Agribusiness set for mass adoption of fintech solutions as the space grows

Agribusiness set for mass adoption of fintech solutions as the space grows. PHOTO | POOL

The potential for scale among small and medium-sized enterprises (SMEs) lies in the connection between agricultural operations and digitization.

Digital solutions allow agri-SMEs to deliver value, improve productivity, access finance and offer inclusive and sustainable solutions.

From my experience at Avenews, a financial app for agricultural businesses, I envision that 2023 will be the year we see mass adoption of fintech solutions.

As Africa’s fintech space continues to grow, it is clear that all stakeholders understand the enormous potential of digitization.

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But the complexity of Africa’s agricultural supply chain requires innovative industry-specific solutions.

In sub-Saharan Africa, most of the agricultural ecosystem receives and makes payments in cash.

The World Bank’s 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, a non-bank financial institution or a mobile money account).

Moreover, among the farmers in the region who sell part of their produce in the market, only 17 percent save in a formal financial institution and around 10 percent borrow from one.

Paying for supplies and products in a timely and cost-effective manner is a challenge that agricultural businesses are constantly trying to navigate and that financial technology can handle.

According to the International Financial Corporation (IFC), the significant time and cost required to price the risk and security for agricultural businesses to access affordable financial products, as well as the difficulties in serving farmers in rural and remote areas, can be solved by digitization.

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Digitizing agricultural payments is a path to broader financial inclusion.

It helps make Africa’s agricultural supply chains more efficient and resilient by reducing the cost of payments and providing better visibility into how and when agricultural businesses are paid.

In addition, digitization plays an important role in facilitating agricultural transactions and facilitating the expansion of financial products to more businesses across counties, while better managing their vulnerability to shocks.