Mobile-enabled Economic Identities for Smallholder Farmers in

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Mobile-enabled Economic Identities for Smallholder Farmers in

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Mobile-enabled Economic Identities for Smallholder Farmers in Ghana
Copyright © 2019 GSM Association

The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators with over 350 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Barcelona, Los Angeles and Shanghai, as well as the Mobile 360 Series of regional conferences.
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Report published March 2019

Digital Identity
The GSMA Digital Identity Programme is uniquely positioned to play a key role in advocating and raising awareness of the opportunity of mobileenabled digital identity and life-enhancing services. Our programme works with mobile operators, governments and the development community to demonstrate the opportunities, address the barriers and highlight the value of mobile as an enabler of digital identification.
For more information, please visit:
Mobile Money
The GSMA’s Mobile Money programme works to accelerate the development of the mobile money ecosystem for the underserved.
For more information, please contact us: Web: Twitter: @GSMAMobileMoney Email: [email protected]

Authors: N icholas Wasunna, Market Engagement Manager, Mobile Money Willie Gichora Ngumi, Market Engagement Manager, Digital Identity
Acknowledgments: The authors would like to thank: Farmerline Ghana, Nika Naghavi, Ceri Howes, William Derban and Daniele Tricarico (GSMA); Vodafone Ghana; and lastly, each of the smallholder cocoa farmers in Ghana’s Western and Ashanti regions who participated in this research.




1.  Economic activities and behaviours of smallholder farmers in Ghana


 Insight 1: Farming incomes are diverse and shifting


 Insight 2: The economic activities of smallholder farmers are complex,

but rarely documented


Insight 3: Farmers tend to save their money at home, primarily to invest in

their farming activities and pay their bills


Insight 4: Loan appetites amongst smallholder farmer are linked to the

seasonality of their income


2. Identity and smallholder farmers in Ghana


Overview: Foundational versus functional identities


 Challenge 1: Varying degrees of identity document acceptance across

numerous types of foundational and functional identities


 Challenge 2: Farmers are willing to share their information in order to get

the services they need, but there can be information gaps


Insight 5: A complex lending environment for smallholder farmers is not

meeting their specific needs and is creating unfavourable financial alternatives


3. Prerequisites for developing an economic identity


Pillar 1: The development of economic identities requires both foundational and

functional inputs, supported by digitising agricultural value chains


Pillar 2: Building an economic identity requires efficient data management processes 21

4. Key considerations and sample framework


5. Conclusion





Mobile-enabled economic identities for smallholder farmers: key considerations from Ghana

The third Global Findex shows transformational change in financial inclusion around the world. Five hundred and fifteen million more adults reported owning a financial account in 2017 than in 2014.1 Despite this remarkable growth, 1.7 billion adults worldwide are still unbanked, with 20 per cent citing a lack of documentation as one of the barriers to opening a financial account. Globally, an estimated one billion people do not have an official identity document,2 most of whom live in Sub-Saharan Africa and Asia, and a disproportionate share in lowermiddle income markets. Without an ID, many are unable to vote, open an account at a financial institution, access health and education services, obtain legal protection and social security benefits, register for a mobile subscription in their own name or participate in the formal economy.

The identity gap is more acute in rural areas3 where the ability to prove who you are can help determine whether you access a mobile connection, financial services or social protections. A larger proportion of rural populations live in poverty, are vulnerable to harsh climatic conditions and lack access to information services and technology. In Ghana, people living in smallholder households, who represent 46 per cent of the total population,4 have limited access to agro-climatic information and to financial services needed to invest in farm equipment and quality inputs.

As a result, productivity suffers, with cereal yield per hectare still under the minimum global threshold.5
In rural areas of many developing economies, certain services are still inaccessible, even where formal foundational identity coverage is relatively high. For rural populations, a “fixed identity” (the demographic and/or biometric details recorded on one’s identity document) does not necessarily reflect their more dynamic economic profile, which includes data on one’s varied economic behaviour,

1. Global Findex Database 2017. World Bank, 2018. 2. ID4D Global Dataset. World Bank, 2018. 3. Identification for Development: Strategic Framework. World Bank ID4D Programme, 2016. 4. AGRA Ghana Operational Plan. AGRA, 2017. 5. World Bank Dataset. World Bank, 2018.
4 | Introduction


