Agriculture is considered a lever of the Senegalese economy, given the number of people who depend directly on it for food security and the contribution it makes to macroeconomic and social stability.

It is a significant source of jobs: agriculture employs nearly two thirds of the population, and there are over 750,000 farming households in the country.¹ The vast majority of crops grown (91 percent) are food: millet, cowpeas, maize, rice and sorghum.² The main industrial crop (75 percent) is groundnuts. The contribution of agriculture to national wealth has been steadily increasing since 2011, rising from 6 percent to over 8 percent by 2015 and then to 9 percent in 2016.³

But farmers are still largely excluded from the formal financial system. Banking and microfinance services have low coverage rates in rural areas of Senegal. For instance, in the 2000–2011 period, only 3 percent (CFAF68 billion, or US$128 million)⁴ of bank credit reported to the national credit bureau was allocated to the agricultural sector—mainly the Caisse Nationale de Crédit Agricole du Sénégal⁵. Moreover, digital financial service providers only spend 12 percent (CFAF 36 billion, or US$68 million) of their portfolio on agricultural and rural activities.⁶

Business within Senegalese agricultural sectors is based on cash, which creates several challenges for producers:

• Lack of security. Many cases of theft or loss are frequently experienced after cash payments.
• Difficult financial management. Farmers receive income only during harvest periods and often lack resources the rest of the year.
• Dependence of farmers on cash payments, which are highly volatile. This dependence limits their ability to access other financial services such as credit, savings or even insurance.

Yet solutions exist that can make life easier for farmers.

In Côte d'Ivoire, for example, the microfinance institution Advans, in partnership with the telecom operator Mobile Telephone Networks (MTN), launched in 2015 a project to digitize payment flows from cooperatives to producers in the cocoa sector. The main objective was to secure producer funds in personal bank accounts. The project was adopted by 58 cooperatives of the 61 approached, allowing 7,000 planters to have a savings account and facilitating the first use of a USSD (unstructured supplementary service data) menu by a majority of the planters.⁷

Other types of digital solutions are also possible, such as digital education on agricultural practices (e.g., how to use inputs), creation of databases, and dissemination of information on pricing, soil monitoring, weather conditions, etc. In Senegal, the start-up Mlouma is working on this type of product. Other examples of solutions are production traceability and predictive analysis for precision farming.

Today, digitization of payment flows in agricultural value chains is generating a lot of enthusiasm within the digital finance ecosystem in Senegal. Several consultation frameworks have already been initiated to reflect on the added value of digitized agricultural value chains. In October 2017, the UNCDF AgriFinance programme held a workshop on the financing of the potato sector, which confirmed interest of agricultural stakeholders (i.e., Government, producers, input suppliers, financial service providers) in digital financial services. In November 2017, Ecobank Senegal invited the UNCDF MM4P programme to share its expertise on the challenges of digital finance in the agricultural sector during a panel with all stakeholders.

Opportunities for digitization do exist and could help lift farmers out of poverty. However, digitization alone cannot be the solution. The following issues deserve to be considered in the implementation of digital solutions for agricultural value chains in Senegal and beyond:

• Adoption of digital solutions in agricultural value chains is more appropriate where farmers are accustomed to receiving deferred payments.
• Use of digital solutions is more suited to value chains where farmers sell their crops at regular intervals.
• Custom pricing is desirable.
• Usage of USSD is not always easy for rural populations who are mostly illiterate; training is a must.
• Gradual implementation is essential for adoption of the proposed services.
• An offer focused on savings and payment services may not be enough to retain producers.

East African countries like Kenya and Uganda are already leading the way. Digitization could be a new niche to accelerate financial inclusion in rural areas of Senegal as well.

^{1. Agence Nationale de la Statistique et de la Démographie, Recensement Général de la Population et de l’Habitat de l’Agriculture et de l’Elevage 2013 (Dakar, 2014).↩}

^{2. Ministère de l'Economie, des Finances et du Plan, Direction Générale des Finances, Direction de la Coopération Economique et Financière, Programme Triennal d’Investissements Publics (PTIP) 2015–2017 (Dakar, 2014).↩}

^{3. Ibid.↩}

^{4. Conversion rate: US$1=CFAF531.225 (Source: https://treasury.un.org/operationalrates/OperationalRates.php, 1 April 2018). Note: This rate is used in both instances when United States dollar equivalents are provided for CFA francs.↩}

^{5. Ministère de l’Agriculture et de l’Equipement Rural, Programme d’Accélération de la Cadence de l‘Agriculture Sénégalaise PRACAS (Dakar, 2014). ↩}

^{6. Ibid.↩}

^{7. Consultative Group to Assist the Poor, CGAP Annual Report 2016: Advancing Financial Inclusion to Improve the Lives of the Poor (Washington DC, July 2016)↩}