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Mobile Applications for Rural Development
The World Bank20 January 2011
Andrew Dymond & Steve Esselaar
2What is a Mobile Application?
Use of a mobile telephone beyond purely consumer voice and text for collection or transmission of data for a particular commercial or administrative purpose
Overwhelming majority of applications (“apps”) today are for Entertainment and Lifestyle purposes – e.g., iPhone apps
This study looks at mobile use for economic and governmental purposes related to rural development, including:
Agricultural pricing information Virtual market place transactions Value chain automation
• Tracing product collection & distribution
Cashless payments
Agricultural extension services
Information collection & dissemination
Distribution of micro-insurance
Pickup scheduled for 27 March 2009
Is your harvest ready?
1)Yes 2)No 3)Call
3Contents of presentationOverview of the m-applications in Rural Development for
three study countries Kenya, Philippines, Sri Lanka
Categorization framework Each country with a different blend of m-app interventions
Example of most interesting cases Objectives & Concept Business Model, Outcome Benefits, & Challenges
Business Models & Funding Methodology used for the study Categories M-App Funding & PPP Planning Gaps
4The Rural m-App Case Studies
Country Business
Subsector
Agric. Price
Information
Agric. Market
Linkages
Agric. Extension & support
Resource management
Labour migration &
Human dev
Governance/
political
Rural finance & ICT
Kenya [*Cases studied in detail]
*KACE – Mkt Info. & Linkage Services
✔ ✔
*DrumNet ✔ ✔ *VirtualCity ✔ *Kalimo Salama ✔ ✔ ✔
KenCall Farmers’ Information Service
✔
Mkulima FIS & iCow ✔ *GrundFos LifeLink ✔
Kazi560 /Mobile4Good ✔ *Ushahidi ✔
Philippines
B2BPriceNow ✔ ✔ Project Mind ✔
Farmers Texting Centre ✔
TXT CSC ✔ text2teach ✔
Sri Lanka
1920 Agri Extension ✔ TradeNet ✔ ✔ e-Dairy ✔ 1919 Gov’t Info Centre ✔
Totals 4 6 6 1 3 3 1
5The Rural m-apps interventions
Market participation & linkages
OBJECTIVES DESCRIPTION OF RURAL USAGE EXAMPLES
Agricultural extension
Distance education
eGovernance
Rural Finance, Infrastructure & ICT
Access and provision of agricultural information Support and promotion of better farming methods
Improved education results Greater access & participation in education
Access to government information Amalgamation of grassroots information online
for purpose of effective response
Finance and insurance on fair and equal terms which overcome rural challenges
Ease of payment & receipt Protection from impact of climatic disaster Access to insurance for small farmers
Improved economic participation & income Information, insurance & finance Buy-sell trade without exploitation Hands-on linkage assistance
Resources Clean water at affordable price & for irrigation purposes
Project M.I.N.D
6Example: “Kilimo Salama” Agri. insurance
Kenya
7Overview of Kulimo Salama
Concept
Objectives
Mobiles used in sales of farm inputs, insurance policies & payouts
Mobile linked sales automation between farmer, agent and Insurance Co.
SMS sent to farmer for initial contract confirmations
M-Pesa used for input and insurance policy purchases
M-Pesa automatic pay-outs triggered by weather station report
Distribution model can be replicated & integrated with other applications, added to all value-chain systems to improve the security and credit-worthiness of farmers
Create, demonstrate and launch an affordable index-linked input and crop insurance product for smallholder farmers that insurance companies are able to offer and administer at manageable cost
Reduction of risk for smallholder farmers to enable them to adopt more advanced farming techniques and thus increase their income
8Kilimo Salama (2) Business
model
Outputs / Benefits
Challenges
Revenue (Cost of insurance) Farmer pays 5% of input cost Input company pays 5%
Product System Costs Investments by Syngenta – server, weather stations, information
services Safaricom data transmission discount IFC $2.5 m farmer education considered an essential element
User benefits – higher yield growing for smallholders facilitated by insurance, could eventually double farmer incomes
1st Year Payouts gave credibility
Currently few suitable weather stations
High training & extension costs necessary to reduce farmer risks
Could backfire on farmers without critical information and education
Smallholder suspicion of insurance
Cost of information & education/extension services
Cost of insurance without premium sharing Back
9DrumNet Kenya
Concept
Objectives
ICT & mobiles used in the finance, production, delivery & payment process in the agricultural supply chain
Pilots in the horticultural sector and the oilseed sector
Future target is all significant agricultural production segments
Reduce dependence on brokers in the Kenyan Agriculture Sector Reduce logistical transaction costsIncrease trust between value-chain players & reduce risks
Create performance quality standardsImprove reliability/quality of transport servicesBring traceability in the commodity markets
BanksBanks
ProducersProducers
BuyersBuyers
Agro-DealersAgro-Dealers
Source: PRIDE AFRICA
10Drumnet (2) Business
model
Outcome / Benefits
Challenges
Revenues – Membership fee, linkage fee, transaction fee Upscaling strategy - Form company (done), Develop new IT platform,
Automate one segment Value Chain at a time Investment - Need $1 million on commercial basis for IT platform,
staff complement and first 2 years operations Projections show self-sufficiency from Year 2 onwards based on the
experience of the pilot projects and expectations in Business Plan
Pilot increased growers’ incomes by 32% and integrated market segment.
