Written by Jesse Fripp
Recently, my wife and I supported a client of hers, a Malawian woman, victim of trafficking, to make a trip home to visit her family for the first time in fourteen years. Her mother and family are low-income farmers who live off-grid in a remote area of the country. Upon her arrival, she reported that they were so thrilled at her return and our support for her that they wanted to send back a prize goat for us, as an expression of their deep appreciation.
My wife and I were deeply touched by their gesture, knowing that in much of the world a goat is a key element of a low-income family’s investment portfolio – an accessible, secure, reliable and generally very productive asset.
However, it reminded me that the goat (and other such instruments of value in the informal economy) is the primary competition to the true success of digital and mobile banking in achieving financial inclusion. In a low-income, emerging-market environment, a goat is a prized “liquid asset,” with a good outlook for return and security.
Contrast this with the opportunity to put precious cash savings into a seemingly ephemeral “mobile wallet” savings product. There, the hard-won cash the matron of the family hands over at the local kiosk disappears into a notation in a passbook or lightly printed receipt, where it will earn a return (if at all), only marginally better than inflation or sometimes even less. The asset cannot be seen or felt, and can sometimes be difficult to access on short notice. Complex and opaque fees of the agent, the mobile operator, bank partners, and others eat away at the value of each transaction. And ultimately, there is limited social satisfaction, nothing to point to or be secretly envied by neighbors as a result of her efforts.
However, if that same farm matron invests her savings in a goat, she is reasonably assured of a few things. She can keep an eye on the goat on a daily basis. The goat can produce valuable dairy products for consumption and sale. The goat has the capacity to literally pay dividends by reproducing and making a host of kids (little goats, for you city-slickers) who can be sold, raised for dairy and/or meat. The goat keeps the weeds down, and entertains the children. Aggressive male goats are even decent “guard dogs.” A tribe of healthy goats indicates village status. And when push comes to shove, the family can sit down to a nourishing meal of goat stew.
So, the financial inclusion answer seems clear. Enclude’s Digital Channels & Linkages team is certainly working hard on this one, with partners in Ethiopia, India, Pakistan, Nigeria and elsewhere.
Yes, a Digital Goat.
This electronic equivalent to real goat value could be an m-savings product explicitly presented in goat-value terms, benchmarking the return on a Kwacha invested in savings vs the risk-weighted average return of a goat – offering real return over time, linked to real objectives. Possibly even purchase of a pair of goats or other high-value household investments as the explicit marketing outcome.
Enclude’s current deployments in Ethiopia and India include a focus in the area of such out-of-the-box thinking around customer-centered products for smallhold farm households, as well as broader areas, such as incorporating partnerships with ag input providers to integrate payment and input distribution channels to provide a “one-stop” information, ordering, distribution and payment point for rural farmers. Not a goat, perhaps, but certainly feed for one.
And with the recent discussion by Bill Gates at Sibos (view a clip here) around the future of the financial sector, and mention of several specific examples of what this might look like, there may be more to explore. These include the potential of innovations like BitCoin (Gates also flagged long-time Enclude partner and client bKash as an example of what this future might look like). Does this open an opportunity to develop “GoatCoin” for rural emerging markets? Perhaps with a farmer-friendly customer interface and a national goat-based commodity index backing up value (a “Goat Standard,” so to speak). The farm matron might buy whole or partial “GoatCoins” on a periodic basis, which maintain and grow in value until she is ready to cash them out – either for currency or goats, perhaps. We will explore this type of innovation and others further in a future BBB blog.
Whatever the case, until we are able to offer a Digital Goat that can compete with the tangible value of a real goat, or the other informal payment and investment alternatives of the two-thirds of the world’s population that remains largely outside the formal economy, broad-based financial inclusion will remain elusive.