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Why Financial Inclusion Matters to African Farmers

With almost 23 per cent of SSA’s GDP coming from agriculture, according to a 2019 McKinsey report, it is responsible for providing much of the income and growth in sub-Saharan Africa, and reducing poverty. In fact, the agriculture sector employs almost 50% of the sub-Saharan Africa population and has massive benefits to the continent. In a world where global food shortage concerns are prevalent, African farms are looking to become the future profitable food market suppliers of the world.

In 2020, World Bank valued sub-Saharan Africa's food market at $300 billion as of 2017 and estimated its worth at around $1 trillion ten years by 2030. The financial inclusion of farmers is of critical importance to the region, according to the World Bank, as it enables individuals and companies to take advantage of business opportunities, to invest and save for the future, and to obtain insurance against risks.

According to a 2019 finding by Brookings, financial inclusion almost doubled from 23 per cent to 43 per cent between 2011 and 2017, with mobile money growth in East Africa being a major contributing factor. Payment digitization gives farmers the chance to engage with the crucial factors that contribute to inclusive borrowing, saving and investing that is necessary for growth, yet most farmers in the region do not have access to formal financial services.

The role of governments in building national digital economy structures to bring about a better working environment for the agritech, fintech and e-commerce sectors, which all work together in fostering the increase in digital payments for farmers, is crucial. Working with payment service providers is also critical in bringing about beneficial PSP, fintech and agribusiness partnerships.

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