Esoko: Empowering Low-Income Farmers with Real-Time Market Data

Esoko: Empowering low-income farmers with real-time market data

By Raghav Narsalay, Ryan T. Coffey, J. Adetunji Adegbesan and Femi Giwa

Case Study Esoko: Empowering low-income farmers with real-time market data

Many companies in low-income markets fail to achieve scale. Barriers to scale That’s because obstacles such as poor infrastructure make reaching a Early on, Esoko’s founders sufficiently large customer pool prohibitively expensive. Yet companies Lack of trust: assumed that farmers and traders used have begun experimenting with partnership models to reduce the market data originating from centralized costs of scaling up. Take Esoko for instance. After initially focusing on sources, such as government-operated greenfield expansion for its agricultural informatics platform, Esoko’s price information systems. Accordingly, creators adopted a franchise model that has enabled them to connect they procured price data from these with more small farmers in 15 African countries. sources. However, farmers actually viewed data from the government as inaccurate and obsolete and thus they were initially Impact of the inclusive In 2009, Esoko changed its business model wary of Esoko’s offering. business initiative in an effort to reach more customers. The company now contracts with Limited infrastructure: Even though Esoko has developed a web-based agricultural associations, governments, mobile penetration was high in the technology platform and consulting-service private businesses and NGOs to further countries where Esoko was launched, tool with a simple but important goal: to connect with individual farmers and mobile network coverage and quality of facilitate the flow of market data within traders. Through these arrangements, the service varied significantly across regions Africa’s agricultural sector. Esoko uses associations become franchisees and and countries within Africa. Moreover, SMS messaging to gather and disseminate purchase a license to sell Esoko’s services in the earliest days of the initiative, the market data—such as produce and meat to local farmers. In addition, the service sharing of cross-border price information prices—through mobile devices among has partnered stakeholders such as equity was challenging: If a producer in one farmers and traders in Africa. This medium investors and international development country sent a price query to someone lets users easily and affordably exchange agencies to reach users. in another country, the price generated information and do business together, and would not automatically be translated has sparked an explosion in the usage of Esoko has helped reduce the costs involved into the recipient’s currency. To surmount mobile devices. in transacting business and searching this challenge, Esoko invested heavily in for market information. Thanks to the developing software to standardize its Subscribers pay a small fee to receive up enhanced transparency, farmers have offering across markets and currencies. to 10 SMS alerts per month and to upload gained the negotiating power needed to buy and sell offers directly to the system. secure the most favorable prices for their In Nigeria, for example, individual farmers products. The result has been an increase in Strategies for success and traders can receive a year’s worth of income for small farmers, who make up the SMS alerts for just US$10. Institutional majority of Africa’s farming population. In Winning customers’ trust by drawing users, such as agribusinesses, NGOs and fact, many farmers reported a 40 percent on local social ties: Once Esoko learned government agencies, can purchase a increase in revenue after they began using that farmers did not trust government subscription and use the information to the services. Esoko has also helped farmers data, it moved swiftly to gain farmers’ advise and train their local beneficiaries. save money, because they no longer have trust through other channels. For example, to send workers to central marketplaces it employed information agents from Over the years, Esoko has expanded its to retrieve price information. Moreover, communities located near the markets. range of services beyond simple price Esoko’s real-time market information has Small farmers knew and therefore information. Today, its services include reduced farmers’ risk of produce spoilage trusted these agents, who collected automatic and personalized price alerts, because it enables them to better match market information from traders and buy and sell offers, bulk SMS messaging, supply to demand. As of 2012, the Esoko served as ambassadors for Esoko. The stock counts and SMS polling. platform was facilitating data exchange agents also registered traders to receive Employing more than 60 local developers on nearly 500 commodities and roughly Esoko’s SMS services. and support staff, Esoko is leading the 800 markets, and it accommodates as way in agricultural informatics. many as 20 currencies.

Therefore, Esoko launched a franchise model to further extend its reach and secure its long-term commercial viability. Drawing on its technological strength, it encouraged local organizations, including private businesses, NGOs and governments, to take up franchises and build their own agri-information businesses on the technology platform provided by Esoko. Since 2009, Esoko has substantially expanded its franchise model, partnering with franchisees in every country where it operates with the exception of Ghana.

