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>View discussions about this entry Country: Kenya
Organization: KACE Kenya
Year initiative/program began: - 1999
Field of work - Agriculture
Service / Activity focus (If "other" please explain in entry form) - Transaction
Year organization founded (yyyy) - 1994
Project URL: http://www.kacekenya.com
Positioning in the Mosaic of solutions
What is your signature innovation, your new idea, in one sentence? - The use of a rural FM Radio as a platform or virtual trading floor for linking poor smallholder farmers to input and output markets.
Describe what makes your idea unique—different from all others in the field. - I have never heard of or read in literature where the FM Rural radio is used as a virtual trading floor for linking poor smallholder farmers to input and output markets. I believe we are pioneering this application of rural radio.
Market information includes current commodity prices, offers to sell and bids to buy. The other components of MILS are: a) Market Resource Centers (MRCs) which are market information points or kiosks located in rural markets. Information users go to MRCs to access market information on bulletin boards; b) Mobile phone Short Messaging System (SMS). KACE uploads updated market information into Safaricom Mobile Phone network and subscribers access the information through their mobile phone handsets through a simple menu. Safaricom is the largest mobile phone network in Kenya with over 10 million subscribers; c) Interactive Voice Response (IVR) service. KACE uploads updated market information into the IVR network, and users access the information in voice mail by dialing the number 0900552055 with any mobile or digital phone through a simple menu; d) Regional Commodity Trade and Information System (RECOTIS). This is an electronic database that KACE has created of clients interested in receiving market information. About 600 users in 26 countries in Africa and beyond receive updated market information daily as email messages; and e) Radio. In addition to the Soko Hewani radio program, KACE sends updated market information to the national radio, the Kenya Broadcasting Corporation (KBC) radio. KBC then broadcasts the information once in the evenings and in the mornings. How do you implement your innovation and apply it to the challenge/problem you are addressing? - The Kenya Agricultural Commodity Exchange Limited (KACE) Market Resource Centers (MRCs – see below) compile and verify commodity offers and bids and broadcast them on FM rural radio in an interactive radio program branded in a local language (Kiswahili) Soko Hewani (the Supermarket_On-Air). Listeners call standby KACE MRC staff with broadcasted mobile phone numbers to bid on offers or offer on bids. KACE standby staff then match the offers and bids in a virtual trading floor, or provide more information to callers.
Soko Hewani is one of the six communication channels that KACE has developed into a Market Information and Linkage System (MILS). KACE collects, processes and disseminates on a daily basis market information to poor smallholder farmers and small-scale commodity traders (who are largely women) in rural Kenya Do you have any existing partnerships, and if so, how did you create them? - KBC estimates that about 5 million listeners tune into the program daily across Kenya.
KACE has an Agreement with the West FM Radio station whereby KACE provides the content of Soko Hewani while West FM provides the programming and broadcast. In which sector do these partners work? (Check all that apply) - Citizen sector (nonprofits, NGOs)
Provide one sentence describing your impact/intended impact. - Smallholder farmers are accessing input and output markets that they were not able to access before, and have reliable information from KACE that has strengthened their bargaining power for better prices in the market place.
Please list any other measures of the impact of your innovation. - The total volume of business through the Soko Hewani and MRCs for the period June 1, 2007 to May 31, 2008 was US$ 862,584 or US$ 71,882 per month on average. However, business was considerably reduced to US$ 5,371 only in December (a 97% reduction from the previous month). In the months of January and February 2008 business reduced even farther to US$ 4,935 and US$ 3,714 respectively. The business picked up in March (US $ 54,599), April (US $ 103,123) and May (US $ 54,599). The poor business performance between December and March was occasioned by the post December 2007 general election violence that rocked the country and severely affected Soko Hewani and MRC services.
How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation? - The Soko Hewani broadcast covers an area of 5 million inhabitants, stretching from Eastern Uganda to Western Kenya, and an estimated 3 million of them being poor smallholder farmers, who are the major beneficiaries of the radio program.
