BRIEFING PAPER

AN ASSESSMENT OF MARKET INFORMATION SYSTEMS IN EAST AFRICA

INTRODUCTION USAID’s focus on facilitating cross- dissemination—though other more This briefing paper presents the results border trade, gaining access to crop traditional channels (radio, paper, of an assessment carried out to explore prices across the region is of great chalkboards) are also still valuable as the current use of sustainable (without interest to development practitioners. complements to the “mobile channel.” on-going donor support) and scalable By now, most countries in East Africa (potentially to millions of farmers) have access to a variety of existing MIS In order to ensure long-term agricultural market price information platforms which follow diverse models— sustainability at a sufficient scale, it is systems (MIS) in Africa, with a particular some are governmental projects, some critical that any supported system—or focus on East Africa. Its goal is to add are private efforts, and a few are set of integrated systems—be based on a value to the discussion in the region public/private partnerships. Some of business model that enables the services regarding alternative approaches to these systems are growing well; while to be sustained and extended to millions improving affordable access to market others are stalled pilots; and a few are in of farmers. Scalability at this level has prices to value chain actors, including the process of being assessed. Most been elusive to date. Given that many poor smallholder farmers—the target focus on a particular country or set of Ministries of Agriculture consider market beneficiaries of USAID Feed the Future commodities, while a few provide price information to be an important projects. The research, which was information on regional markets. public good, governments may also play conducted between May and October a key role in any successful business 2012, included interviews with managers The focus for this analysis is on market model, either via public-private solutions, from MIS providers in Africa, along with price information services to enhance content producers, key customers or practitioners and academics. trade and competitiveness of smallholder funders. farmers, not to track trends in prices. The full list of MIS covered by this Clearly, the latter can be a side benefit of BACKGROUND ON MIS assessment is as follows: the former but the test of value is Agricultural market information systems • Agricultural Marketing Information whether the prices are useful for are a set of integrated and coordinated Services (Cameroon) commercial decisions. processes and tools to collect and • Agricultural Input Market deliver agricultural and/or livestock Information and Transparency Market price services are not provided market information and services to System – AMITSA (East Africa) in a vacuum. Farmers also want farmers, traders, food processors, • Esoko (many countries in Africa) information related to agricultural government functionaries and others processes, pests, weather, sources of • Infotrade Market Information that may benefit from current market inputs and more. Market research shows Services (Uganda) data. Agricultural MIS were developed to that it may be most cost effective (and • Lima Links (Zambia) increase the transparency of markets by hence more likely to be sustainable), if a • providing current price information to Livestock Market Information platform combines market price services System – LMIS (Ethiopia) smallholder farmers who were with other information services. While historically unable to obtain market • MFarm (Kenya) this assessment focused particularly on prices because of their isolated rural • Nokia Life Tools (Nigeria) market prices, it also sought to locations and lack of contact with actors • Regional Agriculture Trade understand the relative effectiveness of in other components of their product Intelligence Network – RATIN (East models that provide a larger basket of value chains. MIS provide these farmers Africa) information services. with access to relevant price information • Zambia National Farmers Union – organized by country, crop, and ZNFU (Zambia) [partial information The dramatic increase in affordable marketplace to ‘level the playing field’ collected] access to mobile phone networks has between farmers and market opened potential new opportunities for intermediaries who traditionally had Due to the increasingly regional nature MIS—for both data collection and been able to take advantage of farmers’ of agricultural markets in East Africa and 1 An Assessment of Market Information Systems in East Africa Last updated May 2013 lack of knowledge about the market information on staples in Africa. One Initial platform design was basic among value of their produce. USAID-funded project, the Famine Early the systems reviewed, but most systems Warning System (FEWS), dates back to have evolved their platforms as they MIS generally serve as components of 1984 and is still expanding across the have developed. Several systems use free wider government, NGO or donor globe. and open-source software, while others agency efforts that are designed to program their own systems or license increase market transparency, introduce Examples of first generation MIS include third party platforms. For instance, the standards, open markets, and otherwise the Agricultural Market Observatory in AMITSA network for agriculture input intervene in strategically important value Mali (OMA), the Agricultural Marketing market information currently uses a chains to combat poverty by shifting the Information Centre in Zambia (AMIC), software platform from Image-AD called share of