This video explores how we can engage youth in agriculture to help alleviate the unemployment crisis in Sub- Saharan Africa.
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Youth in agriculture: how to engage and retain youth in agricultural activities
When I was a young boy growing up in rural Kenya, farm work was punishment—be it at school, digging the farm if you had pending homework or at home, picking coffee and tea while it rained. With these experiences, nothing would have motivated me to choose a course that is related, in any way, to agriculture. That, however, changed along the way. That is not who I am today.
In many developing countries, agriculture and allied courses and professions have been “orphaned”. Usually, students who join public universities can choose such “archaic” agricultural courses that are available usually with lower qualifying grades. The media has not helped either. The negative imagery of emaciated farm families, reports of unpaid farmers, and devastating post-harvest management, such as rotting cereals and fruit dominate the media’s agricultural coverage. All these have negatively affected the youth’s perception of agriculture.
The African Union’s Malabo Declaration, which set agriculture goals for 2025, works to create job opportunities for at least 30% of youth in agricultural value chains across the continent. However, investments that support skills, knowledge, employment, and finance for young people are still lacking—especially in rural areas.
Data from the Population Reference Bureau in 2018 projects that the population of Sub-Saharan Africa will more than double by 2050. Africa’s youth population, currently at 20%, will rise to 35% of the total youth in the world by 2050. Studies have shown that agricultural growth in Sub-Saharan Africa has a greater positive impact on reducing poverty compared to growth in other sectors. Hence, tapping into the reservoir of employment opportunities in agriculture is indispensable for poverty reduction.
Why does agriculture not attract youth?
Agriculture in Sub-Saharan Africa is the main source of income and subsistence for over 70% of the adult population. The sector supports more than 40% of the total employed population in the region. Despite the potential of agriculture to create employment, the steadily increasing youth population in Africa has been turning away from it due to the hard work, poor remuneration, and other negative factors associated with it. Youth unemployment rates in South Africa are almost four times higher than the regional average—62% of South Africans between 15 and 35 years of age are unemployed. Of them, 60% have never been employed.
Sub-Saharan Africa has a huge potential with 60% of the world’s uncultivated arable land. Yet it spends USD 25 billion annually on food imports. A comparison of Africa with other continents highlights that the difference lies in its low adoption of technology. If this divide is crossed, Sub-Saharan Africa could produce enough food for its own population and even become a net exporter of food.
Youth inclusion, engagement, and most importantly, retention in the agriculture sector are hot topics. The international community has raised this concern and national governments have spoken on the issue repeatedly. The youth, on the other hand, consider agricultural jobs painstaking and unrewarding. These jobs also require a lot of patience that the millennials lack as pointed out by a Leeds University study: Millennial impatience and the rise of next day delivery. Several youth agri-initiatives have been developed to address this gap but many have failed to achieve the desired results. This begs the question—how can we attract, engage, and retain youth in the field of agriculture?
Can digitization bridge the divide between youth and agriculture?
The average age of an African farmer is between 45 and 60 years. Even though the farmers are attached to their traditions and quite reluctant to change, they are not immune to the technology revolution. Just like the banking industry where mobile money technologies have become pervasive despite the old banking system, agriculture must follow suit. Digital innovations and the use of Information and Communication Technologies (ICTs) will prove essential to unlocking Africa’s agri-business and bridge the rural divide. This will help smallholder and family farmers, fishers, pastoralists, and forest-dwellers.
According to the World Bank’s report “Growing Africa: Unlocking the Potential of Agribusiness”, Africa’s farmers and agribusinesses could create a trillion-dollar food market by 2030 if they can expand their access to more capital, increased access to electricity, better technology, and irrigated land, among other things. The agribusiness logistics sector is essential to agricultural transformation through value-chain development. ICT will be pivotal to provide efficient agribusiness logistics and to link producers and final consumers almost instantaneously. The emerging Agriculture Technology (AgTech) start-ups have demonstrated this—and in the process, attracted youth to provide best practices, agricultural networking, and linking to finance. However, the AgTechs will need to work closely with experienced organizations in the low and middle-income segment, especially smallholder households, to tailor solutions for the market as demonstrated by MSC.
