Financial inclusion fit to size: Customizing digital credit for smallholder farmers in Tanzania
This briefing (PDF) by The Initiative For Smallholder Finance explores the causes of low uptake in digital credit for smallholders in Tanzania. Dalberg’s Design Impact Group (DIG) explores these causes to better understand how concrete product solutions to jump-start adoption of digital credit products can be developed. Digital credit products represent an important financial inclusion opportunity for smallholder farmers in Tanzania, where close to 80% of the workforce is engaged in farming. Uptake of these products by smallholder farmers, however, remains limited. To address this challenge, DIG used a human-centered design (HCD) approach across three regions of Tanzania to produce behavioral insights around smallholder farmers’ interaction with, and demand for, digital credit products. Based on insights collected during their research, DIG designed and prototyped a new digital credit product for smallholder farmers and evaluated their response to it. This idealized digital credit product builds on existing products available in the Tanzanian market, but has five new components, each with multiple differentiated features, that meet the unique credit needs and behaviors of smallholders. One of these components is flexible credit, because loan sizes, repayment periods, and repayment terms of current digital credit products do not meet the credit needs of smallholder farmers. Most existing products were designed for urban consumers, whose finance needs differ significantly from smallholders’ needs in several respects.