income toward smallholder and the Agricultural Market Information mFarms (not to be confused with MFarm farmers and/or small traders or food System of Mozambique (SIMA). in Kenya) for price collection and processors. Access to current prices and dissemination as well as profile price trend information supports The rise in accessibility of new management for agro-dealers across the commercial decision-making, allowing information and communication region. Specifically, they are using farmers to choose preferred markets to technologies in Africa—such as internet- mFarms’ Market Information Platform sell their goods, negotiate more based applications and mobile phones— for Agrodealers (MIPAD) module. effectively with intermediaries, and, in led to the emergence of second some cases, choose which crops to plant generation market information systems Some MIS are the result of a complex or how long to store their crops until in the 2000s. In second generation MIS, integration of various systems. In prices increase. Small agribusiness market prices were integrated with addition to its use of the mFarms traders also use MIS to decide how to other mobile agriculture information platform, AMITSA, for example, uses the price goods and where to sell them. In tools to provide additional information, KENTICO content management system addition, MIS are used by donors, including agricultural extension advice, to manage its website to incorporate universities, businesses, and all levels of input price information, weather information from mFarms, publications, government to track agricultural prices forecasts, and trading platforms to match catalogues, directories, news, events, and spot demand or supply trends so producers with buyers. These systems blogs and other sources. AMITSA also they can react to or prevent food tended to be created and led by the uses Microsoft Reporting Services to security problems and support trade. In private sector, or farmers’ or traders’ manage agro-input statistics on the same addition to prices, market information associations rather than governments website and takes advantage of Facebook systems are often integrated with other and they at least attempt to achieve and Twitter as additional channels to mobile agriculture information tools and financial sustainability by charging user reach its audience. In addition to price carry additional information, including fees, permitting advertising and/or dissemination by SMS, most MIS also agricultural extension advice, weather providing fee-based additional services. distribute information via radio, internet, forecasts and prices for agriculture- Examples of second generation MIS newspaper and television. Again, this related inputs, such as seeds, fertilizer or include Esoko (formerly known as widespread diffusion increases pesticides. TradeNet, which is based in Ghana and accessibility for all market stakeholders. now active in 16 countries), Infotrade Market information systems developed (Uganda) and the Regional Agriculture Enumeration. The systems examined during two primary phases. The first Trade Intelligence Network or RATIN all strive to remain relevant to users by generation of MIS appeared in the United (based in Kenya but operating regularly updating price data. Additional States during the 1920s to support price throughout East Africa). production- or sales-related information transparency and fight market is also updated in a timely manner, with concentration in agro-industry.1 These MIS PLATFORMS data provided by market-based systems were replicated in Europe Early agricultural MIS systems were often enumerators. Most of the systems which during the 1930s but were not extended required to create their own platforms were reviewed collect data using to Africa and other developing regions for distributing price information. Today enumerators who observe prices in until the wave of market liberalization in many such platforms exist, some of public marketplaces and report those the 1980s when most governments in which are specifically designed for MIS prices via mobile phone. Most the region stopped fixing prices via and others which serve as general enumerators are third party observers, Cereal Marketing Boards. These MIS purpose SMS platforms. Choosing a although Infotrade uses market workers benefitted from the work done to platform has implications for the ease of as enumerators and Esoko uses traders establish famine warning systems, which delivering MIS data as well as the extent or wholesalers in some countries. also gathered market prices and of additional services that may be Enumeration has always been an delivered with the data, and may expensive component in MIS because it determine the possible business models is human resource intensive, adding cost 1 Bowbrick, P. (1988). Errors to Avoid with available to MIS projects. and requiring significant management Price Reporting Systems 2 An Assessment of Market Information Systems in East Africa Last updated May 2013 overhead. Informally, some systems have to identify mistakes or aberrations. claim self-sustainability, as defined by reported a concern that paid Further checks are also undertaken at raising sufficient revenue to cover annual enumerators could send fabricated this stage to validate data values. Some operating costs. The majority of MIS market price information without systems have pre-programmed macros continue to receive grant or donor actually going to the markets to observe and other code so minimal analysis is funding today, in many cases several prices. Systems such as Esoko in Malawi necessary, freeing staff time for other years after start-up. have combated this