How is your initiative financed (or how do you expect your initiative will be financed)? - Approximately 60% of KACE’s annual budget (about US$ 465,000) is financed through participation in donor-supported projects and about 40% from its own revenues generated from its services. KACE charges modest fees for broadcasting of offers and bids, and a modest commission on matched (traded) commodity offers and bids. It is expected that when KACE’s services are scaled out to cover farmers across the country, they will generate sufficient revenue to be financially self-sustaining. KACE has received financial support from the USAID Mission in Kenya, the Rockefeller Foundation and the Technical Centre for Agricultural and Rural Cooperation (CTA) in the Netherlands.
If known, provide information on your finances and organization: -
• Annual budget: US $465,000 What are the main financial barriers and how do you plan to address them? - Lack of financial resources to help smallholder farmers to bulk their commodities into reasonable volumes, improve quality and packaging for easier access to better-price output markets; or to be able to store their grain (maize, beans) commodities under a recently launched warehouse receipt scheme (WRS) in the country and reap the benefits of the WRS program. . The idea behind warehouse receipts is to have farmers store their grain in secure warehouses and use the warehouse receipts as collateral for obtaining credit for immediate financial needs. A certified warehouse management firm keeps the grain in a secure warehouse so that farmers can sell the grain later in the year and benefit from increased prices that usually occur several months after the harvest.
Aside from financial sustainability, how do you plan to grow the initiative? - 1) To scale out the Soko Hewani program to FM Radio stations across Kenya to service more smallholder farmers and small-scale commodity traders.
2) To assist in the bulking and warehouse receipting of smallholder produce. What was the motivation or defining moment that led to the creation of this innovation? Tell us the story. - My parents grew crops such as maize, millet, sorghum, sweet potatoes, cassava, bananas, vegetables, especially Indian Vegetables such as Egg Plants, Brinjals and Chili. They also raised livestock such as cattle, sheep, goats, chicken. All the crops and livestock were produced on a small-scale, a few acres or portions of an acre for crops, and a few numbers of the livestock, in a typical smallholder farming system fashion. My father used to sell Indian vegetables to Indian shopkeepers in Bungoma town, a distance of about 12 km from our village. My parents also sold farm produce to traders who came from distant towns to buy in the local market called Nasianda, only three km from our village.
As a young boy growing up in the village, I used to help my parents with farm work, like other siblings and other children in the village. We used to go to school during the week days, and help with farm work during the weekends. 3. My encounter with the exploitation of poor farmers in the market place During the time when I accompanied my father to sell farm produce to Indian shopkeepers in Bungoma town or traders in the local Nasianda market, I observed that the prices that were paid to my farther for produce were entirely set by the shopkeepers and the traders. They would say to my father: Mr. Wekulo, today we are paying this much shillings for this or that produce. My farther was merely a price taker, with no bargaining power for better prices. I realized that other farmers like my father suffered the same fate: they had no bargaining power for better prices in the market place. The Shopkeepers and traders seemed to have all the money and power to set whatever prices they deemed necessary, which were always viewed as low and exploitative by farmers. Farmers who had large surpluses for sale would take their produce to the government marketing boards, but often waited for many months, even 6 or 8 months, to get payment at prices also set by the government. Please provide a personal bio of the social innovator behind this initiative. - Note this may be used in Changemakers marketing material. Please upload a photo of the project innovator or innovation at the bottom of the page. After completing my secondary school education in 1967, I made up my mind to take a training course in agriculture. I believed that as an agricultural officer, I would help advice poor farmers on better farming methods so that they could increase their yields and output and earn enough money so as to be able to afford school fees for their children, including the girls! So I applied and joined Egerton (Agricultural) College, Njoro, in 1968, where I graduated with a Distinction Diploma in Farm Management in 1970. I joined the Ministry of Agriculture in Nairobi where I delightfully worked as an Extension Officer, advising farmers and livestock keepers on better crop and livestock husbandry. My brother followed my footsteps, joining Ahiti Institute of Agriculture in Nairobi, where he graduated with a Certificate in Agric
a) Please identify the individuals that your innovation benefits (Please check all that apply) - Producers
b) Do you help the people you serve to buy goods or services using financial innovation? If so, how? - Commodity buyers in Kenya can now send payments through mobile telephony, using Safaricom mobile phone money transfer program branded M-Pesa. KACE MRCs are planning to serve as M-Pesa agents, where sellers can collect money from buyers at a small commission. Negotiations are still going on between KACE and the Safaricon Limited.
c) Do you help the people you serve to sell goods or services using financial innovation? If so, how? - Commodity sellers including smallholder farmers, can receive their payments through the M-Pesa services, without the need for having a bank account. Most smallholder farmers in Kenya don’t usually have a bank account. KACE MRCs are planning to serve as M-Pesa agents, where sellers can collect money from buyers at a small commission. Negotiations are still going on between KACE and the Safaricon Limited.
