Mastercard has developed a new technology that provides digital marketplace for East African farmers, enabling them to sell their produce and receive payments through their mobile phones, according to VOA.
The program dubbed “2Kuze” is expected to boost farmers’ profits by providing them with easy access to a wider network of buyers and faster money transfers.
To make this program more effective, Mastercard has partnered with various local mobile money transfer systems, including MPesa, to ensure quick and reliable facilitation between farmers, buyers and banks.
“What’s historically been used has been these middlemen arriving at the farm gate, or setting up marketplaces in local communities, where they’re doing deals there and coming back later, and paying those farmers in cash after they’ve been able to sell the goods,” John Sheldon, Mastercard’s Vice President in charge of the new technology told VOA.
Promoting Fair Trade Practices
Sheldon further revealed that they will be partnering with various charity organizations such as Cafedirect Producers Foundation to help 2Kuze achieve its desired goal of promoting fair trade practices between farmers and buyers.
For many years, farmers in East Africa have had to depend on middlemen brokers to sell their products, who unfortunately are the ones who dictate the price. These brokers have often left farmers with little profits that are very unpredictable.
But with the new technology, farmers in this region are set to enjoy higher returns and access to a broad range of markets for their goods. By eliminating these brokers, small-scale farmers will be able to negotiate directly with potential buyers, thus increasing their chances of making more profit.
“With technology comes great scale, and so if we can help [buyers] work with 10 times the number of farmers they’ve historically been able to work with…they have the opportunity to make more money, even if the margins on any given transaction is lower,” Sheldon said.
What’s In It for Mastercard?
According to Sheldon, it is still not clear how the company will benefit from the program, which is still at the trial stage. He however noted that they are still texting different potential financial models such as getting a certain percentage of the total sales and giving access to large-scale buyers for a fee.
He also hopes that this technology will help small-scale farmers in East Africa to improve their credit ratings so that they can be able to access loans from financial institutions.
Agriculture is a key mainstay for majority of households in the East African region and remains the largest contributor to the region’s GDP.