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From Pilot to Franchise: Esoko Arms Farmers with InformationPosted by: admin on Wed, 2010-12-22 10:28
Farmers throughout Africa are using mobile technology to get access to current market information for their crops. Esoko, a Ghanaian software company, is moving from a nonprofit model to a business model to increase the use of its agricultural software. Dinfin Mulupi reports.
By Dinfin Mulupi
A mobile application created by Ghanaian software company Esoko has enabled small holder farmers in Africa to negotiate better price deals for their crops and control the timing and location of their supplies. With a successful pilot project in Ghana off the ground, and expansion underway to several other African nations, the company is now setting up country franchises to run Esoko’s system as a business.
Agriculture has for years been described as the engine for growth in most African countries. Agricultural businesses make a significant impact on the economic development of most African states. Yet, while the export of coffee, tea and horticultural products, among others, may bring in millions of dollars, farmers, particularly small holder farmers, in the continent languish in poverty.
Empowering Farmers with Information
The meager earnings from farming are due, in part, on farmers’ inability to negotiate for better crop prices. The advent of ICT solutions like those offered by Esoko means that farmers will be armed with information to strengthen their advantage in such negotiations.
The software’s interactive platform allows farmers and other business people in the agricultural sector to use their mobile phones to exchange real-time market information. The SMS platform, called “Esoko” (from the Swahili word “soko” which means market), supplies text-message based price alerts, allowing farmers to monitor crop prices and demand in various locations across the country.
Esoko runs a non-tradable commodity index comprising 12 commodities, including groundnuts, white maize, millet, soya beans, rice, cowpeas, cassava tuber, wheat, tomatoes and yams. According to the Soros Foundation, a major Esoko investor, commodity indices, rare in Africa, are a “powerful tool in helping ensure that farmers are fairly compensated for their crops.”
Aside from signing up for a subscription where they receive alerts automatically, farmers can also send an SMS to Esoko with a specific commodity code. In return, they receive a comprehensive list of wholesale and retail prices for different markets. This enables them to deliver products to a market of their choice where they will get a better price deal. It also eliminates the need for middlemen who profit from connecting farmers with buyers.
SMS alerts are but one part of Esoko’s growing software products. Groups can also use Esoko to track stock, send out bulk text messages and do sophisticated SMS polling to gather information from the field. The common theme driving these products is a focus on improving the lives of small holder farmers through access to information.
Adoption Outside of Ghana
In 2009, Esoko was developed in Ghana by a team of 25 software developers. A pilot project in the Eastern Corridor of the Northern Region in Ghana in the towns of Salaga, Chamba and Kpandai has had very positive results. To date the Esoko service is operating in several other African countries: Northern Sudan, Malawi, Cote d'Ivoire, Burkina Faso, Mali, Nigeria, Mozambique, Cameroon, Kenya and Madagascar.
In November, the company recently received a US $2.5 million investment from the International Finance Corporation and the Soros Economic Development Fund to support the program’s expansion.
“IFC and SEDF have a strong track record of helping local companies get the funding and advice needed to expand into new regions and markets,” said Esoko CEO Mark Davies in a statement about the equity investment. “With their support we hope to export this African technology all around the world.”
Esoko is in the process of opening country franchises that can run its Market Information System (MIS) in each country as a business, selling Esoko software and support to local businesses and associations (and even individuals). According to Sarah Bartlett, of Esoko’s research team in Accra, the goal of franchising is to make sure that Esoko’s products are consistently available.
“With the high demand we see from donor-funded projects, we feel that we could continue for many years working in just that area,” said Bartlett via e-mail. “But as those projects begin, end and change quickly, there is less consistency with how they are deployed and when/if the service is available to end-users.”
Opening franchises also makes sure the product is responsive to the market, and will adapt as needed by actual users.
“The market demand from those local businesses, associations and individuals -- the real end-users -- is very important to keep Esoko profitable,” explained Bartlett.
She says franchises will allow smaller groups to use the different tools (bulk text messaging, SMS polling, websites) to make them more effective, efficient and profitable. Currently the two active franchises are Esoko Ghana and Esoko Nigeria. They are “actively seeking” other franchise partners, Bartlett said.
Better Payoff for Farming
Davies describes how great a difference the software is having in farmer’s lives in countries using the platform. “In many cases farmers were able to negotiate better prices, find new markets and decide when to sell their harvests to make the most money,” said Davies. “Many reported revenue increases as high as 40 percent.
We’re rolling out in other countries and hope to have many thousands on the system actually benefitting by this time next year.”
Esoko’s blog offers testimonials from farmers who have used Esoko to get better prices. In addition to finding the best price for a crop, they report it has saved them money in time spent traveling to market.
Benjamin Matranga of Soros estimates that more than two-thirds of Africans are engaged in small holder agriculture, most of whom have access to a mobile phone. Consequently, he expects the service to have a huge impact on their earnings.
“A big challenge for farmers is fluctuations in commodity prices in each country,” said Matranga. “This gives middlemen (brokers) influence on the pricing, thereby diminishing the bargaining power of farmers. Esoko empowers farmers with information to make better decisions.”
Watch a flash animation video demonstrating how the service works. .
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Dinfin Mulupi is a business journalist based in Nairobi, Kenya. She is currently the East Africa corresp for an online business paper based in Cape Town in South Africa.
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