risk by adding GPS duties. As a final check, users are also stamps to mobile phone-based price encouraged to report data that seems All of the MIS studied are in search of reporting tools so that enumerators incorrect. ways to grow their income. Two-thirds must be physically present at the of the systems (all but Lima Links, LMIS indicated market in order to report While farmers and retailers may simply and AMITSA) are attempting to raise prices for it. receive the mean product price for a operating income by incorporating user particular time period, government and fees; two of the remaining MIS are Lima Links and MFarm, the two most university users like to receive the prices considering user fees in the near future. recently established MIS surveyed, have in both formatted and ‘raw’ form to One system manager expressed concern innovated by pulling price data from enable further analyses. The data are that user fees deter the “neediest” of the actual transactions handled by the generally stored on a server at the host market stakeholders from accessing the systems, rather than relying on third agency in SQL, MySQL, Java or market data. He noted that the US$1.00 parties to observe and report the prices. Access/Filemaker Pro formats or—in the monthly fee to receive price messages is Lima Links avoided enumeration along case of newer systems—in the cloud, a deterrent to the smallholder farmers with the substantial costs it adds to the where they can be accessed for analysis. his project serves. system and the data reliability problems it causes by developing a point of sale KEY FINDINGS Infotrade charges substantially higher (POS) system optimized for agriculture The assessment uncovered several key rates: 25,000 Uganda shillings (about and giving it to small scale traders in findings about the characteristics of and US$10) per commodity per month or Zambia. The POS provides these traders challenges faced by MIS, which are 125,000 shillings (US$50) for all 46 with a useful tool for conducting trades highlighted below. commodities; however, one can pay a and storing information regarding their fixed price of 62,500 Uganda shillings transactions. The prices recorded during Variations in Sources and Amount (US$25) for information on a total of up each transaction are then announced to of Start-up Funds. The majority of to 10 commodities. Additional costs are other stakeholders through the MIS. systems reviewed were developed in determined by the number of Lima Links’ price data is therefore based consultation with MIS experts associated commodities accessed and years of price on actual prices paid for agricultural with USAID or other donors, data requested. products with no distortion or reporting universities, UN agencies, and delays. The MIS, however, is still new international NGOs. All of the MIS In addition to user fees, some of the and has few users, so the price reviewed, except for Nokia, received systems permit advertising on their information it carries is not yet based on some type of external funding—most websites to raise additional revenue. enough data points to ensure that it is start-up financing for the MIS surveyed One of the main operating costs for the accurate. If Lima Links scales successfully, came from international donors and systems is the fee for sending text the POS strategy will be a powerful and private foundations. Though several messages to users’ mobile phones. Most efficient method of tracking accurate groups declined to share start-up cost systems attempt to lower these fees by 2 prices. information, it is clear that start-up costs negotiating preferred rates with mobile varied significantly: reported start-up network operators and then pass the Data Collection, Cleaning and investments ranged from MFarm’s remaining fee to the user, but the Aggregation. All of the MIS systems US$12,500 to well over $500,000. strategy often means losing the poorest surveyed have data validation systems. small producers who are unable or The first validation step is verification by Business Models and Sustainability. unwilling to pay the fee. the enumerator’s supervisor, followed by As is the case with many information and checks at the data analysis stage. Raw communication technology for Though individual smallholder farmers data submitted from the field are development (ICT4D) projects and may have difficulty paying for MIS reviewed using statistical software by tools, agricultural market information services, associations of these farmers analysts at system headquarters in order systems struggle to remain financially may be able to do so by aggregating sustainable and have adapted a variety of demand for MIS data and providing other 2 As of April 2013, a soft launch of Lima Links models to support their ongoing efficiencies. The ZNFU model is with 6,000 farmers was still pending. At this operations. The most common but least interesting because it is operated by a point, therefore, it is important to take sustainable of these models is donor farmer cooperative whose members anything reported about them in this paper support. None of the systems studied include both small and large scale with that fact in mind. 3 An Assessment of Market Information Systems in East Africa Last updated May 2013 farmers, companies and agribusinesses, The Public Good Nature of make MIS platforms popular among which effectively subsidizes smallholders. MIS and Sustainability other stakeholders in the market, not ZNFU is affiliated with international Prior to private sector entry into simply producers, retailers and agricultural associations such as the market information, price data were wholesalers, which may generate International Federation of Agricultural generally provided by national revenue and increase the sustainability of Producers and the Southern African governments because of the ‘public those systems. Confederation of Agricultural Unions, good’ nature of such information. which could further aggregate demand Key informants pointed out that Esoko allows for the collection of across the region. strong price data are critical to a detailed information on users to permit