According to a blog by CGAP on promoting digital financial products among the youth, behavior segmentation and data analytics are critical to understanding the variance between predicted users and actual users of digital products among youth. However, MSC’s blog on digital credit clients cautions that most youth will juggle between lenders. In Kenya for example, the Central Bank (CBK) estimates that over 500,000 people listed on credit reference bureau (CRB) for owing less than USD 2 are youth between 18 to 24 years. They were listed on the CRB after taking a small loan to use it for gambling, after which they lost the bet and failed to pay the amount back.
Financial access to youth
Financial Service Providers (FSPs) continue to shy away from financing youth, terming the group risky. Banks across Sub-Saharan Africa still provide “vanilla” products that are delivered through the brick-and-mortar approach. This is compounded by the banks’ limited understanding of the financing opportunities along agricultural value chains. The difference in aspirations of the FSPs and the youth has increased the exclusion of youth from the agriculture finance continuum.
Consultative Group to Assist the Poor (CGAP)’s financial diaries and national surveys with smallholder households indicate that young people in rural areas save two to five times as much as their elders. These savings were four to five times the amount they borrowed from different sources. The statistics highlight that youth can and should be involved in transforming agriculture.
Research in Behavioral Economics is essential to design and implement solutions to improve services and job opportunities for these segments. MSC’s proficiency in behavioral, gender-centric, and market-sensitive program design helps us develop products and channels that cater to the specific needs of women and youth. We have a long history of working on financial and skill development services for the youth. MSC has developed a wide range of savings and credit products tailored and targeted specifically for a range of youth segments—from schoolchildren to those in their twenties. We conduct market assessments on opportunities for youth employment. We also develop and deliver training programs that support employability and technical skills for both youth and women.
Case studies of youth engagement in agriculture
MSC helped Musoni Microfinance, Kenya to review its agriculture finance product and introduce digital credit assessment for clients. Musoni is a microfinance institution (MFI) that utilizes ICT to increase the efficiency of service delivery for rural clients. It has successfully targeted rural youth through products and services delivered through technology. Musoni’s agricultural finance product—Kilimo Booster—is a success in targeting youth engaged in agricultural production. A client who owns a dairy farm in rural Kenya attested this.
In Tanzania, the Alliance for Green Revolution in Africa (AGRA) provided a USD 540,000 grant to SELF Microfinance Fund (SELF) to develop digitally delivered products for smallholder farmers. MSC helped the Mahanje SACCO located in the Ruvuma region to review its loan products to suit the needs of targeted rural clients. Members of the SACCO can now access credit, repay, and save using their mobile phones. The convenience and privacy of transactions created by digitization attracted about 300 new clients, which represents a 14% growth rate in the 18-month project period alone. Out of these, 120 (40%) were aged between 18 and 25 years.
MSC provided technical support to the Land and Investment for Future Transformation (DAI-LIFT Ethiopia) project between 2016 and 2019. The project worked to accelerate access to finance smallholder farmers through seven MFIs. As of June 2019, 12,098 loans worth USD 12.5 million have been disbursed and USD 1.1 million in deposits mobilized. The project has reached vulnerable groups through the Gender, Equality, and Social Inclusion (GESI) pillar. About 30% of the loans are directed to the GESI group that includes youth. About 400 land rental service providers have also been employed, with almost 60% of them aged 18–25.
So, how do we attract and retain youth in agricultural activities?
Digital technology and digital financial services have the potential to bring youth closer to the agricultural sector. The players in the ecosystem focused on promoting agriculture needs to deliberately create an attractive and enabling environment for youth through:
- Sustainable market linkages between rural young farmers and urban markets through e-commerce or m-commerce platforms, such as the Agrocenta in Ghana, 2Kuze and SokoNect in Kenya
- Integrate various actors and activities across value chains and create meaningful employment for youth
- Adopt digital platforms that offer an opportunity for embedded social services that could compensate for the lack of financial and non-financial services and provide social protection, such as platforms that offer embedded unemployment insurance or health insurance; Specialization in service provision—information, data and, value chain linkages
- Special support to build value addition, capacity-building, and idea incubations
- Efficiency in agriculture value chains that will spur growth in the trade margins and returns and thus encourage youth to engage fully in the sector
- Work with FSPs to develop financial tools and products that facilitate access to finance for agriculture-related activities by youth
- Position the youth in risk management mechanisms among smallholder farmers and agri-businesses, along selected agriculture value chains
Optimizing agent network distribution
In the not-so-distant past, India suffered from a severe lack of banking facilities. This was especially true for rural areas, where less than 10%[1] of villages had a brick-and-mortar branch. In 1989, the Reserve Bank of India (RBI) implemented a service area approach as part of its Lead Bank scheme, which was reviewed later in 2004. The introduction of Business Correspondent (BC) agents in 2004 further supplemented the approach (see Appendix).
