MOBILE MONEY VALUE CREATION IN THE AGRICULTURAL VALUE CHAIN: EVIDENCE FROM A DEVELOPING ECONOMY

ABSTRACT

There is a growing indication that, the economy of agricultural value chain is confronted by challenges of delays in money transfers and payments. These challenges have made way for mobile-enabled agricultural transfers over the last few years to change the way activities are conducted along the agricultural value chain. Through the use of mobile money, it is increasingly becoming easier for actors along the agricultural value chain to lessen the amount of time and money spent in getting access to the capital they require to invest in agriculture.

Literature on agricultural value chains and the use of mobile money seem to focus mostly on one of the stakeholders in the agricultural value chain. Additionally, studies on mobile money largely focus on mobile money transfer adoption and acceptance and seldom explore outcome and value creation from these new payment pathways. This study, therefore, calls for research into the value created from the use of mobile money in agriculture. The aim of this study is to assess the value created in using mobile money transfer services on agricultural value chain in Ghana. The study implored the use of critical realism paradigm and the theoretical foundation of the transaction cost theory for the study with particular focus on the actor motivation cost component of the theory in order to assess how mobile money helps to reduce actor motivation costs and enhance commitments in transactions. The study was a qualitative study involving in-depth interviews which served as the main data source for this study. Eleven (11) respondents from two agricultural companies comprising of smallholder farmers, aggregators, input suppliers and management of the companies were interviewed for the study. The choice of agricultural companies for this study was based on their use of mobile money in their agricultural activities for at least a year. The findings of the research suggest that, mobile money is largely used for input supply, production and aggregation. The value created from the use of mobile money focuses largely on reduction in actor motivation costs in the transaction cost theory, thereby ensuring commitments in financial transactions. This value created could be categorized into Operational (reduction in operational cost), Relational (Strengthening business relationships) and Strategic value (Expansion of businesses). A number of factors including network coverage and reliability, regulations, convenience of the service and availability of mobile money vendors are the factors that enable the creation of value.

Financial literacy and the commission charged, did not seem to be factors that inhibit value creation as discussed in literature. This is because people in rural areas with little or formal education found mobile money very convenience to use as they either memorized mobile money options and procedures or got assistance from their children or from mobile money vendors who were conversant with the system. The issue of commission charged by the network operators did not seem to hinder mobile money as farmers maintained that, they would have had to spend more than the commission charged to travel to a nearby town to access their monies. The agricultural companies also mentioned that they use a mobile money merchant sim cards registered in the companies’ names which allows them to transact business with large sums of money for free.