well-functioning agricultural sector, data mining for marketing or meta- System users include System Users. but that the economic benefits of analysis purposes, which increases the producers, retailers and wholesalers supplying the data are difficult to value of the system for potential users. along with government policy makers, quantify, so governments often have donors, NGOs, universities and other difficulty allocating resources for MIS RATIN provides location information on research organizations. Examples of activities. Health activities, such as grain storage facilities across the region private businesses include insurance vaccinating babies, for example, are it covers. Using website menus, the user companies responsible for assessing risks much more tangible and provide can view an East Africa map with points and shopkeepers who use market data more immediately measurable results. representing locations of the facilities. to price their goods. The number of Market prices for each RATIN country reported users also varied significantly, The dilemma is exacerbated because can also be downloaded from the site, from tens of millions globally in the case governments that invest in capturing permitting users access to price trends, of Nokia Life Tools, to only a couple of price information as a public good are highlighting any shocks or abrupt hundred in newer, localized systems, sometimes uncomfortable with the fluctuations. The website includes data such as Lima Links and MFarm. profit motives of private firms that on regional trade flows dating back to

wish to distribute the information. 2004. With the advent of Services Provided. There is an on-going dance between newer technologies (such as email and both groups, with the public sector AMITSA is different than the other MIS SMS), the private sector has innovated to requiring access to additional market profiled here in that it provides provide a range of demand-driven information for policymaking and information on farm inputs such as products along with prices. A few planning, and the private sector fertilizer, pesticides and seeds for the systems even have links to a ‘library’ of seeking remuneration for the Eastern and Southern Africa region agriculture-related information. All told, information. The absence of a rather than on agricultural products or 70% of the systems surveyed provide sustainable model for governments to livestock. Price data are collected services in addition to price data, obtain the price information directly from a network of volunteering including weather information, pest reinforces dependence on donors private agro-dealers. Other information alerts, communication with other users, and grants. Public-private is gathered from public and private and match-making between producers partnerships, where governments sources available for free. AMITSA does with traders. (Only AMITSA and Nokia support price collection needed for not target smallholder farmers directly; of the 10 systems do not provide some policymaking, and the private sector, its goal is to inform stakeholders within sort of trade support). which manages collection and the agro-input supply chain, making the To impact farmer competitiveness and distribution, would result in a more chain more efficient, transparent and income, MIS data must not only be reactive to the needs of farmers. To relevant to the crops cultivated by stable model. provide this service, AMITSA has farmers and the markets available to licensed the Esoko platform to collect them, but they must also be actionable. Systems delivering weather information and distribute price info on mobile Information about crops that farmers do generally include forecasts, precipitation phones and websites in the countries it not grow in commercial quantities, or monitoring, and extreme weather alerts. serves. Given the size of many about high prices in markets that farmers Other systems provide prices related to smallholder plots (< .5 hectares) along are unable to reach with their produce, transport, and inform farmers about with soil nutrient depletion, information cause frustration at best. transport availability in specific locations on inputs is critical for smallholders. by date. One system, Infotrade, even Providing information in addition to provides fuel prices to help users In addition to agricultural staples, some prices improves the relevance and estimate transportation costs. Nokia Life MIS provide horticulture, vegetable and ‘actionability’ of MIS systems. Five of the Tools in Nigeria provides weather fruit prices. MFarm, for instance, MIS providers report input prices in information by season and region, presents transaction requests for fruits addition to retail and wholesale data. further adding value to its service. and vegetables. Some systems also allow Providing additional information can communication among system users to

