Bananas, fish and financial services may seem like an unlikely combination, but they often feature in answer to a question I pose to interviewees. “Who or what are you watching in the data, innovation and the financial services space?”

When Africa is the context of the discussion, one business has been referenced more than any other – Twiga Foods

In 2014, the company founders set out to change the way bananas were distributed in Kenya. Today, Twiga Foods serves approximately 13 000 farmers and 7 000 vendors in Kenya. It has cut out the “middlemen” and altered the distribution networks for not only bananas, but several other fruits and vegetables as well. 
Improved access to markets is an age-old challenge for smallholder farmers, but Twiga’s business model has enabled some of its registered farmers to double or triple their production volumes. Savvy vendors have been able to increase their orders and improve their efficiency. These improvements to the MSME value-chain have also garnered Twiga both interest and investment.

Small-scale fishers face similar challenges in accessing markets for their perishable products. It was another interviewee who introduced me to Abalobi, a marketplace platform operating with the by-line “From hook to cook”.

The Abalobi app suite was initially co-developed by South African small-scale fishers, researchers and other stakeholders interested in fisheries governance and traceable catch logging. Abalobi now offers a curated marketplace for 300 fishers and about 108 restaurants. 

Fishers upload details of the fish they have caught and then local chefs who are registered on the platform get pinged with the “catch of the day”. Marketed as “storied seafood”, chefs have access to information on where the fish was caught, who caught it and the name of the boat from which it was caught. There is an emphasis on promoting underfished species.

From an insight2impact (i2i) perspective, these platforms aren’t interesting solely because they have improved access to buyers of bananas and fish, but because of the associated financial services and the potential they have to successfully serve previously underserved individuals. 

Twiga Foods and Abalobi have different approaches to the integration of financial services. The widespread use of M-Pesa by Kenyans was an enabler for the growth of Twiga’s business, which would otherwise have required more complex cash reticulation processes. 

By developing functionality on the back of the M-Pesa API, Twiga is now able to pay farmers within 24 hours of collecting the produce from the farms. It also collects payment from vendors who benefit from the easy access to records of their purchase orders. This documented purchase history is beneficial to vendors undergoing credit risk assessments. 

Twiga is currently piloting its own vendor credit service and it has observed a considerable demand for a one-day or two-day credit facility. Assuming favourable results from an extended pilot, Twiga will roll out this vendor credit offering. The company is also in discussions with Kenyan banks to understand how these banks can offer value to the farmers – many of whom need inputs to upscale production.

Daniel Ngugi, Head of Legal and Administration for Twiga, explains that the technology is an enabler of efficiency rather than the primary thing. Their clients have always been farmers and this [Twiga and the mobile money technology] just makes their farming easier. “Financial inclusion should be a way of improving people’s lives, rather than a goal in itself,” he added. 

As a result of a more direct link to the market, Abalobi fishers now earn three to four times what they earned previously, and they do this while catching fewer fish! 

The Abalobi payment platform has a small float for restaurants and each restaurant has a unique QR code, which is linked to the log of the fishers. This functionality enables immediate payment into the fisher’s bank account. 

Serge Raemaekers, MD of Abalobi, estimates that about 50% of Abalobi-registered fishers either didn’t have bank accounts or only had dormant accounts prior to signing up to the platform. Community representatives report that now that fishers are earning a more regular income, with digital receipt of that income, some of them are starting to save or invest in repair and maintenance of their fishing equipment. They also appear less likely to borrow money from unscrupulous lenders. 

Mindful of the value of the data they are collecting, the Abalobi team is in conversation with insurers to consider additional insurtech-related service offerings. 

Raemaekers says, “We’ve been trying to figure out financial services for a long time and we realised that connecting the market and traceability are where it’s at. A lot of fintechs claim to serve the underserved, but they usually evolve to serving a group of people that are already on a trajectory to using digital financial services”.

i2i is exploring how platforms digitising the delivery of goods and services either create opportunities for the additional delivery of financial services or encourage users to adopt digital financial services. Our research on multi-sided digital platforms has revealed over 277 platforms exist in the eight African countries we surveyed. These platforms range from ehailing to elancing to marketplaces and 17% of them currently distribute financial services. 

This year we will also be working with 107 emerging tech companies in our DataHack4FI Innovation Competition. Competition participants are encouraged to examine how the data they are collecting could shape their service or product offering in such a way that it contributes to financial and economic inclusion.  

The understanding that individual’s actions aren’t necessarily motivated by the desire to own a bank account or work with a specific formal provider, but that they have needs that they wish to meet forms the basis of i2i’s #FinNeeds framework. 

We are curious to understand the extent to which efforts encouraging the adoption of digital financial services are more effective when they focus on digitising existing value chains rather than on persuading people to abandon their preference for cash. 

Do organisations and regulators pushing the adoption of digital financial services perhaps too often focus on a “let them eat cake” approach, when what people most want is an easier way to earn and manage their daily bread?