Agribusiness set for mass adoption of fintech solutions as space grows. PHOTO | POOL
The potential for scale among small and medium-sized enterprises (SMEs) lies in the nexus between agribusinesses and digitalisation.
Digital solutions allow agri-SMEs to deliver value, improve productivity, access financing and provide inclusive and sustainable solutions.
From my experience at Avenews, a financial app for agribusinesses, I foresee that 2023 will be the year in which we see mass adoption of fintech solutions.
As Africa’s fintech space continues to grow, it is clear that all stakeholders understand the immense potential of digitalisation.
READ: How tech is making farming, agribusiness ‘cool’ for youth
But the complexity of Africa’s agricultural supply chain requires innovative industry-specific solutions.
In sub-Saharan Africa, most of the agriculture ecosystem receives and makes payments in cash.
The World Bank Global Findex Database indicates that fewer than one in six individuals who receive agricultural payments in sub-Saharan Africa do so through an account (at a bank, non-bank financial institution, or a mobile money account).
Moreover, among the farmers in the region who sell a portion of their produce in the market, only 17 per cent save in a formal financial institution and around 10 per cent borrow from one.
Making payments for supplies and produce, in a timely and cost-effective manner, is a challenge that agribusinesses are constantly trying to navigate and that financial technology can address.
According to the International Financial Corporation (IFC), the significant time and cost required to price the risk and collateral for agribusinesses to access affordable financial products as well as the difficulty of serving farmers in rural and remote areas can be addressed by digitalisation.
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Digitalization of agribusiness payments is a pathway to broader financial inclusion.
It contributes to making Africa’s agricultural supply chains more efficient and resilient by reducing the cost of payments and bringing better visibility to how and when agribusinesses are paid.
In addition, digitalisation plays a vital role in easing agribusiness transactions and facilitating the extension of financial products to more businesses across counties, while better managing their vulnerability to shocks.
Agribusiness set for mass adoption of fintech solutions as space grows – Business Daily
