Super platforms: Connecting farmers to markets in Africa
This blog by CGAP is on super platforms that are pushing the boundaries of financial inclusion around the world, creating million of new jobs and stimulating trade, especially in rural markets. These “platforms of platforms”are typically thought of as connecting customers and merchants but they are also connecting farmers to markets, potentially increasing farmers’ incomes by 50 percent or more. Mercy Corps’ AgriFin Accelerate Program inventoried models from around the world with a focus on agricultural markets and smallholders, which showed that digital platforms link the smallest of agricultural businesses to an expansive and ever-growing market of buyers, often bypassing middlemen and resulting in better prices for goods sold. When they operate at scale, these platforms also greatly reduce transaction costs related to aggregating and moving goods and making payments. Six strategic decisions are identified that companies make when developing and scaling their market platform for agriculture: model, crops, buyers, transport & logistics, farmer engagement, financial services and payments. Research shows that logistics are usually a major cost driver of digital market development. Robust logistics networks are a key constraint across Africa. Platforms are also experimenting with disaggregated logistics, leveraging underused logistics capacity. Data scarcity and data management are another major cost driver. Platforms that invest in data see major benefits in improved farm-to-market logistics, more tailored customer support, investment and increased sales. Converting farmers to digital marketplaces will require trust built on strong customer experience. So what needs to happen for models to grow and scale in Africa? As Africa’s population doubles by 2050 and the demand for food and rural jobs escalates, the transformative power of super platforms becomes a strategic imperative.