Is mobile money and market information systems the perfect marriage?

©IFAD/Horst Wagner
The availability of Market Information System (MIS) have proven to be an important tool to help increase market transparency, alleviate information asymmetries, allow farmers to adjust production and ultimately obtain a higher price for their products.

A Michigan State University study on the “Impact of Agricultural Market Information Systems Activities on Market Performance in Mozambique” suggests that access to market-information increase probability of farmers-participation in market-activities by 34%, and increase the mean-price obtained for commodities sold with as much as 12% [1].

However, the reliability and sustainability of MIS’ have historically been a major challenge, and most systems stay reliant on donor support throughout their lifespan. The majority of MIS’ are based on data collected by enumerators, who observe prices in public marketplaces and report these to a central system, for example via a mobile phone. This is very human-resource intensive and costly, and require substantial amount of management and supervision. As prices reported often go through a rigorous control prior to being disseminated, many system often report data that is outdated and of no use to the farmer. 

SANGONeT and International Development Enterprises (iDE) started with the support of the Bill & Melinda Gates Foundation, a mobile phone point of sale (POS) and inventory control app in Zambia called Lima Links. The data generated from the POS is then used to obtain real-time and accurate price information, which is disseminated to farmers, completely eliminating the need for using third party enumerators. This does not only reduce cost (and thus increase likelihood of a sustainable business model) but also reduce the margin of error and delay of delivering price information.

Lima Links is still at very early stages, but it is a very interesting innovation in the MIS realm, well worth following further.You can access an excellent assessment of MIS in East Africa done by USAID here , and read USAID's profile paper on Lima Links here .

[1] Kizito, Donnovan, & Staaz. (2012). Impact of Agricultural Market Information Systems Activities on Market Performance in Mozambique


Moneycation said…
In addition to the market information systesm being challenging, and not necessarily cost effective, it also places a technological barrier in the market.

Besides the traditional economic reasons such as price and production optimization, why standardize prices at all?

The exchange of price control for dependence on technology and larger market forces is potentially less grass-roots, and replaces localized economics with macro-economics. As an example, farmers markets in North America don't always have fixed prices despite knowing all about the greater market pricing.

As long as farmers get what they consider to be a reasonable price, then the emphasis falls back on weather forecasting, haggling and salesmanship skills, both of which are free if implemented by the farmer.
Rogers Kasaija said…
The article deliberated more on Market Information Systems and excluded the contribution of Mobile Money. This maybe a discussion for a future article.

Market Information Systems may not necessarily be aimed at price stabilization as such, but could provide valuable information on what the farmer should charge per unit output, based on prevailing prices elsewhere. The challenge however is, what is the level of usage of this service in areas where it exists?

Practice indicates that farmers are more likely to sell at prices prevailing in the localities in which they transact, as opposed to chasing after higher prices in localities elsewhere, even where the transaction costs would provide economic incentive to do so. The question then remains, why?

Many theories have been advanced to explain this. Our intervention should be to solve this why. Any intervention to help with how farmers price their products should consider why they do not take advantage of market information systems. These challenges, when addressed, would greatly improve the income of smallholder farmers.