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How can we ensure financial sustainability of ICTs?

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Soonho.Kim
How can we ensure financial sustainability of ICTs?

How can stakeholders in both the private and the public sector ensure that ICTs like mobile phones remain financially sustainable? 

Benjamin.Addom
Sustainability is a Wicked Problem!

Sustainability of ICTs for agriculture, food and nutrition security, and early warning system projects is a “wicked problem” that needs concerted efforts from all stakeholders to address, even though it is not perculiar to information and communication technologies for agriculture (ICT4Ag). But as stated in the question, it should be a multi-stakeholder approach – not private sector or public sector going alone. Foundations can push millions of dollars/euros into ICT4Ag but without good planning with viable business models, it will be short-lived.

Sustainability of information services and products?

While affordable, accessible and good quality seeds, fertilisers and agro-chemicals are seen as vital for improving the productivity and incomes of smallholder farmers in developing countries, timely and accurate information for using these inputs is often overlooked. Farmers, despite their economic situation, do everything possible to pay for and acquire these inputs in preparation for the farming season. However, persuading a smallholder farmer to pay for information services and products is far more challenging. 

I strongly believe that there is a need for donors to reduce their current approach of piecemeal funding of ICT4Ag activities. There is a need for a radical approach to funding ICT4Ag such as one-time BIG investment fund (seed money) that can eventually transition into a financially sustainable venture. But this needs to be done in collaboration with the private and public sector partners.

Once the seed money begins to germinate, the culture of payment for information services then needs to be gradually cultivated among end users. My experience is that if farmers see the value of a product or services, they will be willing to pay. Hence the seed money could be used to prove the value of ICT-enabled information to farmers. While the seed money germinates, other intermediaries like private sector agribusinesses that do benefit from farmers produce can start paying for the service on behalf of the farmers with some pre-arranged means of cost recovery from the farmers.

This is to start the discussion from my end.

Ben 

S.Allen
sustainability

These are very good points.  You are suggesting a package of ICT products rather than offering a particular product to show value.  What specific technologies and informatoin products to the producers would you envision as part of this package and at what scale?

Benjamin.Addom
Bundle products versus individual

We are increasingly seeing the value of bundle products as against individual products. Provision of market information alone, advisory messages alone, insurance alone is not only confusing to the farmers but also not business friendly. For example bundling weather information, agronomic tips and insurance seems to be attracting farmers. So we are trying out the bundle product for the MUIIS project in Uganda.

Ben

 

Mercyline Kamande
Sustainability

I agree with Ben  Farmers should not be made to pay for the information. It may be an area that governments should work with the private sectors to cushion farmers. I find such information as a public good that should be made available to all for better decision making. The means used to give free information such as TV and Radio are not as penetrated as mobile phones

S.Allen
payment for products

If information is seen as a public good, provision of it from the goverment is important but businesses will still need incentives to innovate and expand.  In your opinion, is provision solely by the government likely in many places and if so, how could this be better promoted and the usefulness ensured?

Benjamin.Addom
Farmers not paying for information service?

Dear Mercyline, please note that I am not saying farmers should not pay for information services and products. I will disagree with you on this :) . My argument is that for farmers to pay for something that they use to get for free, there is the need for us to cultivate the culture in them. Someone needs to pay for the farmers at the beginning for them to appreciate the value, then they will be willing to pay by themselves later. Increasingly, the development and provision of such information products and services is becoming very costly. This is because more accurate and timely information services and products are being developed. If we continue with free services to farmers, we will not be able to sustain.

For the MUIIS Project in Uganda, we are providing precision information which involves a whole list of actors/partners working on the products from satellite/remote sensing data through knowledge brokering to the delivering of the services to the farmers. We are using a grant at the moment. We cannot sustain it without someone paying for it. We think cooperatives, groups, and other intermediaries can pay upfront for their members and find some other innovative ways of recovering the cost. The benefit is huge and as farmers see the results in their wallet, they will be interested in investing it.

Ben

Mercyline Kamande
Synergy in ICTs products

 

One of the most effective ways to make ICTs sustainable is to use them in a collaborative way to address problems other than competitively. All ICT products have their pros and cons and having them used together enhances the benefits of the users. To elaborate this further it is possible to have a mobile phone as the point of contact to the users for whatever service then have other ICT products as computers, TVs etc disseminate information through the phones. Some of the most successful ICT solutions in Agricultures use a combination of ICTs to offer the services. An example is M-farm in Kenya

 

S.Allen
M farms

M farms is a good example of an initiative that is adaptable to the needs.  How will it be able to enure financial sustainbility to provide the information to producers?  What steps has it taken to ensure this?

