continuously grow oil seeds; guarantee production and create a predictable source of supply for the Mukwano processing plant in Lira.
• Support the documentation of transaction history of farmers and traders to make it much easier for them to access credit and other formal financial services.
• Reduce transaction costs and increase supply chain efficiencies to successfully compete on international markets.

For this pilot, so called ‘booster’ teams will push for the development of an agent network, the increase of phone penetration and enhanced customer literacy. Simply by explaining what mobile money is and how it can be used. In other MM4P projects the presence of booster teams triggered behavioural change which accelerated the growth of a digital payments culture.

Currently booster teams have already educated 17,000 farmers on the usage of mobile money, how to make payments with their mobile wallet, start saving etc. A first step in making sure farmers will accept the development of a digital payments culture.

This is further supported by a communications campaign to Mukwano farmers, in collaboration with CGAP. Text messages (in local languages) are sent to farmers with information on best farming practices, market prices and usage of mobile money.

Tony Gadhoke, CEO at Mukwano is eager to make the pilot a success. “We are excited to test digitizing the payments and want to learn more on what this can do to increase the loyalty of the farmers whom we buy from. We can for instance use data in a loyalty programme. And we hope to include other products such as agro inputs like fertilizers and pesticides, healthcare products, savings and loans, etc. For the company, we know this process will give us a greater sense of transparency. So, this project holds the potential to benefit us all.”