Targeting large scale roll-out to many sectors
Numerous mobile applications coming into the market dilute opportunity
Long process of engaging partners, negotiations could take long periods before finalized.
Back
11e-DairySri Lanka
12Overview of e-Dairy
Concept
Objectives
Pilot initiated in the Dambadeniya district in 2009 Enables dairy farmers to access information via touch screen
computers and request veterinarian services via SMS Uses pre-assigned codes to order vet services Vet gets in touch with farmer directly Build database to support farmers with dairy decisions
Extension service targeting 30% increase in milk production through higher pregnancy rates in cows, by providing access to veterinarian services
There are 560,000 milk cows in Sri Lanka. Out of these at a given time only 45 % are milk-producing animals while 55% are dry. The application targets increased production through provision of information and timely vet services via ICT and mobile.
13e-Dairy (2)
Business model
Challenges
Revenues – None Cost of operations: $6k per year Farmers pay cost of SMS (directly to MNO) Upscaling strategy – Expand to other localities Upscale financing – $1.2 million (already allocated from USAID)
Market penetration• Currently 300 farmers signed up• No information on benefits to date, though the project has high
expectations of improved techniques through ICT empowerment of the farmers
Expectation that service is free, though current research suggests that farmers may be willing to pay for the service
Reach is limited by connectivity in rural areas
Outcome / Benefits
Back
14All the Kenya casesObjective Application DetailsMarket participation & linkages
KACE • Set of agricultural information & market linkage apps in development & operation since 2005
• Virtual trading floor combining radio broadcast, telephone and SMS.Market participation & linkages
• Well developed pilots linking all players in value chain of two horticultural and oilseed sectors
• Financed by donors, proved the potential viability of the application
• With the planned additional of a ICT and commercial investment partner, the application appears to be viable, scalable & replicable with targeted further investment.
Value chain efficiency
• Automation solutions in the Tea, Coffee, Dairy & Cotton segments
• Scaling up and replication currently underway for Dairy & FMCG segments
Secure Water Supply
• Innovative use of m-Pesa for cashless payment of water supply
eGoverance & Non-Government
• Reporting crisis information, disturbances or other events on Google map
• Has been used beneficially in Kenya, Haiti, & licensed to many other locations
Rural Finance infrastructureAgri Insurance
• M-Money used to distribute Index-based agricultural insurance to small scale farmers on high yield inputs
Agricultural Extension
Green Dreams
Mkulima FIS
• Pre-pilot stage applications using mobile USSD for accessing timely & critical information
15The Philippines casesObjective Application Description
Market participation
• e-commerce platform completing transactions between buyers & sellers.
• Uses the internet as a billboard for agri-products and as a virtual marketplace for buyers & sellers of agric. produce.
• It is currently profitable.
Non-formal Distance Education
• Mobile Initiatives for Non-formal Distance Education was a pilot to test the feasibility of using SMS technologies for delivering non-formal distance learning (DL).
• It is used mainly to administer exams to students.
Agricultural extension
Farmers’ Texting Service (FTC)
• Innovative SMS based service for answering agriculture related queries, primarily in rice production.
Access to Gov’t information
TXT CSC • eGovernment application that provides information to citizens on government frontline services.
Enhanced video based education resources
• Educational program which enables teachers and students to access over 900 multimedia educational materials like video, pictures, text or audio files through an SMS control.
