Editor's note: Many thanks to Georgia Barrie and GSMA for letting us cross-post this wonderful blog post! It's fantastic to hear about a case study that focussed so hard on the sustainability and business model of the intervention itself. Bravo TechnoServe! Check out this post about their work in Tanzania from 2011.This post is written by Georgia Barrie, the Commercial Programme Manager for GSMA mWomen. Program information provided by Cooper Swift, Program Manager, TechnoServe Swaziland.
It’s a simple idea: provide smallholder farmers with information via SMS to improve farming practices and thus increase their yields. In fact it’s a concept that has been replicated by NGOs and MNOs across the developing world, with varying degrees of success. However, the real challenge in launching such a service lies in building a business model that is both commercially viable to the provider whilst remaining accessible to the poorest populations.
In 2010 the NGO TechnoServe developed an SMS programme in Swaziland to provide cotton farmers with weekly time and location-specific farming information. Funded by USAID under the Swaziland Entrepreneurship and Enterprise Development Program (SWEEP) the service was managed by TechnoServe Business Advisors and provided free to all cotton farmers. Three years later TechnoServe has succeeded in turning this free service into a commercially viable product.
One of TechnoServe’s key success factors in delivering the service was to reach as many cotton farmers as possible. When questioned, farmers showed a strong interest in receiving farming information via SMS. However, with annual profits averaging less than $150 per farmer, there was a reluctance among farmers to pay for a service that may not yield returns. The ability to pay was further hindered by the fact that two thirds of cotton farmers are women who traditionally have much lower purchasing power than their male counterparts. In order to drive uptake and ensure accessibility for even the poorest communities, TechnoServe decided to provide the SMS information as a free service to farmers.
Developing the service:
Developing the SMS service itself was simple. Using the FrontlineSMS platform TechnoServe was able to quickly and easily send weekly farming information to thousands of cotton farmers in Swaziland. From information on rainfall to notifications on pest outbreaks, farmers could receive up to date advice on managing their crop. After the first season of implementation TechnoServe surveyed farmers and found consumer satisfaction to be very high. 97% of farmers stated that they believed the SMS service had a positive impact on their yields and 98% of farmers said that they had shared the SMS information they received with other farmers. Interestingly, less than 1% of farmers said they had forwarded the message, reinforcing the initial assumption that airtime costs are prohibitively expensive for many of the cotton farmers.
Making the business case:
As the number of subscribers to the SMS service continued to grow, the long-term success of the programme hinged on finding a sustainable business model that did not rely on donor funding. TechnoServe analysed the situation through funding provided by USAID under the Community Based Livelihoods Development Program for Women and Children (CBLD), where TechnoServe has partnered with FHI360 to improve the lives of women and children in rural Swaziland. The goal was for the cotton ginnery to take full ownership and begin paying for of the program.
The total cost to send weekly SMS messages throughout the cotton season was calculated to be $1 per farmer. TechnoServe analysed the impact of a potential yield increase on the profits of the sole buyer of cotton, the Sikhulile Cotton Ginnery. It was established that if the cost of SMS messages were to be funded by the ginnery, they would require an average yield increase of just 4% per farmer to be cost neutral. Although it was difficult to estimate the direct impact on yields due to external factors such as climate, pests and disease, feedback from farmers suggested that the yield impact of the SMS service was significantly higher than this 4% figure.
TechnoServe brought the case to the ginnery who agreed to take on the management of the SMS programme on a pilot basis for the 2013-2014 cotton season, with SMS costs shared between the cotton ginnery and the USAID-funded CBLD Program. Due to an excellently executed handover process, the pilot has been very successful. The ginnery has sent regular crop management information messages to over 2,600 farmers throughout the season, reaching 88% of the total cotton farming population. They have also used the Frontline SMS technology to alert farmers of upcoming training sessions and extension officer visits in the farmer’s region, something that previously relied on word of mouth. As the first batches of harvested cotton arrive at the ginnery this April, the Sikhulile Cotton Ginnery recognise the value of the service and have agreed to take on the full management and funding of the SMS programme for the coming seasons.
Sustainable Mobile for Development business models frequently rely on the benefits to MNOs in increased ARPU or reduced churn. However, when consumer populations are small and the ability of users to pay is very low, it is often difficult to find commercially viable solutions. TechnoServe’s SMS programme highlights the opportunity for MNOs and NGOs to work with multiple stakeholders in developing markets to establish sustainable services that are accessible to even the poorest populations.