4 An Assessment of Market Information Systems in East Africa Last updated May 2013 encourage establishment of user groups. training and other collaboration more an effective mobile advertising model. These systems allow, for example, all valuable. Although stakeholders cannot Advertising via text messaging on simple participating maize farmers to control which platforms MIS use, they mobile phones is challenging, but communicate with each other about can encourage the use of existing possible. In Kenya, SangoNet is testing a emerging situations, such as crop plagues platforms (with the appropriate licensing, system that will reserve a certain or market opportunities. reimbursement or other arrangements, number of characters for advertiser as necessary) and refrain from messages. Obviously, marketing text RECOMMENDATIONS supporting the creation of new ones. within a 140-character SMS must be Market information systems are still exceedingly brief, but in the case of very trying to find a sustainable model for Encourage End User Payments simple price data messages, it is possible. communicating price and other valuable Though many MIS are now charging for market information to farmers. The access to market data by smallholder Continued Innovation in the organization of MIS and the technical farmers, few agricultural MIS have been Provision of Related Services platforms they use have innovated to successful at raising substantial portions Smallholder farmers and other MIS take advantage of mobile technologies of their operating budgets through user stakeholders, such as policy makers, and, in some cases, social media, but fees. It may be that many smallholder export growers’ associations, farmers’ their business models have not matured farmers are simply unable to afford the associations, agro-processors, traders at the same pace, leaving most in a cost of messages or any agricultural and transporters, benefit from a variety precarious state because they depend on expense beyond the most basic inputs, of information services in addition to donor funds to operate. Donor and but their unwillingness to pay for this price data. MIS platforms should development practitioners should clearly data calls into question the value of the continue to diversify the types of move away from providing general funds service. Development practitioners additional information they provide to that support MIS systems. could consider strategies directly aimed their users in order to increase the at incentivizing user supported models, overall value of their services for MIS Any new funding provided to MIS actors such as micropayments or group stakeholders. MIS can also provide should be focused on helping MIS subscriptions offered as a member communication services to additional systems to make concrete progress at benefit by farmers’ or traders’ customers, such as government developing revenue streams. This does associations. One option would be to programs and NGOs that are not not mean that all MIS should earn offer a prize (at a much lower financial traditional MIS stakeholders. enough revenue to be self-sufficient. As level) patterned after the Haiti Mobile some types and uses of market Money Initiative, which awarded US $3.2 Support Nascent MIS Trading information are clearly public goods, it million to Digicel and Voilà, the first two Modules and/or Integration with makes sense that governments and other mobile networks to reach the project’s Commodity Exchanges supporters—including donors—have an target milestone of five million mobile All but two of the MIS studied for this interest in supporting the availability of finance transactions. Such an incentive paper provide some type of service to market information, but MIS need to be could reward the first organization to match farmers with traders or other organized in stable models so their successfully reach a threshold of farmer buyers, but these trading platforms are existence from year to year is not in or other direct user payments by generally immature and poorly trafficked. question. number of users, messages or If MIS providers are able to improve transactions. these services so they increase the Be Wary of Investing in New MIS number of transactions they broker, or Software Platforms Promote Advertising MIS are able to facilitate commercial While new models for MIS sustainability In addition to income that end users may transactions in some other way, then are desperately needed, new platforms contribute, advertising has the potential they may be able to benefit financially are not. Early agricultural MIS systems to support the cost of enumerating and from those transactions. Without a often did not have a choice but to create distributing price data. A few systems portion of trading revenue from their own platforms to distribute price accept ads on their web sites, though it transactions, it is difficult to imagine that information, but today many such is doubtful that they are earning much MIS systems can sustainably offset the platforms exist. The diverse array of revenue from the ads. Fees for listing cost of their services—especially their platforms, however, makes data and preferred placement in active trading price enumeration activities, which harmonization and standards setting systems are much more promising. In require a substantial presence in significantly more difficult and expensive. Malawi, Esoko expects small agro-traders markets, which are often geographically More MIS sharing fewer platforms would to market their services to participating disperse. naturally lead to more harmonized data farmers using Esoko’s platform and and shared systems and would also likely stored user profiles. Mobile advertising is One way to ensure that MIS providers lead to more cooperation between staff admittedly difficult; even Google and share transaction revenue is to integrate of different MIS as it would make shared Facebook are having trouble developing or merge them with commodity 5 