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Digitizing for an Inclusive Value Chain
April 16, 2018
By Diana Boncheva Gooley, Manager, Strategic Advisory (Digital Financial Services)
Which is harder? Digitizing a fast moving consumer goods (FMCG) or an agricultural value chain in developing countries?
Although the FMGC value chain could be more complex (more links, less visibility), a large part of it is in urban areas where the digital financial services (DFS) ecosystem is more developed. On the other hand, though agricultural value chains are in rural areas with less developed digital infrastructure, these value chains tend to be a bit shorter, with fewer participants.
While there are a lot of studies on digitizing the agricultural value chain with mobile money, there are fewer on FMCG chains. There is even less work done on ensuring that these efforts are tailored to women. In an attempt to close this knowledge gap, Women’s World Banking is sharing some of our learnings from recent work digitizing an FMCG value chain in Nigeria, funded by Financial Sector Deepening Africa by UKaid from the British people.
The drive to digitize
Digitizing value chains has been a focus of many organizations of late, given the disruptive impact digital technology has had on every level and type of industry. The benefits are enormous, from more visibility along the value chain and operational efficiencies for companies to increased access to convenient, time saving financial services for individuals, not to mention growth in financial inclusion. Focusing on ensuring the value chain works for women makes value chains more inclusive as well, because in many industries, women are at the bottom of this chain.
When deciding to digitize any value chain, the number one prerequisite is a mature DFS market with a developed DFS ecosystem. What is true for FMCG in urban areas is even truer for agricultural value chains: “The overall lack of mobile money ecosystems in rural areas, even in countries with the most developed digital financial service ecosystems, gives farmers little incentive to switch from cash to digital payments.”
In other words: if the market lacks a well-developed DFS ecosystem and easy-to-use services that demonstrate clear benefits over cash, trying to digitize a value chain would be a near impossible task. Further, as women the world over are less likely than men to have access to mobile phones, a truly inclusive digital value chain would have to get creative in identifying access points that are easy for women to reach. On the other hand, if a DFS ecosystem exists, now we are “cooking with gas,” as the expression goes.
Newbies don’t make great recruiters…
We cannot expect someone to learn and teach a new behavior simultaneously. Asking an FMCG value chain participant to become an agent and then recruit and teach her customers to become DFS users may be difficult especially if the agent-to-be has not used the service previously.
When selecting agents, ensure that they have used the service previously and understand its benefits or let them be users first before asking them to teach others. After the future agent has become a user, proper training focused on benefits—not only on features of the product– supported by relevant marketing materials delivered in a timely manner are imperative to making agents effective.
…but familiar faces do!
Using sales agents that FMCG value chain participants already know to introduce the service is highly effective in converting to usage. A stranger—often the mobile money trade development representative (TDR)—trying to explain how or why to use a new payment method while the participant is busy in her shop, is almost useless.
However, FMCG representatives may also not be equipped to explain the service well to the client. A more effective strategy is to have a familiar FMCG sales or marketing agent introduce the TDR to the value chain participant. This approach leverages the existing trust between sales agent and value chain participant, smoothing over apprehension or mistrust a new face might engender. This is particularly important for women value chain participants, who are much more conservative in trying out new services than men.
Give them a reason to digitize
So the TDR has gotten through the door… is that enough to get the value chain participant to digitize? No surprises here, the answer is no. You are asking people who have done things in a particular way for a long time. How might we get them to change that?
Incentives really work in changing behavior, especially if they result in financial gains. They can take the form of the FMCG product which they can sell for profit, or marketing merchandise such as t-shirts, umbrellas, etc. Not surprisingly, FMCG product incentives are much more effective because it comes with the potential for additional profit.
Digitizing a value chain is hard work but work worth doing. I hope these tips help you in designing an inclusive digitization solution for your company. If you’d like to hear more about this project, tweet to me at @DianaBoncheva.
 GSMA, The Mobile Gender Gap Report 2018, https://www.gsma.com/mobilefordevelopment/programmes/connected-women/the-mobile-gender-gap-report-2018/