Page 232 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

• How important are agriculture payments to the lives of the poor?

• Would value chain eMoney tend to stay in electronic form?

Note: A variety of research papers explore the intersection of Digital Financial Services (DFSs) and
agriculture. An excellent example is USAID and mSTAR’s “Guide to the Use of Digital Financial Services
in Agriculture” which provides a framework for using lending, payments, and other DFSs to improve
specific agriculture value chains. This report has a different emphasis than the USAID and other
papers. This report primarily focuses on the degree to which agricultural value chains can accelerate
progress toward digital liquidity and less on the reverse perspective – i.e., whether eMoney is good
for value chains. With that said, a strong value proposition is obviously an important consideration,
otherwise eMoney implementations will not happen.

2 Background

Importance of agriculture

Agriculture is a critical component of the economy in developing countries and can play an important role
in helping to alleviate poverty. Developing countries can derive more than 30 per cent of their GDP from
agriculture, compared to less than two per cent within a developed country, such as the U.S. Additionally, there
is a close connection between the poor and agriculture. SHFs comprise most of the rural poor in developing
countries.

A common approach for alleviating poverty is through commercial value chains. In this framework, policymakers
and stakeholders examine the spectrum of ‘farm to fork’ activities and identify tactics that will benefit SHFs.
These tactics include incorporating SHFs into existing value chains or improving value chain performance
through financing, better training, better fertilizer, and so on.

Commercial value chains differ by crop but often share the activities shown in the diagram below.

Figure 2 – Typical agricultural value chain

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