Originally published by CTA on Wednesday, 11 July 2019
A recurring question in agricultural development is how to transition successful donor-funded initiatives into self-sustaining, smallholder-focused businesses. One of CTA’s most innovative digitalisation projects, the Market-led, User-owned ICT4Ag-enabled Information Service (MUIIS), is proving it can be done.
The MUIIS project was established in September 2015 with support from the Dutch Ministry of Foreign Affairs to address Ugandan smallholders’ limited access to timely and accurate farm management information in a time of climate change. In March 2017, the project launched a bundle product of highly targeted satellite-based services delivered by text message to mobile devices, including agronomic advice, weather alerts and index-based crop insurance.
By the time the project was concluded in February 2019, over 250,000 farmers were digitally registered in its database and 3,609 farmers had subscribed to the MUIIS service bundle. A rapid crop yield assessment of soya bean, maize, beans and sesame carried out by the National Agricultural Research Organisation of Uganda and the Alliance for a Green Revolution in Africa over two seasons showed that farmers who subscribed to the bundle significantly improved their productivity. Specifically, maize yields increased by 67%, far above the project target of 25%, and soya bean yields increased by 60%. In addition, 874 subscribers qualified for insurance pay-outs, with over UGX 27 million (€6,400) paid in compensation for crops destroyed by drought.
A few months before the end of the donor-funded phase of MUIIS, we asked Ernst and Young to review the project’s business model, identify and recommend possible options for a viable enterprise. These included alternative cost structures, a business-to-business (B2B) offering, priority markets and future ownership considerations. We used these recommendations as a starting point and presented the revised business model to potential partners inside and outside Uganda.
MUIIS is now being run by Ensibuuko, a Ugandan fintech start-up that handled the text message delivery platform during the project phase, in partnership with farmers’ organisations. And the initial results look very promising. Ensibuuko is well on its way to scaling up the business within Uganda, with the possibility of expanding to other African countries. In the first farming season of 2019, the advisory component of the service bundle was sold to more than 7,000 farmers – almost double the 3,609 farmers who subscribed in the previous four seasons of the project’s lifespan. Most of these sales were B2B, with a single institution buying 6,000 subscriptions for its members.
The service bundle is also being promoted to a broader range of users, including savings and credit cooperatives (SACCOs), agribusinesses, non-governmental organisations, development actors, aggregators, input suppliers and insurers, who can adapt it to their needs. For instance, cooperatives can use the new dashboard functionality to input and manage their members’ data and financial records more efficiently, as well as run basic analytics to establish, among other things, the cumulative acreage of a particular crop under cultivation.
For service providers, an add-on to the text message system allows cross-promotion of other relevant products and services. As an example, an alert warning farmers of hot weather and the need to water recently planted seed can be accompanied by the name and contact details of a local, low-cost supplier of irrigation equipment.
To ensure MUIIS’s financial sustainability, the subscription price has been raised slightly to reflect the transition from a project to a business and the additional value being provided. A seasonal subscription now costs UGX 30,000 (€7), up from UGX 14,000 (€3.30) in season one and two of 2017 and UGX 20,000 (€4.75) in season three and four of 2018. Built into this cost is a commission structure that compensates partners involved in administering and using the service, such as SACCOs and the national farmers’ federation.