• Uses satellite for curriculum delivery and sms for response & feedback
• Was transferred to Tanzania, where it uses mobile entirely
Project M.I.N.D
16The Sri Lanka cases
Objective Application Description
Agricultural extension
• Also known as “Govi Sahana Sarana”) • Toll-free hotline service which provides agricultural advisory
services to farmers in Sinhala or Tamil. Market participation & linkages
• Provides real-time spot-market wholesale price alerts in agricultural commodities on mobile phones.
• Also facilitates trading between buyers and sellers for mainly products and/or services.
Agricultural extension
• A pilot which enables dairy farmers to request veterinarian services via SMS and touch screen computers.
Access to information on Government services
• A hotline which provides access to information on government services.
• Accessible on any telephone network and offered in all three local languages, Sinhala, Tamil and English.
• Some of the services are also available via an SMS channel.
17Overview of all users, platforms & mechanisms
Sub-Sector or Intervention
Type of service
Users Platform Mechanism
Smallholder farmers
Suppliers, banks,
insurance co's.
Buyers & exporters
Consumers TeachersSMS/ USSD
CallWeb
browser
Self contained
app
Remote sensor
Push (data sent to user)
Pull (data asked
from user)
Supply chain management
Virtual trading floor
✔ ✔ ✔ ✔ ✔
Pricing info ✔ ✔ ✔ ✔ ✔ ✔ Automation ✔ ✔ ✔ ✔ ✔ ✔ ✔
Financial infrastructure
✔ ✔ ✔ ✔ ✔ ✔ ✔
Education
Exam management
✔ ✔ ✔
Provision of video resources
✔ ✔ ✔
ResourcesSafe water management
✔ ✔ ✔ ✔
Agricultural extension
Milk productivity
✔ ✔ ✔ ✔
Rice productivity
✔ ✔ ✔ ✔
Cow birthing management
✔ ✔ ✔ ✔
eGovernance
Access to information
✔ ✔ ✔ ✔ ✔
Grassroots reponse
✔ ✔ ✔ ✔
18Basic rural development themes Common theme of all applications is “Access’
Information Markets Resources Job Opportunities Governance
Some objectives are cross-cutting between sub-sectorsE.g., Access to Information is common, but impact deepens when timely expert assistance,
education, finance, etc. is applied
Supply chain management in the agricultural sector has far-reaching impact
Market information, linkages, micro-insurance, education & extension are all related to supply chain operation
Efficient supply chains are key for the economy to be globally competitive
Benefits create spin-offs that stimulate social and economic factors (employment generation, added value, decreases of product losses, reduced fraud losses, etc.).
Financial component can also leverage other outcomes/benefitsE.g., access to credit, safe & rapid payment, insurance, can have transformative effect,
creating steps in development towards independence and empowerment
19Agric. sector apps link many playersObjective – improved, equal & integrated access between key players
Suppliers, banks & ins.
Buyers & exporters
Sm
allh
olde
r Far
mer
s
1. Poor knowledge of farmers’ needs for inputs and services
2. Costly and complicated distribution to small farmers
3. Means of payments unsuitable to farmers
4. Systematic losses from small farm customers
1. No effective means of communication with farmers
2. Poor knowledge of grower activities
3. High costs/low performance management
4. Low profitability
5. Vulnerable to speculation
1. Lack of knowledge of arable surface area & potential productivity
2. Need to master improved cultivation techniques
3. Little or no learning &/or sharing of best practices
4. No access to credit or insurance
5. Limited knowledge of weather expectations, impact & risks
6. No access to certified seeds, fertilizers, inputs and services
7. Market misinformation8. Vulnerable to
exploitation by middlemen
20Business Model Analysis
Financing & Re-financing Analysis [Excel Tool] Financial cash flow model – all
supply costs, revenues, growth projections
Decision metrics – e.g., payback / IRR / time to sustainability (may be different for commercial & Non-Profit Orgs)
Maturation & Expansion Status Pilot Active: “S” curve
positioning Early High growth Saturation
Expansion potential (market & finance)
Replication to other countries
Risky or suited for replication?
Alternative interventions
SWORB Strengths Weaknesses Opportunities Risks Barriers
Viability analysis
Supply costs (Value chain: Fixed & variable Costs
Price to users Volume /demand
(Incl. Customer / user profile)
Payback/Profit/ Viability measure
Competition /Market /Trends
Benefits – descr. & quantification
Is the application a transaction business or does it provide information or other services?
