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This article explores SMS technology and the potential use of mobile banking systems for farmers in rural Africa.

Mobile Banking in Rural Africa
Erik Hersman

How it Works

The application that is being written, is Java with a Postgres database utilizing a commercial SMS gateway out of South Africa. DrumNet is trying to write it so that it is extremely simple to use. From the farmers perspective they are initiating an SMS to them where they ask a question looking for a simple answer. Many of the SMS's only require a Yes | No | or Call response, probably a 1, 2, or 3. Some are more complex, like "How many acres has your group planted?".

Another main goal of the system is to create a cashless system that allows DrumNet to track where inputs are going, who is getting inputs and how much produce is expected at the end of the growing season. This will hopefully cut down on side selling, selling of bad fertilizers and seeds, etc. The farmer will receive a unique e-token on their phone. When they go into the stockist they give the stockist the e-token and s/he sends it into the DrumNet system. The DrumNet system immediately affects payment to the stockist. The DrumNet system in turns sends a confirmation SMS to the farmer making sure that the he did indeed pick up the inputs.

They are also trying to create a system so that when the transporter picks up the graded harvest at the end of the growing season, the transporter can SMS in the amount picked up. This will kick off a 50% payment as the transporter is climbing into his lorry. The DrumNet system will notify the farmer, and the bank that they are using, Equity Bank, will also notify the farmer that a certain size deposit has been deposited.

Further Benefits

Another main goal is to gather data about the reliability of all the actors in the chain. This data is primarily for the benefit of the farmer, as we can provide a type of credit rating. For example - This farmer has worked with DrumNet for 2 years, and has very successfully planted and sold his sunflower every season. The participating bank(s) can then use that information to lower interest rates on their loans, offer different services like crop insurance, health care, education loans.

This last part is extremely useful and could be used as the foundation for a reputation system for mobile banking in Africa. The potential there is that credit, and debt, can now be handed out at the micro-level to almost anyone. The banks who take an early role in this process, and those who are willing to venture into untested new territory with technology stand to gain a lot if they can create this mobile payments system for Africa.

* Erik Hersman is a programmer and blogs at