An Assessment of Market Information Systems in East Africa Last updated May 2013 exchanges, as is happening with Esoko and ‘social’ metrics, such as users’ RESOURCES and the Agricultural Commodity understanding of information provided Exchange (ACE) in Malawi. In that case, by mobile agriculture systems, actions Subervie J. (2011). Evaluation of the Esoko serves as a paid platform which users take based on that information, impact of a Ghanaian mobile-based ACE uses to manage and distribute price and effects on farmers’ livelihoods. MIS on the first few users using a information. Once ACE reaches a quasi-experimental design. threshold of trading throughput a more A number of monitoring and evaluation Fafchamps M. and B. Minten. stable model would be a partnership or tools also exist for health programs to (September 2011). Impact of SMS- joint venture where Esoko shares in a improve the way that multi-level projects Based Agricultural Information on percentage of transaction revenue or, in are evaluated and which may be Indian Farmers. the case of an MIS platform not as adaptable for MIS. One such evaluation

diversified as Esoko, where the two tool is the Monitoring and Evaluation entities merge. System Strengthening Tool (MESST), Kizito A. (2011). The Structure, which has been used to evaluate malaria Conduct, and Performance of Agricultural Market Information Improve Monitoring and Evaluation and HIV programs in Mali. Monitoring and evaluation continue to Systems in Sub-Saharan Africa. be a challenge for MIS. Monitoring does CONCLUSION Tollens E. (August 2011). Market occur but is often insufficient to gauge What is clear from this research is that Information Systems in Sub-Sahara impact. Defining impact is challenging for even the most established MIS continue Africa Challenges and Opportunities. MIS because the systems operate across to face challenges with delivering market

many levels, resulting in numerous information to farmers in a way that is potential impacts: on national, profitable without ongoing government Staatz J., A. Kizito, M. Weber, and N. institutional, stakeholder (producers, or donor support. Some of those MIS Dembélé (June 2011). Evaluating the retailers, wholesalers, consumers) and profiled here may eventually succeed in Impact on Market Performance of household levels. that task, but doing so will require effort Investments in Market Information and experimentation. Systems: Methodological Challenges. The Agricultural Learning and Impacts Network (ALINe) has developed an As an ever increasing number of Staatz J. (May 2011). Market excellent, detailed monitoring and smallholder farmers in Africa obtain Information and UNECA: Where’s evaluation (M&E) framework for the access to mobile phones, demand for the Value Added? mFarmer Initiative, a partnership mobile-based market information is likely between USAID and the Bill and Melinda to grow as well. Whether MIS providers Kpenavoun C., S. Lebailly, P. Gates Foundation implemented by can convert this potential demand into a Adegbidi, and E. Gandonou. (2009). GSMA. The Global Monitoring, sustainable business model remains to be Impact of Public Market Information Evaluation and Learning Framework is seen. Their success will largely depend System (PMIS) on Farmers’ Food based on an articulated theory of change on providing poor smallholder farmers Marketing Decisions: Case of Benin. which envisions, “improved poor farming with services that enable them to households’ resilience and decision- increase their incomes and therefore Aker, Jenny. (May 2008). Does making as a result of improved access to merit payment. That task is complicated Digital Divide or Provide? relevant agricultural information through by studies showing that not all price Information Technology, Search sustainable business models and information creates value for farmers. Costs and Cereal Market continuous learning.” The Framework For example, a randomized control trial Performance in Niger. BREAD was specifically designed to get around by NYU of 1,000 Esoko users in Ghana Working Paper No. 177. the factors that make evaluating mobile documented a 7-11% price increase for agriculture projects, such as MIS, difficult yams, but no increase for the price of by helping mFarmer Initiative grantees in maize and groundnuts. As more research DISCLAIMER distinct countries and environments is conducted, MIS providers may begin to identify and track common indicators narrow their scope to selected crops The views expressed in this based on the theory of change. The and regions which are better suited to publication do not necessarily indicators are designed to include take advantage of market information. reflect the views of the U.S. Agency outcomes and impacts for ‘business’ That, coupled with additional value- for International Development or metrics, such as demand for services and added services, may be the eventual road the U.S. Government. sustainability of project business models, to sustainability. This series of papers is supported by USAID’s Fostering Agriculture Competitiveness Employing Information Communication Technologies (FACET) project under the Financial Integration, Economic Leveraging, Broad-Based Dissemination and Support Leaders with Associates award (FIELD-Support LWA). It was written by John Zoltner of the TechLab @ FHI 360, assisted by Mona Steffen. FACET offers on-demand field support to help missions with the challenges of using these ICT interventions in agricultural development. To learn more about field support options, contact Judy Payne, ICT Advisor, ([email protected]). 6 An Assessment of Market Information Systems in East Africa Last updated May 2013