Charles.Steinfield
multichannel approaches

I wanted to follow-up on this notion of using different ICTs in a collaborative fashion, as I believe multichannel approaches are necessary and underused.  So many projects have a specific solution and use a controlled design to test it for effectiveness. But this is pretty divorced from real life, where information flows through multiple channels from multiple sources.  We tried to leverage this approach in a recent study I mentioned in another post, where we brought information to farmers in the form of videos, but then used mobile phones to send audio reminders (we didn't use text because we had found that many farmers had problems reading texts). The mobile reminders helped to reinforce the video content, and they were timed to go along with when key behaviors should occur in the farming season. So even if phones aren't the primary information channel, they can still be used in a complementary fashion.  We used the EngageSpark service, which was affordable and had some nice features.

Mercyline Kamande
M-farm

The fact thatM-farm gathers  information from all quarters which is sent to the mobile phones of farmers makes it a one-stop information centre for the users. The same platform is used by farmers to market their products (for which they pay a transaction cost) With this approach the farmers do not pay for the information but they are empowered to make better decision. The farmers also operate in groups bringing their products together such that even transaction costs are not borne by individuals

 

Charles.Steinfield
M-farm usage

My colleague, Susan Wyche (I believe she will be joining us today and I'm sure will have a lot to say about this) and I took a look at M-farm usage a couple of years ago, and we would urge just a bit of caution when considering these kinds of mobile market information systems as quick and easy solutions for rural farmers.  We studied rural farmers in Western Kenya to see how they were using services like M-farm and whether they were benefiting from them.  What we found was 1) very low awareness of the existence of these services, and 2) quite limited usage even when they were aware due to a range of problems.  The included problems like 1) mobile phone competence issues - we found many rural farmers, and especially women, lacked basic skills needed for using these types of services, such as knowing how to send and receive texts, 2) resource issues - we were surprised by how many farmers had virtually no money on their SIM card, so could not even send a text without going to the market to top up their phones.  Also, when we asked to see the phones, many had no power or were off charging somewhere so were not available to be used to access time-sensitive services like M-farm provides. 3) service design issues - many of these services were in English, making it virtually impossible for rural users who speak other languages to use. We also heard from farmers that when they wanted to know prices or had something to sell, they preferred to just call their traders, and just knowing that the prices for goods were better in other markets wasn't much help since they had no way to get their goods to these other markets anyway. And they were reluctant to damage their relationship with their trader.  There were lots of other reasons, but overall, we came away a bit disappointed by the experience and saw a need to work on improving farmers' understanding of their phones and how they could use them.

S.Allen
M-farms

Hi Charles,  Susan will not be able to join today due to an unexpected conflict but the points you raise are very interesting.  Training on the use of the tool is critical.  What would be your suggestion in terms of the financial sustainability of these efforts.  What partners are needed to support these activities?

Charles.Steinfield
Building competence

I see a range of needs related to building competence on mobile phones and other ICT-based services.  It goes beyond the basic operation of tool, but also extends into understanding service logics, especially if/when the farmer is expected to pay.  It's too bad, Susan can't make it, but she has a recent paper that looks at how some mobile phone services do more financial harm than good. For example, we did a project, also in western Kenya, focusing on use of short video clips to help improve mobile phone literacy among women farmers.  One of the things the farmers complained about the most was that they somehow got enrolled in some premium SMS service because they didn't understand that simply replying to a marketing text would enroll them.  And once enrolled, they couldn't unsubscribe, so every time they topped up their phones, the service deducted the amount owed and they ended up never having any credit. We built a component into the session to show how to unsubscribe, and you wouldn't believe how complicated Safaricom made it to do so - it took a lot of steps and the steps were different for each type of phone!  

Who pays for this type of training? I believe service providers, and others along the value chain who stand to benefit (as Shaun said in another post) need to contribute to the costs for building better literacy. It's an ongoing need - not a one-shot effort - and should be a component of every service and extension effort.

 

S.Allen
mobile literacy

Charles, thank you for the very good example and suggestion.  We have seen this in a few contexts for mobile applications (something that should have been simpler was complicated enough that most preferred not to use it).  Training is critical and so is buy-in and support of the public sector private companies (as appropriate) so that users are not penalized for using the service.  This is critical especially in early stages when the value of the service for these users is not a given.

S.Allen
payment

Thanks.  What organization is paying for this product currently and how is it envisioned to continue into the longer-term?

Shaun.Ferris
the perpetual Business model

As Ben has said WHO PAYS is a tricky issue! I don't think anyone has quite got this right yet. 10-15 years ago, the feeling was more in favour of strengthening Government services, such as extension and market information services.. Mobile brought in a lot of energy after many years of FAO trying to invigourate the Government Radio systems....  and this started to swing the pendulum in favour of private services. Some of the new services such as RESIMAO and Afrique Verte in West Africa, Esoko and Foodnet, opened up new ways of thinking about how the private sector could work with Governments to rebuild ailing services.

