“Humans think in stories rather than in facts, numbers or equations…” This quote from Yuval Noah Harari was running through my mind while I listened to Steve Cui during a recent partner event by the UN Capital Development Fund (UNCDF) in Dakar, Senegal. Steve, who is the Director of International Business at JD Finance, explained how JD Finance is using facial recognition technology for pigs in high-tech piggery farms in China and how they are applying artificial intelligence to optimize their diets.

Steve’s story is compelling when considering the impact digital technology can have on agriculture. Agriculture is a sizeable driver of many economies in developing countries, if not in terms of GDP value, then at least in terms of employment. Most agricultural sectors in the developing economies where UNCDF operates are comprised of value chains that rely on output from large groups of smallholder farmers. For these farmers and the other actors in these value chains, advances in technology and digital finance, in particular, have the potential to drive more-equitable gains in their livelihoods. Therefore, many fintechs see this market segment as the next big nut to crack. After all, beyond food security and employment, smallholder farmers also represent a big opportunity for untapped revenue.

One breakout session of the #DFS4What event hosted by UNCDF was dedicated to digital solutions for smallholder farmers. It brought together a very interesting mix of bankers, telecom operators, regulators, fintechs and agricultural specialists, mostly from African countries and all reflecting on the challenges faced by various stakeholders of agricultural value chains and the potential of digital solutions. The session raised questions such as these: What are some examples of these technologies and what can we learn from them? How do we help smallholder farmers adopt these digital solutions? How do we ensure that there is a value proposition for adoption, not only for the farmers but also for all of the relevant stakeholders in these value chains?

Quite a lot has been going on in the UNCDF portfolio on digital solutions for smallholder farmers, though not yet to the extent reported by Steve in China. That was clear when participants were asked to do a ‘temperature check:’ only half of those in the room thought that smallholder farmers were ready to adopt digital solutions. After having led the UNCDF country programme in Uganda, which has a number of initiatives in five different agricultural value chains, I appreciate the participants’ responses. They are reflected in my own experience, not only in Africa but also in the Pacific. In numerous countries in which UNCDF operates, many of the basics (or ‘digital rails’) are not in place to provide a conducive environment for fintechs: no or limited mobile network coverage, limited phone ownership (let alone smartphone ownership), no formal ID documentation, low literacy of potential users, significant cash/liquidity management problems, etc.

Nevertheless, there is great potential for new digital technologies in agricultural value chains and challenges have not stopped many fintechs from testing and piloting many new services: soil sensors (IoT) and data analytics for targeted farmer advice, chickens on the blockchain and satellite imagery for crop insurance, to name a few. Digital solutions such as these provide ‘sexier’ topics and, together with the more philosophical challenges of current digital economies (such as data ownership and use), probably generate more headlines than the previously mentioned basics. Nevertheless, attention must not be lost on the need for building digital rails. They are key components of a conducive digital ecosystem and, more than ever before, digital rails must be built and reinforced in order to ensure a strong foundation for the future of inclusive economic growth.

December 2018. Copyright © UN Capital Development Fund. All rights reserved.

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