Expanding Digital Financial Services in Senegal

In Senegal, mobile money growth is boosting financial account ownership, a common measure of financial inclusion; but it is necessary to ensure all parts of the population realize the benefits of digital financial services (DFS) to continue expanding financial inclusion. According to the United Nations Capital Development Fund (UNCDF), Senegal’s DFS market has significantly transformed over the past five years. Adults with an active DFS account (defined as having conducted at least one recent transaction per month) increased from 13 percent in 2014 to 29 percent in 2019, and the number of active DFS agents has risen from 54 to 192 agents per 100,000 adults. DFS agents are third-party entities who contract with e-money issuers that offer financial services through mobile phones. These agents can perform the entire suite of services offered by the mobile money product, and they are the primary points of contact for the service.

Digital programming must account for gender and geographic disparities in access and use of digital technologies to see continued growth in DFS markets. Inclusive access and use are core to the USAID Digital Strategy, which charts a vision for USAID and partners to support open, secure, and inclusive digital ecosystems. When designed to be accessible, DFS can offer greater convenience, security, and the ability to save easily.

Bridging the Gap Between Providers and Smallholder Farmers

In 2018, USAID/Senegal requested a digital agriculture assessment by Digital Development for Feed the Future, a collaboration between the U.S. Global Development Lab (Lab) and the Bureau for Resilience and Food Security. The assessment recommended research to understand how and why farmers may or may not adopt the use of DFS products in Senegal. 

Based on these recommendations, USAID’s Digital Finance Team and Massachusetts Institute of Technology D-Lab’s Comprehensive Initiative on Technology Evaluation Program (MIT CITE) conducted a study to understand how to serve the most vulnerable populations in Senegal. The study explored perceptions, barriers, and enablers and focused on specific groups as part of  Feed the Future's zones of influence (identified in the Global Food Security Strategy Senegal Country Plan). In May 2020, the Digital Finance Team and MIT CITE released the research report, “Assessment of Potential Opportunities for Use of Digital Payments for Smallholder Farmers in Northern and Central Senegal.” MIT CITE also conducted similar research in Guatemala and Burkina Faso.

Key Findings and Recommendations 

The report presents six key findings and related recommendations to encourage the use of DFS by smallholder farmers in Northern and Central Senegal. The recommendations also ensure supply-side stakeholders are aware of and responsive to smallholder farmers’ needs and preferences. These recommendations could be divided in three categories and supported by providers, enablers, and conveners:

1. Providers design and deliver digital financial services (i.e., banks, telecom companies, fintech startups).
2. Enablers can foster a functional DFS ecosystem by managing institutions, identifying best practices, and designing regulations, policies, and programs (i.e., governments, international donors, NGOs).
3. Conveners aggregate DFS users (i.e., grassroots farmer cooperatives or farmer networks).

Key findings include the following:

1. Financial inclusion is lower than digital inclusion*, especially among women. 
   Recommendation: Providers, enablers, and conveners could consider targeted interventions to improve women’s digital and financial inclusion, demonstrating that access/ownership of a mobile phone can provide opportunities to expand financial inclusion.
2. Many smallholder farmers feel that DFS is not designed with them in mind, which impedes their adoption of DFS. 
   Recommendation: Providers and enablers should develop products for intended users and communicate the benefits of DFS. Some of these benefits may include safety, convenience, and reliability. However, providers and enablers could benefit from better understanding the reasons non-users do not think DFS is compatible with their lives and from involving non-users in the design process.
3. Supply-side perceptions of smallholder farmers’ needs and attitudes are not always accurate and lead to services and programs that do not align with their preferences. 
   Recommendation: Providers, enablers, and conveners could use these research findings as a start to understand the needs and preferences of smallholder farmers and apply these insights to product design and service delivery. This approach is outlined in the Consultative Group to Assist the Poor (CGAP) Customer-Centric Guide. For example, Orange Money Madagascar, a telecommunications and mobile money provider, and CGAP interviewed rural customers. They found that the customers were interested in offers of credit, an Orange product offering already in development. Orange applied these insights to validate their goals and set conditions for this financial service.
4. DFS service package preferences differ somewhat by gender and age but not by region. 
   Recommendation: Since the sampled regions had similar DFS delivery preferences, providers and enablers can scale without targeted geographical interventions. However, to scale equitably, providers and enablers must consider special considerations among subgroups, such as women and the elderly, whose preferences are distinct.
5. Preferred service package delivery methods — conducted via an agent or phone application — varied by type of DFS  (insurance, transfers, savings, credit, etc.). 
   Recommendation: Providers and enablers may want to consider tailoring service package delivery to meet users’ needs and preferences. For example, smallholder farmers indicated they would prefer to work with an agent for insurance products rather than solely use a phone application.
6. Supply-side perceptions of DFS service package preferences differed from smallholder farmers’ reported preferences. 
   Recommendation: Providers and enablers could benefit from incorporating smallholder farmers’ feedback into the service package design. Listening to farmers and integrating them into the delivery design process could help counter costly misperceptions and speed up DFS expansion among smallholder farmers.

*The researchers determined financial inclusion by asking respondents about bank account ownership, usage, as well as savings, borrowing, transfers, payments and insurance activities. They determined digital inclusion by mobile phone/computer ownership, usage, etc.

The MIT research team will publish academic papers containing the complete methodology and research results in addition to these preliminary results. To read about similar research done in Guatemala and Burkina Faso, check out the blogs, “From Access to Usage: Digital Financial Inclusion of Smallholder Farmers in Guatemala’s Western Highlands” and “Assessing the Gender Gap in Access to Digital Financial Services in Burkina Faso.” To learn more about DFS in agriculture, check out USAID’s Digital Financial Services for Agriculture Guide and Toolkit for Integrating DFS into Feed the Future Programs.