Contact Information:
Adrian Mukhebi
This field has not been completed KACE Kenya (This field has not been completed) Discussions about this entry |
A Virtual Trading Floor for linking poor farmers to markets
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Hello Adrian,
Thank you for the wonderful work your are doing.
Am glad to hear that your innovation extends to Eastern Uganda, my home country. You really deserve to win. Your initiative is really helping a wider community which in the longrun might be rolled out to other African countries.
Am keeping my fingers closed for you!
God luck!
Rose Nambassa
Admin. Officer
Joyce Fertility Support Centre Uganda
Dear Rose,
Thanks for your support and encouragement. Indeed, our plans are to scale out this innovation to Uganda and to the other member countires of the East African Community, namely Rwanda, Burundi, Tanzania, in addition to Uganda and of course Kenya.
With kind regards,
Adrian
Dear Keylena and Amelia,
Thank you so much for your feedback on my submission. I am very delighted that I am a winner of the Early Entry Prize! I feel very encouraged.
Keylena, yes, we believe the Warehouse Receipt Scheme (WRS) will greatly assist poor smallholder farmers to receive the most benefits from their maize and bean crops. First they will be able to access credit, using their delivered produce as collateral, and second, be able to cash in on improved prices post harvest season. And with the Soko Hewani radio virtual trading floor, they will be able to access better markets right form the comfort of their homes, without the need and cost of traveling to markets.
To get credit, a farmer will simply go to a bank with her warehouse receipt, showing and proving that she has her produce stored safely in a secure warehouse, in the quantity and quality indicated on the receipt. The bank will take the receipt, and pay the farmer up to 80% of the value of the produce. When the farmer later sells the produce, obviously at a better price, she will repay the bank the loan borrowed, and retrieve her receipt and give it to the buyer of the produce, who then presents it to the warehouse to receive the produce stored. The actual procedure is a bit more complicated than I am describing, but the essentials are the same.
However, because smallholder farmers produce small quantities of highly varied quality produce, it is quite a challenge for them to individually provide quantities large enough to meet warehouse requirements. I.e. a single contract quantity is 10 metric tonnes. Most farmers can offer one to five metric tonnes. Thus, for most farmers to benefit from the WRS, they require an intermediary to bulk their produce into reasonable volumes.
KACE is thus seeking a partner who may be interested in extending loan finance to us to invest in the WRS system as the farmers' intermediary. Adrian Mukhebi
Dear Adrian,
Thank you for submitting your entry!
The idea of warehouse receipts, which farmers can use to obtain credit on immediate needs, is fantastic and hopefully very scalable. We would like to learn more about warehouse receipts and how to use grain as collateral. We think this is a very important aspect of your project, especially given the potential for radio as a new innovation in this context.
Since the judges spend more time reading the entry form than the comments, please also update your entry in addition to responding to our questions and other comments. This will provide the panel of expert judges with the most comprehensive explanation.
Thanks so much! We look forward to learning more.
Best wishes,
The Changemakers Team
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Kaylena Bray
Ashoka's Changemakers
Congratulations! On behalf of Citi and the Changemakers team, we are honored to declare you a winner of the Early Entry Prize for the “Banking on Social Change” collaborative competition! You will be receiving an email shortly to confirm the shipment of your prize.
We hope that by submitting your innovation early, you have been able to generate feedback, dialogue, and insight about your initiative. Showcasing your blueprint and the challenges involved in creating social impact advises potential investors about how best to improve funding/investing patterns for the sector and to maximize the strategic impact and effectiveness of their future investments.
Please remember that your selection as an Early Entry Prize winner does not preclude you from winning the competition in any way, or guarantee finalist status—all entries will be equally evaluated per the Changemakers criteria at the completion of the entry period.
Congratulations, again!
Best wishes,
The Changemakers Team
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The Changemakers Team
Ashoka's Changemakers