Today, less than 15%[2] of villages in India have a brick-and-mortar bank branch. In most rural areas, a network of 543,472 BC agents primarily drives banking operations and is integral to the business strategy to achieve financial inclusion. However, despite a growth in the number of accounts, the number of dormant accounts in the country increased by 16 percentage points from 2014 to 2017. Hence, optimizing the performance and availability of BC agents becomes important to enable meaningful financial inclusion that goes beyond focusing on access and looks at the use and quality of access.
We undertook this study to optimize agent networks in two blocks—administrative subdivisions that fall under districts—in two aspirational districts in the country. Based on our analysis, a number of trends emerge in the country, which requires specific action plans to enhance financial inclusion:
1. A national-level study is required to understand the true impact of the Sub-Service Area approach for financial inclusion (see Appendix) and to identify the underserved or unserved areas in the country.
2. Efforts are needed to strengthen the supporting infrastructure, which will enable the smooth functioning of existing agents. An example of such a method is agent segmentation, wherein agents are classified into two types. The first type comprises relatively sophisticated sales agents who are usually exclusive to specific financial service providers and are dedicated solely to the agency business. These agents sell products, on-board customers, and conduct transactions of larger value.
The second type comprises basic service agents. These agents are usually non-exclusive, which means they offer services on behalf of a range of financial service providers. They are also non-dedicated, which means that the agency business for them is a marginal, add-on to
another core business, typically in retail. This second category of agents is responsible for conducting typically smaller cash-in and cash-out (CICO) transactions. The sales agents can act as rebalancing points for service agents, which can help solve the problems related to liquidity that agents potentially face.
- Agent segmentation is even more important in areas with underdeveloped agent networks. Segmentation will optimize the spread of agents and ensure maximum population coverage while maintaining agent viability.
- Potential service agents should ideally be already engaged in other businesses in the area. PDS shops, CSCs, and post offices are examples of such potential agents, as identified by MSC’s analysis. Policymakers may wish to develop a framework to identify businesses, establishments, or persons as potential agent types, as proposed in reports published by Helix Institute of Digital Finance and GSMA.
Navapur block in Nandurbar, Maharashtra and Kursakatta block, Araria, Bihar. We mapped the geographical locations of all agent points, bank branches, and post offices and conducted geospatial analysis to understand the current penetration of banking services in the respective blocks. We also mapped non-banking infrastructure setups of the government to explore their potential as an alternative to expand the current outreach of financial services. These included primary health centers, panchayat offices, Public Distribution System (PDS) shops, Common Service Centers (CSCs), and commercial establishments like grocery stores, mobile recharge shops, and computer centers. The sections below provide details of the key findings from both blocks.
In all, nine BC agents are present in Navapur, who cater to a population of 367,443, out of which 85% live in a rural area. Furthermore, most agents are located in clusters around the more urbane establishments in the block. Several BC agents operate from inside a bank branch, which undermines the entire objective of creating such agents in the first place. Hence, it was not surprising to find that for 30% of the total population and 52% of the rural population within Navapur block, the nearest agent was located more than five kilometers away.
Low population densities[3] and an undulating and difficult-to-access terrain are possible contributors to the meager presence of BC agents in the block. The effectiveness of the service area approach in the district, therefore, has been severely undermined. Moreover, the selection of agents in new locations depends on the constraints of access and viability. In such a scenario, non-dedicated agents become the best option to ensure a sustained and well-spread-out presence of agents in the block.
Kursakatta, on the other hand, has 28 BC agents who cater to a population of 149,231. The network of BC agents in this block is well established, with a majority of the villages lying within a two-km radius of existing agents. However, we found disparities in the replenishment of cash reserves by the BC agents. Given that the block has only two bank branches, almost half of the BC agents in the block have to travel more than five kms to reach their nearest rebalancing point. Optimizing agent performance becomes necessary in this case by reducing the loss of person-hours, which currently occurs due to the long trips to bank branches. At this point, we must consider the ANA India Report-2017, which revealed that 74% of BC agents across India face challenges in the rebalancing process, with long travel time being the major barrier.
