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Promoting Financial Inclusion through Digital KYC: Our work with Crop2cash

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Agriculture is by far Africa’s most important economic activity. It employs roughly two-thirds of the continent’s working population, and each country contributes an average of 30 to 60 percent of gross domestic product and 30 percent of export value. Nonetheless, the need to dramatically increase food production to meet the demands of a rapidly growing population remains critical. Africa’s population is expected to nearly double by 2050 and quadruple by 2100, making it more challenging to feed communities and generate wealth, but agriculture has the potential to thrive. According to Mckinsey, Africa can add 20% more grain to the world’s 2.6 billion tons of production and nearly the same amount of fruits and vegetables. By providing a source of income for women and the poor, agriculture has tremendous potential to achieve gender and class equality.

However, without official proof of identity, many smallholder farmers struggle to access services and subsidies and capitalize on new opportunities presented by innovations in mobile technologies, finance, and other fields. Smallholder farms are less than seven acres and account for 80 percent of Africa’s farmland. They are primarily vulnerable to low risks, such as a lack of credit, making their farms’ success entirely dependent on financing and resources.

About Crop2Cash:

Crop2cash is a digital financial services provider focusing on farmers using an innovative approach to enable rural Nigerian smallholder farmers to receive digital payments and build their financial identities. Furthermore, crop2cash is constantly digitizing the food crop value chain by creating tools for agro-processors and making activities like weighing, quality control, and extension services easier.

Crop2Cash provides farmers with simple financial accounts linked to an e-wallet, allowing them to receive payments, make purchases, and track their financial transactions. The system is based on USSD, so farmers without smartphones can use it. Crop2Cash was conceived as an online marketplace where farmers could sell their produce to agro-processors and receive payment via the platform. They could also obtain inputs from the market.

Through CashCard (its digital payments product) and SupplyBase, its inputs and supply-chain management product, Crop2Cash has helped over 100,000 smallholders build financial profiles and –UNLOCK $2.8 million in credit.

Financial Inclusion Crisis for Smallholder Farmers In Nigeria

Most local food production in Africa depends on smallholder farmers; however, they face ongoing challenges in financing to support food production for their local communities and other markets. Political, economic, social, cultural, and institutional barriers confront smallholder farmers. They have limited access to information, markets, capital, land tenure, and even essential inputs such as fertilizer and seeds due to a lack of identification to access these services. An estimated 78% of Nigerian farmers do not have access to formal financial services. This makes traditional farming difficult for smallholders across the continent and may limit their ability to benefit from the digital revolution fully.

Annual revenues from digitally supported farming in Africa have recently been estimated to be around $140 million. However, the success of agriculture digitization should not be measured solely by its monetary value. Smallholder farmers and rural populations must benefit from it as well. Giving farmers access to more inputs is critical for increasing African production and improving farmers’ livelihoods. Despite their numerous traditional farming efforts, smallholder farmers cannot replenish their soil. Many people cannot access synthetic fertilizers or pesticides and cannot afford irrigation pumps.

Furthermore, connectivity in rural areas is often limited. Even if farmers can connect, they may not be able to afford the services. These concerns limit the production and profits of farmers and undermine rural development. Producing more food necessitates improving the welfare of smallholder farmers, which can only be accomplished through investment.

How Identitypass Helps Crop2cash Meet Their Inclusion Goals

According to the World Bank’s report on Digitization of Agric Payments in Africa, the digitization of agribusiness payments, including the verification process used by Agric financing platforms, can help advance the financial inclusion of farmers. The report also finds that recipients of agricultural payments save and borrow very infrequently, despite saving and borrowing more frequently than the rest of the population. Only 17% of adults receiving agricultural payments used a formal financial institution to save money, and 10% borrowed money. These findings indicate that farmers across the continent have low levels of financial inclusion. According to the report, digitizing agribusiness payments can help improve agribusiness firms’ efficiency and transparency. According to the report, access to mobile money accounts is a crucial driver of digitization and the promotion of farmers’ livelihoods. This is precisely what Crop2cash aims for and has been doing since its inception.

Crop2cash has successfully resolved the following issues with the assistance of Identitypass’s Digital Identity verification Products:

  • Track farmers’ payments and input purchases: By verifying farmers digitally, Crop2Cash creates a formal financial profile for farmers who previously did not have one. This baseline financial profile, along with farm information such as size, crop type, location, and weather pattern exposure and risk, can then be presented to financial institutions to determine a farmer’s creditworthiness.
  • Screen out Impersonators or Fraudsters: Impersonators and fraudsters are infiltrating online platforms, and digital financial service providers like Crop2cash are no exception. Identifying bad actors is always tricky for digital businesses; however, by utilizing Identitypass’s AI-powered verification services, Crop2cash automatically and seamlessly verifies the identity of every farmer who registers on its platform. The authentication method is typically smooth and expedites the onboarding process for only farmers who meet specific requirements while strictly b– LOCKing out bad actors from the point of signing up.
  • Improve Financial Inclusion for Small Holder Farmers: Improve Smallholder Farmers’ Financial Inclusion: Crop2cash has successfully onboarded farmers and provided them with services using a system that runs on USSD, making it accessible to farmers who do not have a smartphone. Farmers begin by registering on the platform via a USSD shortcode using this simple user interface. Farmers can create digital accounts after registering via a simple USSD menu. Farmers have immediate access to a menu of specific products and services they can purchase at discounted rates once they are set up. They can also use their accounts to keep track of their farming transactions and other activities. Using improved inputs can change the game for farmers in Africa, where yields have stagnated compared to other regions, partly due to soil nutrient depletion. Furthermore, the purchase data is integrated into Crop2Cash’s software throughout the planting season, creating a digital history that Crop2Cash can share with lenders to inform credit decisions. Previously excluded farmers can now use simple USSD technology to substantiate their loan applications with Base. Crop2Cash has a network of 15,000 farmers spread across Northern and South-Western Nigeria and is currently improving financial inclusion for farmers in rural areas through a seamless digital identity verification process.

Get Started and Promote Online Trust On your Platform today!

Identitypass is currently available to businesses that want the identity of their designated customers and partners to be verified without interruption before engaging in business transactions with them. You can contact our team to get started as a new user. We have a combination of resources for you when you start with Identitypass. Check our documentation page for more information about our endpoints.

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