Earthworm organisation hails results from Ghana cocoa farmer digital payment scheme

The Earthworm Foundation has reported positive progress with a digital payment system designed to support Ghana’s cocoa farmers, amid concerns surrounding traditional methods of payment posing security risks, reports Neill Barston.

As the non-profit organisation explained, the initiative through the New Venture Fund has created partnerships that aim to deliver on financial inclusion, with the issue of agricultural pay levels remaining significantly in the spotlight, as workers in the region continue their struggle to attain a living wage.

According to Earthworm, the aim of its latest partnership is to support brands’ NDPE (No Deforestation, Peat and Exploitation) commitments through a digital payment system for farmers, against a traditional means of cash payment for cocoa. But as the group noted,  this has created challenges such as theft, armed robbery and, in the worst cases, loss of life to some farmers and Licensed Buying Companies.

Besides these issues, existing payment systems have neglected most farmers, especially in rural areas. Coordinated action is needed to ensure financial inclusion and address NDPE issues in the cocoa supply chain.

Initial results from group’s latest survey found that 91% of farmers interviewed like mobile money because it is a faster means of direct payment.

Furthermore, Earthworm explained that its approach was to identify key stakeholders, pilot a digital payment system and share lessons learnt. To gather data, Earthworm field teams in Ghana engaged stakeholders on how to successfully implement a digital payment system. These stakeholders included banks, telecommunications companies, Better Than Cash (BTC) Alliance, Civil Society Organisations (CSOs), World Cocoa Foundation (WCF) and Licensed Buying Companies.

In March 2022, Earthworm also conducted a survey to gather primary data on farmer perception of an effective digital payment system. The survey covered about 1,000 cocoa farmers in the Western and Western North regions of Ghana, while a pilot survey was conducted in the Ashanti and Eastern regions of Ghana.

Results from the survey showed that only about 15% of farmers interviewed subscribe to digital payment through formal banking institutions, such as Rural and commercial banks. The majority of these farmers (75%) do not subscribe to digital payment services through the formal banking system. Also, most farmers subscribe through mobile money services. As a matter of fact, 91% of farmers interviewed like mobile money because it is fast and convenient. Currently, only 2% of the total farmers interviewed use digital payments for payment of cocoa beans and receiving premiums.

Equally, much of the income from additional livelihood activities is not received digitally. Of the few farmers that have received digital payments in this category, about 44% reported being satisfied with the service. From the study, most of the farmers interviewed were familiar with mobile money transactions. Also, 72% of farmers had mobile money accounts.

Data gathered has been analysed to identify key factors for implementing a successful digital payment system. The next step of the project will involve a partnership with local Licensed Buying Companies to pilot a digital payment system in Ghana’s cocoa sector and share findings.

As Earthworm noted, according to the World Bank, financial inclusion is the ability of individuals to have access to and use responsible and sustainable financial products and services to meet their needs.

The technology and systems that enable digital payment also offer opportunities for reducing poverty, maximising user benefits and addressing NDPE issues faced by workers, farmers and companies; in line with the UN (United Nations) Principles for responsible digital payments. “It will allow fast and secure payment and permit savings on momo wallet,” said a farmer from Aboi Nkwanta, in response to the introduction of the Cocoa Management System by the Ghana Cocoa Board (COCOBOD). The Cocoa Management System is a database of cocoa farmers and purchases across Ghana, allowing for traceability back to the farm.

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