The agent mapping study sought to understand the current landscape of financial services in the two blocks, potential new agent locations if any, and potential agent types. We conducted the geospatial analysis required for this study by using QGIS and collected the data by using ODK Collect and GPS Essentials mobile apps. Deep-dive analytics such as this reveals much more granular and contextualized data than what macro- or country-level data can yield. Information from such studies will enable policymakers, regulators, and development agencies to make better, evidence-based decisions to direct their resources towards holistic financial inclusion, especially in underserved areas.
Interactive online maps that illustrate the current financial landscape of the two blocks covered in this study can be found here—Navapur and Kursakatta. The “Map & Tools” option in the top-right corner of the link lets you select different features, and visualize and generate insights.
Appendix
Service Area Approach: The approach came into effect to address the lack of banking facilities in the country and to allow people in rural areas to gain access to formal financial services. Under this approach, a designated public sector bank, including regional rural banks, should cover 15-25 villages for their planned and orderly development. The proximity to a branch and contiguity of villages are the main criteria to allocate villages to each bank branch. All 600,000 villages across the country have been mapped according to the service area approach. Every bank branch needs to have at least one fixed-point banking outlet that caters to 1,000 to 1,500 households, which is called a Sub Service Area (SSA).
Business Correspondents (BCs): BCs are banking agents who provide basic services like cash-in cash-out (CICO), account opening, funds transfer, and balance inquiries. BCs enable a bank to expand its outreach and offer a limited range of banking services at a low cost.
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[1] India has 649,481 villages as per Census 2011, of which 593,615 are inhabited. As of 2012, 75,801 bank branches operated in rural areas. Hence, assuming no village has more than one branch, brick-and-mortar branches cover, at best, 7.8% of inhabited and 8.5% of total villages. The real figures will be even lower if, for example, a single village has two or more branches.
[2] Between 2013-2014 and 2016-2017, 8,588 new banks opened in rural areas. Hence, the total number of banks that operate in rural areas became 84,389. The rest of the calculations remain the same.
[3] The population density of Nandurbar is 277 per sq.km., which is much lower than the population density of its parent state, Maharashtra, at 365 per sq.km.
Optimizing agent network distribution
Smart data collection and geospatial analysis have the potential to allow providers to optimize the distribution of agent networks. This report notes that in the areas studied 52% of the rural population lives more than five kilometers from their nearest agent or bank branch. Through geospatial-modeling exercises, we identified 52 alternate service delivery points that, if acting as agents, could bring all the villages within a two-kilometer radius of a financial service point. The report also discusses agent segmentation to ensure agent viability and reduce agent churn. Introducing segmentation in the geospatial model resulted in the optimization of the agent network with fewer agents required to serve the target population.
Report on findings from the impact evaluation of Program Keluarga Harapan (PKH)
MSC as part of its MoU with the Ministry of Social Affairs conducted an impact evaluation and operations assessment of the PKH conditional cash transfer program. PKH is one of the largest social assistance programs of the government of Indonesia and has been operational since 2007.
The objective of this study was to give a snapshot of the implementation of the program and to evaluate the outcomes of key health-seeking and education indicators of beneficiaries. MSC adopted a modified Regression Discontinuity Design to measure the outcomes in the absence of baseline evaluation data.
The primary data was collected in 15 provinces across 60 sub-districts. The sample consisted of 1467 beneficiaries of PKH, who formed the treatment group and 1437 non-beneficiaries of PKH, who formed the control group of the study.
Please see Operations assessment and impact evaluation of Program Keluarga Harapan (PKH)
Boot camp experiences for start-ups: Cheaper by the dozen
Ang Lee’s Academy award winner Life of Pi shows the protagonist Pi Patel’s magical journey on a lifeboat where he attempts to discover himself. The excitement of Pi Patel’s adventures was not unlike the exhilaration that start-up promoters felt at a boot camp conducted for the second cohort of BII’s FI Lab, at the IIM Ahmedabad campus. The atmosphere of the four-day boot camp could be summed up in two words — enthusiastic and intense. The boot camp brought in a confluence of ideas from multiple start-ups, was packed with elements that gave start-ups moments of self-discovery and prodded—at least many of them—to get back to the drawing board.