economic history and shifting economic circumstances. As GSMA research in Sri Lanka found, those who are “unable to provide a detailed profile of their economic circumstances or validate other vital credentials (for example, in the case of smallholder farmers, income and transaction histories, ownership of land, crop types, geolocation or farm size) are more likely to face barriers accessing formal services or connecting to the global economy”.6
This report is based on joint research and in-country engagement by the GSMA Mobile Money and Digital Identity programmes. The aim of this research was to investigate the financial and identity needs of smallholder farmers in Ghana and to understand the unique position of mobile network operators in developing economic profiles that are specifically designed to address the financial inclusion challenges that these farmers face.
The report highlights key research findings that show how the ubiquity of mobile technology has created a platform for gathering, storing and processing data on the economic behaviours of end users, including smallholder farmers. Such platforms enable significant benefits to those who struggle to access formal financial services due to the fact that their financial history is comprised of economic behaviour that is cash-based, varied, inconsistent and undocumented.7
To understand the digital services access gap (including financial services) for smallholder farmers in Ghana, our research focused specifically on the economic behaviours, challenges and needs of cocoa farmers, as the cocoa industry is a major source of employment for over 800,000 rural families in six of Ghana’s 10 regions.8 Globally, Ghana is the second largest producer of cocoa beans (after Côte d’Ivoire). Cocoa is Ghana’s second largest commodity export (18 per cent) after gold, and out of a total population of 28 million people, two million live in households which rely on

smallholder cocoa farming.9 Our research consisted of a mix of end-user focus group discussions, surveys and interviews with stakeholders that engage with this value chain, and aimed to answer the following questions:
• What types of identity documents are available to smallholder cocoa farmers in Ghana in practice, and which ones are accepted as valid forms of identity when farmers need to access specific services?
• What are the challenges of driving the use of digital financial services, from both a supply and demand perspective?
In-depth interviews with smallholder farmers and other stakeholders in the cocoa value chain (e.g. agribusinesses, purchasing clerks, financial services providers, input providers), generated several important insights and considerations that provide a starting point for MNOs as they consider their role in the economic identity space in Ghana’s agricultural sector.
It became clear that by digitising and documenting a smallholder farmer’s economic behaviour in an accessible, mobile-enabled platform, we can begin to understand their economic identity. This identity can then be used to authenticate and verify relevant data from other sources, and to offer new and better-targeted financial services with an assurance that the data is linked to a secure SIM card which has gone through a robust “Know Your Customer” (KYC) process.10
These findings are in line with research conducted by the GSMA’s mAgri programme, which found that “the transition from cash to mobile money payments for the procurement of crops can support the creation of an economic identity for farmers via digital records from the sale of agricultural produce, which, in conjunction with other data points, open up to full financial inclusion (access to credit, insurance and saving accounts)”.11

6. Digital Identity for Smallholder Farmers: Insights from Sri Lanka. GSMA, 2018. SmallholderFarmers_SriLanka.pdf
7. E nabling Digital Development: Digital Identity. World Bank, 2016.
8. Ghana Cocoa Board, 2018. 9. Opportunities in Agricultural Value Chain Digitisation: Learnings from Ghana. GSMA, 2018.
Introduction | 5


1. Economic activities and behaviours of smallholder farmers in Ghana

Over 50 per cent of adults in Ghana have a mobile phone and mobile money usage is growing rapidly: 42 per cent of adults had a mobile money account in 2017 compared to just 12 per cent in 2014.12 Over 45 per cent of the country’s 28 million citizens are employed in agriculture,13 which contributed to 19.5 per cent of GDP in 2016.14 Most agricultural workers live in rural areas and practice smallholder, traditional or rain-fed farming. These farmers struggle to increase yields largely because of limited

access to information on sound farming practices, credit, input and other resources and markets.15
The following farmer archetype is a composite of smallholder farmers we interviewed in key cocoa-producing areas in Ghana’s Ashanti and Western regions. The profile illustrates the fluid and dynamic economic activities of the country’s cocoa farmers, which are common to smallholder farmers across the developing world.



Male and Female

Age Family Literacy

Married with 6 children (help on the farm on Saturdays)
Basic – can read Twi, know some English

Photography credit: 17 Triggers/C.Zanzanaini

Phone Mobile money ID

Feature phone
Use mobile money to send/receive and to store money when travelling
Voters card, health insurance card, farmers’ group card

12. Global Findex Database 2017. World Bank, 2018. 13. The latest data from the International Labour Organization (ILO) indicates that the share of agriculture in total employment in 2013 was 45.2 per cent. ILOStat Country Profiles: Ghana.
International Labour Organisation, 2018. 14. World Bank dataset. World Bank, 2018. 15. AGRA Ghana Operational Plan. AGRA, 2017.
6 | Economic activities and behaviours of smallholder farmers in Ghana


THEIR FARM Land size Main crop Other crops

Photography credit: 17 Triggers/C.Zanzanaini

Primary income

3 – 6 acres (may be separate parcels that add up to 10+ acres)
Maize, cassava, plantain, cocoyam, vegetables
Cocoa: ~8,500 Ghana cedis/year (GHS) (15 – 20 bags/season at 475 GHS) Livestock: 300 Ghana GHS/goat; 1,000 GHS/pig; 35 Side business (shop): ~500 GHS/month Rent out: Cars, bicycles’, rooms

Insight 1. Farming incomes are diverse and shifting

Our research focused on understanding the income and spending patterns of Ghana’s smallholder cocoa farmers. Through in-country focus group discussions and interviews, we found that Ghanaian farmers, like most farmers involved in cash crops globally, derive a significant part of their income from agriculture but also rely on other income-generating activities. This helps

them mitigate the risks and vulnerabilities that farming can pose.
Amongst the smallholder cocoa farmers that were surveyed, the following breakdown of economic activities represents how they supplement their shifting and diverse incomes.