With the rise of the Telco's increasing interest came from the idea of entirely private service providers. I think these mainly started with the idea that farmers would pay a subscription.....  and so far that has not worked. Not surprising, farmers are poor and they need support services not extra charges..  There are others in the agricultural value chain who can pay for such services. 

In the next 10 years, i hope that we see a more mixed business model approach, where investments are made by the public sector to support farmers in their ability to engage with ICT services more effectively and investments made by the private sector to provide valuable services that drive productivity and market linkages at scale. The question of who pays, needs to be shared by those who gain value in agricultural markets, or whose goal it is, to support growth in the agricultural markets.  Thats a lot of people, it includes a combination of actors from agribusiness, farmer organizations, Governments, donors, agrodealers, processors, traders, some farmers and consumers. 

The Tricky question is how to align these very diverse players in a way that  avoids the inefficiency that we see today, of multiple small scale start ups, working in the absence of a common data platform. I would like to see some big bets being placed on common infrastruture alongside the energy and innovation that the start up companies can bring to the agribusiness community.      

S.Allen
business model

This is a good point and a worthwhile question:  How can we align the diverse players in an efficient way to deliver the most relevant ICTs for producers to increase food security and nutrition?

Mercyline.Kamande
M farm usage

 

I do agree that solutions like M farm have not been very effective in reaching out to the most vulnerable farmer simply because of the transaction cost

I also agree that someone must pay for the information since it is mostly provided by the private sector

My take in this is that if the government sees a benefit of these services from the studies already carried out, then there is a role of government to subsidize the information sharing but once the farmer has information then they will may for the transactions 

Going back to the M-farm example information on market prices (and probably demand information) in different regional markets should be shared freely. The farmer then takes an initiative to access the system and post what is available in the market they choose to transact with 

We did a study on two portals Kenya Agricultural Commodity Exchange (KACE) in Kenya which is private and ESOKO in Rwanda Public sector owned. The study revealed that once farmers using KACE knew about the services provided they were more willing to use the services to sell their produce. Ofcourse the cost of information sharing was quite high and the benefits could not last 

Esoko was designed to have users access the system at a cost to get this basic information and the penetration of the information was very poor leave alone usage 

To have these ICT solutions work for the farmer the information sharing must be an initiative of the service provider and this must be supported by the government 

I see the need for some collaboration

 

 

 

 

Berber Kramer
Paying with Data?

Hi everyone, I'm a research fellow in the Markets, Trade and Institutions Divison at IFPRI. This is an interesting discussion and it is difficult chipping in with new points when so many good points have already been raised. It's important to keep in mind that mobile phones allow for a two-way stream of communication - to the farmer and from the farmer (this is of course related to the bundling issue as well). The financial sustainability of ICTs could improve when both streams of communication would be utilized. For instance, instead of asking farmers to pay for a subscription on an ICT service, would the data that farmers provide by using the service enable service providers to earn back part of their investment? In other words, could farmers pay with their data, and while doing so, how to make sure that there are basic checks and balances in place on farmers' privacy? Would like to hear thoughts on that as well.

S.Allen
paying with data

I think this could work if there is strong financial support to develop the mechanism.  Sending SMS messages to producers is relatively cheap and could be done in exchange for the responses to a few production questions, etc.   Determining the type of information that will incentivize the producers, the quality of information that can be collected in this way, and the long-term financial sustainability of this will depend on upfront public and private support I imagine.

Charles.Steinfield
Using farmers to collect data

I had heard of one project where farmers were encouraged to input the prices they were paying at local markets for various commodities as a way to collect price information at a very local level without having to hire enumerators for every market.  The project - sorry I can't recall it's name - offered small payments for this, but one worry was the generation of bad data (sort of the same problem we see with Mechanical Turk).  But perhaps if the contribution of daily price data was in return for access to the collective data (hence bad input would contribute to a poorer quality of service for the contributor) maybe this bad incentive would be diminished. 

Berber Kramer
Reporting or observing

Great point on that there needs to be a value for farmers in reporting truthfully, also working with large numbers of farmers/crowdsourcing could perhaps prevent collusion and reduce bias. In my previous comment I was actually referring more to data that farmers might report automatically, for instance by sharing their Google maps data or their mobile money records (creepy, but we are doing it in the US too when signing into our chrome browsers).

I recently came across an NGO (I'm sorry, I don't have the name at hand) that was testing a model whereby farmers can save towards input purchases in small quantitities by purchasing "credit" scratchcards towards their future input purchases. They pay for their inputs using this credit, and this for instance could provide a great wealth of data. Doesn't get us output prices yet, though, but one step forward?

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