Most of the nine start-ups in this cohort were different from the ones in cohort 1. The start-ups in this cohort had tested their product market fit with customers who had paid for their products and services. Some participating start-ups who had graduated from the first cohort were willing to tweak and change their solutions as long as they could find an answer to the rhetoric, “show me the money”, as heard in the film Jerry Maguire. With their product and pricing in place and having completed market-testing, the teams wanted to validate it further, and scale-up to the next level. Various boot camp sessions were designed to help the start-ups introspect and redefine their growth and acceleration needs.
Begin by understanding the customer: Low and middle income (LMI) segments
Great companies do not just offer products—they solve problems that matter. For the start-ups, the first step to doing that was to understand who they are speaking to. Now while the definition of an LMI segment looks simple on paper, several factors are “unknown” and demand deeper insight.
The session on understanding the financial lives of LMIs helped participants to know the segment better, identify characteristics, and create meaningful solutions to problems. They worked on market selection, market size, and salient features. At times, these in-depth activities brought them back to the drawing board. Eventually, they were able to comprehend the nuances of a large market and the prudence needed to pick a precise segment.
Find the value proposition of the offering: Build a brand around the buyer
Customers select solutions based on affordability, accessibility, awareness, and acceptability. Hence, identifying the right customer segments and fixing the right value proposition is a critical challenge.
The boot camp included sessions on value creation for the customers, helping the start-ups ponder on building a “brand”. Customer Perceived Value Advantage (CPVA) was introduced as a concept to explain that the success of an offering largely depends on how customers believe it can satisfy their wants and needs. When a company develops its brand and markets its products, the customers determine how to interpret and react to marketing messages.
In the exercise on customer centricity, the start-ups were asked to draw their customer journey maps and see where their respective customers fit. These maps helped start-ups stand in the shoes of their customers, and experience their own offerings as a customer would. They could see clearly when, where and how interventions were needed so as to retain customers across stages. There were conclusive insights such as “a brand is a representation of what the customer is looking for” and “start-ups have to sell a solution and not a product”.
The start-ups understood that they needed to think like a customer while designing customer strategies. They realized that customer goals and company goals were different. With an enhanced understanding of customer awareness, consideration, decision, delivery, and loyalty, this was an eye-opener for start-ups that earlier struggled to detail out their CPVA.
Courtesy: Dilbert by Scott Adams
Win the markets: Using right marketing strategy and pricing as weapons
The boot camp session on marketing strategies and communication (marcom) helped start-ups that were using social media for marketing. These sessions covered marketing strategies, while focusing on the importance of having repeat customers – and how this was an important goal of having the right marcom.
Products pricing: Pricing is crucial as it represents the start-up’s assessment of the value that customers see in their offering and are willing to pay for it. For start-ups that ride on aggregators, right pricing with the right channel partners is essential for rapid growth. Most start-ups had already priced their products, yet were seeking the sweet spot. Some start-ups had also experienced the decoy effect, where consumers change preferences between two options when presented with a third option that is asymmetrically dominated. For start-ups that ride on aggregators, getting the pricing right with the channel partners was a key aspect. Finding the right type of channel partners are essential for rapid growth.
Go-to-market (GTM) strategies: In this cohort, some start-ups had no GTMs, and others needed sharpening. A few start-ups had demonstrated the working of their business model with a robust GTM strategy. The boot camp discussed the “blue ocean strategy”[1]which referred to the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. The boot camp shared how start-ups can create and capture uncontested market spaces—called “blue oceans”, making the competition irrelevant. These specific sessions opened new possible strategies to enter unknown waters.
The boot camp concluded with entrepreneurs intending to make a difference in the lives of the underserved. They all echoed what Will Smith says in the iconic film, The Pursuit of Happyness, “if you want something, go get it. Period”.
This FI Lab will be helping the start-ups with all that they need to go and get it!
[1] Introduced by W. Chan Kim and Renée Mauborgne in their best-selling book of the same name
Boot camp image credit – Centre for Innovation Incubation and Entrepreneurship (CIIE), IIM Ahmedabad