Sources of supplementary income for smallholder cocoa farmers

No other income reported




Non Agricultural 13.9% Business


Agricultural Labour

Source: GSMA 2018.


Grow Other Crops

Economic activities and behaviours of smIanltlrhoodlduectriofanrmanedrsAinppGrhoancah | 7


Insight 2. The economic activities of smallholder farmers are complex, but rarely documented

Smallholder farmers are not a homogenous group, and even those farmers with adequate production levels often cannot provide evidence of their economic ability or activity. Without a formal way to document and record their economic activities, farmers cannot demonstrate revenue from sales over a certain period or provide documentation regarding the value of their required inputs or their asset base.

Even when farmers do maintain records, such as physical receipts for the sale of crops to formal agribusinesses or cooperatives, there is often no standardised way of recording and presenting this information to financial institutions, making it difficult to issue credit or insurance. Often this information is in manual records, which are also difficult for formal institutions to process.

Furthermore, the following diagram provides an example of the various financial flows that exist within the cocoa value chain in particular. This demonstrates the wide range of financial transactions that many smallholder cocoa farmers engage in on a regular basis, and highlights the varied financial inputs and outputs which flow between a number of stakeholders within the value chain. The complexity of these flows, coupled with a lack of digitised and/or documented recordkeeping, make it very difficult for farmers to provide an accurate picture of their financial history and health to financial service providers.

Example of main financial transaction flows within cocoa value chain

Fertiliser spray ¢20/gallon (6 acres)
Fungicides ¢48/bottle (3.5 bottles for 6 acres()

Farm labour ¢25/day
Fertiliser spraying ¢2/labourer


Farmer buys fertiliser with loan
(50 Ghana cedis/bag, 3 bags/acre)
Farmer sells cocoa to purchasing clerks (475 Ghana cedis/ bag of 64kg

Drying cocoa ¢5/bag
(Loading labourers paid by district officers)
Farmers receive loans from purchasing clerks
(most common 500 Ghana cedis)

Source: GSMA field research, March 2018.

¢8 commission/bag*
Target 1000 - 2000 bags per season

8 | Economic activities and behaviours of smallholder farmers in Ghana



Insight 3. Farmers tend to save their money at home, primarily to invest in their farming activities and pay their bills
Overall, nearly four in 10 farmers stated that they currently save money at home, with approximately three in ten using mobile money for savings. Therefore, designing products that enable farmers to save efficiently (e.g. target-linked savings products), pay their suppliers, pay their bills (school and utilities) and purchase goods, would provide the best value. When asked what they did with their major sources of income from the seasonal sale of cocoa, smallholder cocoa farmers reported that they use it to purchase farm inputs, pay their children’s school fees, pay their utility bills and meet basic needs, such as food, clothing, health, as well as purchase mobile airtime and and contribute to savings.

Where smallholder farmers in Ghana save their earnings

In the home Farmer group Village-level instititions Mobile money
Credit union Bank
Susu collectors Post office
Friends and relatives 0%

12% 12% 10%

36% 30% 30% 28% 24% 20%




Economic activities and behavioursOovfesrmviaelwlhoolfdIedrefnatrimtyeErscoinsyGshteamnas | 9


Insight 4. Loan appetites amongst smallholder farmers are linked to the seasonality of their income

Our analysis of a typical cocoa farmer’s crop cycle and annual calendar showed that their financial needs vary throughout the year (as shown in Figure 4). Therefore, in order to protect themselves against various financial shocks over the course of the year, many farmers require a mix of long and short-term access to financing, in order to supplement their regular (but shifting) income.

This end-user research also revealed a strong borrowing culture in Ghana’s cocoa sector. A farmer’s primary options for securing a loan include:

• Purchasing clerks (PCs) (who are also usually farmers);

• Money lenders (who sometimes charge up to 100 per cent interest);

• Banks (often rural banks);

• Friends.

Photography credit: 17 Triggers/C.Zanzanaini
10 | Economic activities and behaviours of smallholder farmers in Ghana

“When you sell during cocoa season, you get a lot of money and saving can ensure you have money for June, July and August when there is less.”
Cocoa farmer, Ashanti Region. GSMA interview, 2018
Smallholder FarmersGhanaActivitiesServicesFarmers