Mastercard to bring micro biz schemes

NAIROBI

: Marginal

farmers

and microretailers in Kenya are just about getting themselves registered in the formal economic set-up. Their entry is being facilitated by two schemes that global payments company

Mastercard

has created under its Mastercard Labs for Financial Inclusion (MLFI).

An almost identical scheme for farmers is set to be launched in India (Andhra Pradesh) in Q1 2018, while exploratory talks are on for introducing the financial inclusion programme for microretailers in some states.

A majority of commerce in emerging markets consist of non-formal businesses — Kenya, for instance, has 1 lakh microretailers. However, the need to bring them not only into the tax administration but also into the banking system to access credit and grow has led to two schemes in Kenya — 2Kuze for marginal farmers and Kionect for connecting microretailers to wholesale markets. The transactions in both are digitised and a financial history is generated for farmers and retailers.

“We will only need to tweak around 20% of the schemes for India since the conditions are pretty much the same in both countries,” said Michael Elliott, who heads MLFI.

2Kuze, which Mastercard will replicate in Andhra Pradesh under an appropriate Indian name, is a mobile device marketplace that allows farmers to sell their produce without being fleeced by middlemen. Farmers access prevailing prices for their produce through SMS, and receive and make digital payments. Another advantage is that they do not have to worry about transport costs, since that is the responsibility of the wholesaler.

Since these exchanges are all digitally recorded and retained as transaction history, and the data made available to banks and microcredit institutions, the farmers become eligible for loans and for financial schemes offered by both the government and the private sector.

A similar scheme is aimed at empowering microretailers, or owners of small kiosks called duka in Kenya, smaller than a regular kirana shop in India. The Kionect programme connects them with wholesale company,

Kaskazi

, which receives their orders, transports them to the door and receives payment in digital form. Given that mobile wallet MPesa is universally used in Kenya (50% of the Kenyan GDP passes through mobile networks), such payments are easy and widely acceptable.

(The writer was in Nairobi, Kenya, on the invitation of Mastercard)