TruTrade uses Mobile Money to pay farmer bonuses
The introduction of mobile money in Uganda in 2009 has been a tremendous success. The mobile money business model involves a partnership between a mobile money operator and a commercial bank. The services offered have so far been for domestic remittances, basic retail payments and money storage services.
In 2013, the Bank of Uganda issued mobile money guidelines, which stipulate the approval process for the mobile money services, as well as the roles and responsibilities of all parties involved. They also stipulate the safeguards to protect customers among which include:
Transactions must be real time and only carried out when the mobile money system is up and running, and must be authenticated by customers' PIN numbers.
The customer must receive confirmation of execution of the transactions.
When sending mobile money, the sender must be able to verify the recipient's name before completing the transaction.
A mobile money agent must clearly display their identity and a dedicated telephone contact of the mobile money operator; the unique identification number of the agent; notice that no charges are levied at the agent location; and a notice that the agent does not carry out transactions on behalf of customers.
TruTrade uses mobile money to make payments to smallholder farmers. This has great advantages compared to handling liquid cash, and it makes it possible to bank or transact at any time and any location.
Mobile money is easy to and enables us to operate more efficiently. When we are able to pay farmers directly for their produce it helps to eliminate cheating, reducing the risks to that come with agents handling cash. It also reduces the risks to our agents who may become a target for crime if they carry large wads of cash on them.
Mobile Money is particularly helpful in rural areas far from traditional banking facilities. Money can be stored securely on the phone and it enables farmers to save for the future. However introducing something new to the local people did not come without some obstacles. TruTrade found that many farmers did not have active mobile money lines with which the money or could be transferred and some did not trust the system or know how to access their money. For many people the distance from their homes to a mobile money agent was too far to walk.
AgriNet, a TruTrade franchisee working to help smallholder farmers market their produce, has become a mobile money super-agent. The company have, enabled a number of their TSS agents in the rural areas of Northern and Eastern Uganda to also become mobile money agents, providing them with access to lines and training. Having a network of mobile money agents in these areas- allows TruTrade to make payments to farmers, who before insisted on cash as they would have had to travel long distances to access cash-out services.
In July 2016 AgriNet trained 27 mobile money agents for both Airtel and MTN. to promote uptake of mobile money payment, TruTrade aims to only pay bonuses to farmers by mobile money. The photo shows farmers who supplied simsim and pigeon peas to TSS Agent Charles Obalim being paid bonus. The fact that many of these small scale farmers did not have mobile phones made the first bonus payment tricky because some farmers had to receive payment on their new sim-card inserted relative or friends phone to receive bonus payments as it extra money that they were not getting before. It is only when farmers receive bonus that they fully understand the difference between TruTrade and other traders.
Mobile payments are also now being increasingly used to pay farmers Cash on the Bag, which is a down payment for their produce as they hand it over at collection point.
TruTrade has made significant progress in increasing the number of transactions made by mobile in Uganda over the last few months.
Many farmers still believe in liquid cash, and convincing them to receive virtual money that they cannot touch will take some time. We are working to change the mindset of the farmers through sensitizing them and building confidence in the system with bonus payments.
TruTrade will continue to grow the amount of transactions done through mobile money as it is the easiest and safest way for us to ensure that farmers get the full amount of money they are due for their produce. Plans are already in place for TruTrade to train farmers on how to use their accounts as a way of saving money; once the money is in their phone, it is as good as having it in the bank.