Saturday, 12 November 2011

ZNFU4455: An SMS service offering smallholder producers in Zambia a brighter future #ict4d

Once a luxury item, mobile telephony is now a catalyst to bring about economic development and social inclusion in developing countries, especially in Africa. For economist Jeffry Sachs “mobile telephony is the single most transformative technology for development”.

Mobile phone numbers talk for themselves. According to International Telecommunication Union (ITU) the number of mobile phone subscriptions worldwide has reached 4.6 billion.  ITU estimates show that in sub-Saharan Africa there is 60% mobile coverage and one-third of the population has a mobile subscription.

Over the last decades we’ve seen the socio-economic benefits of mobile telephony on the lives of many poor rural people. We’ve seen how thanks to mobile phones those who previously were both socially and economically excluded are now actively participating in the economy and are able to connect with their families and friends. We’ve seen how mobile phone supports bottom-up economic development, provides entrepreneurship opportunities and gives voice to poor rural people and the voiceless.

Experts categorize the benefits of the mobile telephony in three categories:

  • incremental: improving the speed and efficiency of what people already do
  • transformational: offering something new such as comprehensive agricultural services (what to plant when, where to buy inputs, access to price information, potential buyers, transport, pest control and more)
  • productive: offering employment and income opportunity

Next time you are in Zambia,  ask a smallholder producer, what is your lucky number. And do not be surprised if they say: “ZNFU4455”.

ZUFU4455 is a market information service open to all smallholder producers and traders, a service that encapsulates and touches on all three categories of benefits of mobile phone listed above.

Designed in 2006 with the assistance of IFAD-funded smallholder enterprise marketing programme and in cooperation with the Zambia National Farmers Union (ZNFU), ZNFU4455 provides accurate and up-to-date agriculture and market information covering the entire value chain. It allows smallholder producers to make informed decision about what to grow, volumes required, storage, processing, marketing and investment opportunities.

ZNFU4455’s prime objective is to make markets functional for smallholder producers and traders. The service provides a list of 180 traders - 50% of whom are active -  and their offer for 15 commodities. To find the best price on offer, smallholder producers and traders send an SMS message to 4455 containing the first four letters of the commodity and the district or province. They immediately receive a text message listing the best prices and codes designating the buyers offering them. After selecting the buyer that best responds to their needs, farmers send a second SMS with the buyer’s code. A text message is returned with the contact name and phone number. Farmers are then able to phone the buyer and start trading. Each message costs around US$0.15.

This demand-driven service responds to the evolving needs of the Zambia smallholder farmers and traders. It has helped reverse the trend of smallholder producers being exploited and passive players to becoming successful entrepeneurs by addressing challenges such as:

  • limited access to credit
  • limited access to price information
  • limited access to appropriate technology
  • limited business and negotiating skills
  • weak organizations
  • weak bargaining power
  • poor access to transport networks
  • little or no knowledge of market trends

The success of this service is manifold. To start with, it benefitted from an excellent marketing campaign.  It’s business model is based on making revenue through advertisement and sponsorships.

It is one of those few IT applications that has little bells and whistles, it is easy to understand and use. It is a service that provides information upon request, as opposed to indiscriminately pushing content. It does so through different means such as  cellphone (SMS), internet and radio. The radio programme is broadcast in seven local languages and in English.

Most importantly, it got the government’s full support and is an integral part of the national agricultural policy. Zambia’s good rural coverage of mobile phones and the fact that it is hosted in a credible institution, such as Zambia National Farmers Union, with a strong management team have contributed to its impressive success.

Between its launch in August 2006 and August 2009, ZNFU4455 managed to improve the bargaining power of smallholder producers, by providing them better access to markets and allowing them to deal with traders on an equal footing. Farmers have managed to reduce their transaction costs, are now producing more high value produces and targeting different markets. Thanks to the weekly updates, they are no longer overproducing, thus eliminating storage challenges.

Policy makers are using ZNFU4455 up-to-date information to identify trends in price fluctuations and to flag emergent and imminent food security challenges.

To date, 90 percent of traders and 60 per cent of the Zambian farmers have benefitted from ZNFU4455. Forty percent have managed to negotiate better prices, 52 per cent have sold their products to different traders and buyers, 23 per cent managed to build new trading relationships, more than 50 per cent increased their income, 15 per cent of initial SMS messages to the system led directly to farmers selling their produce, and over 90 per cent of the calls to buyers led to transactions.

ZNFU4455 and many other similar initiative and services highlight the fact that developing countries see and want mobile phones as the preferred information delivery system. At the same time, there is enough evidence that poor rural people are willing to spend part of their income on such services. The challenge now is to move beyond pilots and make sure that we systematically embed and mainstream ICT4D activities and projects in rural development projects and programmes so that we can have many more successful experiences such as ZNFU4455.

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