SmartMoney ICT and AG Profile

The system, developed by SmartMoney, a third-party provider of mobile money, enables agribusinesses to transfer electronic funds to the mobile wallets of their intermediary buyers, who in turn purchase crops from farmers. Farmers can then choose to cash out at a SmartMoney agent or maintain the stored value in their mobile wallet for future bill payments. SmartMoney partners with agribusinesses to introduce its mobile money payments system to various actors along the value chain. The system uses mobile phones and unstructured supplementary service data (USSD) aggregation technology to facilitate transactions. SmartMoney trains its partners to identify and train agents in the areas where farmers live and work. The company has implemented its system in Tanzania, where it operates with six cotton ginneries serving 750,000 farmers, and in Uganda, where it is partnering with the Ministry of Industry, Trade & Cooperatives to introduce SmartMoney to 13,000 cooperatives. The SmartMoney system is designed to reduce operational expenses for agribusinesses by having them operate the service. The first clients in each country are not only customers but also partners in bringing SmartMoney into the area. As partners, they have options to purchase shares in the service and receive training of trainers, so that they can, in turn, train farmers and village cash agents on how to use SmartMoney. The system charges a five percent fee from the agribusiness each time they transfer money, with one percent distributed to cash agents as commission and four percent to SmartMoney. The impact of the SmartMoney system is still being measured, although farmers can benefit through free and convenient access to mobile money transfer services. Agribusinesses can also benefit from cost savings by removing expenses associated with handling cash, such as transport, safeguarding employees, and losses from theft and corruption. Cash handling costs are typically 7-20 percent of annual turnover in the countries SmartMoney works, as compared to the 5 percent fee charged by SmartMoney to its partners. SmartMoney was founded in 2010 with initial capital of $500,000 provided by its founder. The company is pursuing a broad array of short-term and long-term funding options from foundations, local banks, and private investors. It hopes to be self-sustaining from revenue generation by 2014. The company's business model is designed to reduce its operational expenses by having agribusinesses operate the service, and it has established partnerships with agribusinesses in Tanzania and Uganda to implement its system.