Challenges

The innovation was driven by the critical need of ensuring that Kenya is 100% food and nutrition secured by modernizing the agricultural sector through innovations coupled with a commercial orientation under the umbrella agenda to transform the Country into a newly industrialized, middle-income Country with good quality of life for all as enshrined in the country’s Vision 2030 . The agriculture sector employs 70% of the rural population, accounts for about 65% of export earnings and contributes on average 26.0% to GDP. However, agricultural production is mainly subsistence with small-scale farmers producing over 70% of the national production, yet adoption of improved inputs, technologies, mechanization, etc among small-scale farmers is relatively low. Public input subsidy schemes are generally ineffective, time-consuming, distorts inputs markets and crowds out the private sector especially in many countries in Sub-Saharan Africa. Also, smallholder farmers are generally at the bottom pillar of financial inclusion, which hinder their progression into commercialization. Finding an effective solution that address all and many other challenges to the agricultural value chain factors would be a tall order to start with.

Primary target

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Description of Innovation

KCEP-CRAL in close partnership with the PFIs designed, managed and operationalized in 2016, a digital financial service/e-voucher platform (a customized debit card to work with point of sale). In response to the COVID-19 pandemic in year 2021, a mobile/cardless based e-voucher system developed and deployed by Equity Bank Limited through EU COVID-19 grant funding. The debit card and mobile E-voucher innovation have a default account and multiple wallets that are closed loop, such that once funds are credited into the e-wallets, farmers can only access the funds to redeem the validated e-voucher inputs, technologies and services are designated agro-dealers. KCEP-CRAL farmers accesses the E-wallet using USSD codes. Once the payment is made, an SMS notification is sent to the farmer and agro dealer, indicating the funds have been debited from the wallets and credited into agro dealer account.
The “E-voucher” innovation was introduced to improve farmers’ access to agricultural inputs through private-sector driven delivery approach. The bundling approach of the e-voucher package ensure greater efficiency, transparency, targeting and traceability of the input delivery mechanism that provides a structured platform for crowding in a wide range of value chain actors. e-voucher platform in delivering market-based agriculture input services through a PPP Partnership

Results

i. Over 134,000 smallholders (47% women and 20% young people) have cumulatively accessed assorted e-voucher inputs, technologies and services valued at about US$23.7 million channeled through agro-dealers, conservation agricultural service providers and insurance company in the rural areas
ii. Cumulative savings among value chain actors directly involved in KCEP-CRAL amounts to about US$0.42 billion with smallholder farmers accounting for 71% (majority women and young people) and Agri-SMEs accounting for 29% (agro-dealers, CASPs, rural entrepreneurs) while cumulative loans to the value chain actors amounted to about US$22.2 million with farmers accounting for 88% and Agri-SMEs 12%
iii. Increased food security and income through over 50% increase in crop yields (maize, sorghum, beans, green grams and cowpeas) for the smallholders (47% women and 20% youth);
iv. Agri-SMEs have increased revenues, created jobs and expanded their businesses in the rural areas from direct participation in the programme;
v. The value chain actors are embracing innovative digital financing services (including card, internet, mobile), savings, crop insurance, among others and thus aking financial services closer to the smallholder farmers has broadened the PFIs market base and increased clients.

Lessons Learnt

 E-voucher innovation model has demonstrated that smallholder farmers can embrace technology, so long as the right approach has been used and an elaborate training and support program is availed to mitigate technical challenges.
 Delivering input subsidy schemes through PPPP model is effective and sustainable approach that ensure multiple benefits to all actors across the value chain ecosystem. The e-voucher model is being replicated and scaled up in and outside Kenya

Input subsidy reform could be successful based on bundling of services (including financial services: savings, credit, insurance, financial literacy, digital financial services, agency banking, etc) to incentivize market players and leveraging on broader partnership to ensure policies and regulations are informed by proven and successful models that are amenable evolving country context