Are the non-transaction services on a commercial or non-commercial basis?
Transaction
Information (Commercial)
Non-commercial service
Basic questions
Who invested in the service and owns it?
Who else has financed it?
Who sells what?
Who pays for the transaction / service?
Who are the beneficiaries?
What benefits do they derive (private & macro / external)?
Can the benefits be quantified?
Future Potential
A. Viability/Growth Issues Prognosis
Healthy? or support required? justified?
B. Replicability Common &
unique success factors
Issues Opportunity Support
required? justified?
Barriers Regulatory Social/
Cultural Finance Technology Information
/Capacity
Strategic Analysis Summary & Conclusions Market context & potential opportunities
for scaling up & developing the m-application
Cost- effectiveness/benefits of the m-app compared with other development actions having similar objectives (e.g., reach more people, faster dissemination, enhanced benefits, more potential for future sustainability, etc.)
21Stages - maturity cycleV
iabili
ty
Time
Technology Trigger = mobile penetration
Slope of Enlightenment:49% of apps in the
commercialization phase
Trough of Disillusionment:37% of apps don’t go past
the pilot stage
Plateau of Productivity:15% of apps are sustainable
Peak of Inflated Expectations:71% of mobile apps reliant on
gov’t or donor funding
22The Business Models observed
Country Application
Source of Finance() = Fut. proposed
Source of Revenue to the m-app(Additional to MNO income)
Gov’tDonor/
Challenge Award
CSR
VC Equity
or Private Loan
Share of SMS or
Voice Call
Member Fee,
License, etc.
Sale of product
M-app Transaction charges
Consulting
Kenya [*Cases studied in detail]
*KACE – Mkt Info. & Linkage Services () *DrumNet () *VirtualCity *Kalimo Salama
KenCall Farmers’ Information Service
Mkulima FIS & iCow *GrundFos LifeLink () Kazi560 /Mobile4Good
*Ushahidi ()
Philippines
B2BPriceNow Project Mind Farmers Texting Centre
Text CSC text2teach
Sri Lanka
1920 Agri Extension TradeNet () e-Dairy () 1919 Gov’t Info Centre
Totals
23Potential Funding models
1. DONOR / PPP
FUNDING CATEGORY DESCRIPTION OF FUNDING TYPE
2. VC FUNDING
3. CAPITAL MARKETS
FUNDING SUB-CATEGORY
PPP: Service Contract (outsourcing)
PPP: Management Contract
Donor support or Challenge Award
PPP: BOT (without concession)
PPP: BOT (concession) , license or Lease
Grant matching
PPP:OBA &/or other competitive vehicles
CSR
Social Networking related sourcing
Equity matching
Funding & expertise & networking
Expertise & networking
Debt
IPO
Fee from government for non-core service
Fee plus performance-based incentive
Donor funding or competitive award
The government pays service provider on a unit basis
All revenues from service provision to private partner
Donor / government matches funding raised privately
Government provides Subsidy for Private Participation
Corporate social responsibility allocation of funds
E.g., 1% Club and similar innovative vehicles
VCs match funds that the business is able to raise
VCs supplies some funding, time/expertise & networks
No explicit funding, expertise & networking committed
Business able to go to banks for funds
IPO in order to access additional funds
24Ideal Funding ecosystem – Commercial
Donor / Gov’t funds
VC Funding
Debt / IPO /
Access to
capital markets
Continued Donor/Gov’t
or PPP funding
Apex Fund
Small VC
Fund
Small VC
Fund
Small VC
Fund
Small VC
Fund1
2
3
Commercial skills & expertise, together with funding
Non-commercial
Com
merc
ial
Observed gap - There is a need for financing sources that link the donor / start-up phase to the commercial world, which is less “intrusive” & faster
• The mobile apps world requires agility and flexibility
• Venture capital style rather than donor style
4Observed Gap Optimal Plan for
success
25PPP m-App Planning GapSuccess must be built on the following steps which are common to other PPP type infrastructure projects
Objectives Set Government administrative deliverables – e.g. Information,
Complaints & Feedback, Opinion, Disaster response Set other objectives – e.g., eDairy 30% increase in milk production;
Farmers’ Texting Service increase rice variety production
Financing Design Set a model for private sector participation and design the parameters –
how much to be invested, terms of relationship • BTO, BOT, Lease, etc.• OBA
Operational Design Set targets & KPIs Prepare RFP documents Award contract Monitor results