" New technologies like Esoko can make agriculture smarter, leaner, and more efficient. They Maintaining key stakeholder But MISTOWA still required reliable can also empower everyone to relationships by exploring new methods information providers to service its market act more like a decision-maker of engagement: Esoko’s founders had information points. Esoko’s credentials as based on choice and options than initially worked with international a profit-driven service provider ultimately a passive producer in the field. agencies and NGOs and therefore had played a key role in it securing the When we started years ago, we learned something about how to manage partnership, as MISTOWA was wary of thought that if we could just stakeholder expectations. Drawing on the long-term sustainability of providers these experiences, they actively sought to who relied heavily on donor financing. deliver prices to farmers, we’d forge partnerships with international and Through the program, Esoko was deployed have succeeded. And we did regional agencies that funded agricultural across West Africa and has since been do that, but along the way we projects. But because many development implemented in other African countries learned lessons—and changed our agencies were not eager to provide direct as well as in Afghanistan. Projects like business model time and time funding to a profit-driven initiative, Esoko MISTOWA in essence “open” a country again—making Esoko useful for had to find new ways to engage such for Esoko and enable other development agencies in its mission. projects, businesses and individuals to use everyone along the supply chain, the service there. getting our mix of content vs. The USAID-MISTOWA project is a case in tools right in each market, and point. (MISTOWA: “Market information Adopting a franchise model to further understanding how to engage systems and traders organizations in West boost scale: As a profit-driven venture, with both the public and private Africa”). Esoko captured USAID’s interest Esoko needed to rapidly scale up its sectors. We’d never be where we by showing how its offerings could be operations to serve low-income consumers are today if we hadn’t listened effectively woven into USAID’s program. profitably. Esoko’s leaders estimated that to MISTOWA was building agribusiness become a viable profit-driven business the closely to our clients, and to the market information points in West Africa— company would need to reach a minimum market at large.” business centers that helped agricultural of 10,000 subscribers and scale to 2,000 communities with commercial decision subscribers in each country where it had –Mark Davies, making and business management. operations. The venture’s leaders realized Founder of Esoko Networks The program had provided US$1 million that they could not reach every corner for ICT equipment and had established of Africa; they lacked the funds needed more than 150 market information points to hire and deploy sales staff on such a in the region. large scale. Moreover, partnering with key stakeholders could take Esoko only so far.

Esoko Networks, headquartered in Ghana, Accenture is a global management is a multi-currency, multi-commodity, consulting, technology services and multi-market information system that outsourcing company, with 257,000 gives farmers, traders, agribusiness and people serving clients in more than development projects tools to collect and 120 countries. Combining unparalleled share market information via SMS. Spread experience, comprehensive capabilities across 16 African countries, Esoko began across all industries and business functions, as a simple price discovery tool called and extensive research on the world’s TradeNet in 2005, in partnership with most successful companies, Accenture FoodNet in Uganda. In April 2009, TradeNet collaborates with clients to help them rebranded itself as Esoko, adopted a new become high-performance businesses and business structure and switched to a new governments. The company generated net platform that offered its users a broader revenues of US$27.9 billion for the fiscal set of tools. year ended Aug. 31, 2012. Its home page is www.accenture.com.

About authors: About the Accenture Institute Raghav Narsalay leads the research team for High Performance in India for the Accenture Institute for High Performance. He is based in Mumbai. The Accenture Institute for High Performance creates strategic insights Ryan T. Coffey is a senior specialist into key management issues and with the Accenture Institute for High macroeconomic and political trends Performance. He is based in Mumbai. through original research and analysis. Its management researchers combine Dr J. Adetunji Adegbesan is Director of world-class reputations with Accenture’s the Centre for Competitiveness & Strategy extensive consulting, technology and at Lagos Business School, as well as a outsourcing experience to conduct professor of competitive strategy and innovative research and analysis into how innovation. He is based in Lagos, Nigeria. organizations become and remain high- performance businesses. Dr Femi Giwa is a Research Associate in the Centre for Competitiveness & Strategy at Lagos Business School. He is based in Lagos, Nigeria.

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