Innovative solutions to promote financial access for agricultural workers and Micro-, Small and Medium-sized Enterprises (MSMEs) engaged in agro-processing in rural areas

（Examples of Expected Solutions）
A solution to realize a microfinancing scheme for farmers and MSMEs engaged in agro-processing, etc.
A solution that contributes to the improvement of financial literacy in rural areas
A solution to make it possible to provide financial services even with poor infrastructure

BACKGROUND

While the financial access conditions in Tanzania are improving, a gap in access between urban and rural areas remains as an issue, with 72% of the urban population having access to financial services, compared to less than half of the rural counterparts at 48%. Behind this are factors such as challenging conditions of use of financial services (e.g, securities), low financial literacy in rural areas, and inadequate infrastructure for accessing financial services.

In this RFP, JICA seeks solutions that solve the above-mentioned challenges and help improve the financial access especially for agricultural workers and MSMEs engaged in agro-processing in rural areas in Tanzania

WHY PARTICIPATE?

JICA will provide PoC opportunity (Expected to provide matchmaking opportunities with farmers)
JICA will provide Proof of Concept (PoC) opportunity by providing the PoC fund of up to 3~5 million yen
If the PoC is successful, there are possibilities for technologies/services to be introduced in JICA projects
JICA will support the PoC by introducing the government agencies and public institutions in the country

POINTS TO CONSIDER

4G network is available, especially in the metropolitan areas; however, connectivity is poor in a number of areas, and it is desirable that a proposed solution should be applicable in such areas

PoC

PoC Period：Approximately 3 months within Feburary to June 2021
PoC will be conducted remotely in case of travel constraints due to COVID-19
PoC location will be selected from the following. However, details of the location, local partners, users will be decided after discussions with the proposer. (There is a possibility for collaborating with a governmental financial institution in Tanzania that JICA currently has partnerships with. Specific details are to be discussed after the selection process.)
- Example of potential collaboration: Project areas of JICA’s “Project for Strengthening DADP Planning and Implementation Capacity through Use of SHEP Approach (TANSHEP)” will be possible PoC locations. Specifically, it is to be selected from among the 12 Priority Districts within the 25 districts in 3 regions (Arusha, Kilimanjaro, and Tanga). The project conducts an annual matchmaking event for farmers, agricultural businesses and financial institutions. Matchmaking event can be organized upon request as no matchmaking event is planned in present during the PoC period.
Prospective users include agricultural extension officers and farmers' groups in the target areas Agricultural extension officers
- What they do: To provide agricultural management and technical guidance to producers
- Devices used: While some agricultural extension officers own smartphones, ownership is low district-wide. Likewise, district-wide levels of internet connectivity and personal computer and other equipment availability are bare minimum, with many still using outmoded desktop PCs.
- Purchase of tablet computers is planned within the framework of TANSHEP, and five will be leased to districts, of which three will be for agricultural extension officers. As the project covers 12 districts, a total of 36 agricultural extension officers will have tablets. The operation system for the tablets will be Android; their HDD capacity is small (32 GB) as the capacity will be concentrated according to the guidelines on the SHEP approach (6 GB in total), but proposals that make effective use of tablet computers will be welcome. Because users are charged for mobile data usage, a proposed solution should be designed to offer a wifi-only mode, etc.
Farmers' groups
- Support provided to: Approx. 1,080 farmers (3 farmers' groups, each consisting of 30 farmers, per 12 Priority Districts)
- Devices used: While some farmers own smartphones, many use feature phones
English will be needed for communication with local counterparts
Languages of use: Swahili and English; Swahili is required especially if agricultural workers themselves are to use the proposed solution

FOR REFERENCE: CURRENT STATE OF FINANCIAL INCLUSION IN TANZANIA

Tanzania’s financial inclusion rate is doubling in the past 10 years.
Users with informal financial services has decreased from 29% to 7%, and users with formal financial services has quadrupled.
In terms of the percentage of the population with access to a financial system, however, the gap between urban (72%) and rural (48%) areas remains an issue to be addressed.
Key factors identified to affect the improvement of financial access in rural areas include the following but other solutions are also welcomed.

(1) Challenging conditions for using financial services

In rural areas, there are great needs for small business loans that enable agricultural investment, yet few financial institutions provide small-scale loans. Users, meanwhile, are averse to the fact that infrequent, small-scale financing incurs high interest fees.
There are many low-income users in rural areas, with few capable of offering land as collateral or providing a proof of real estate ownership.
Furthermore, the current system denies access to financial services without a national identification number, which means financial services are not available for users in rural area who do not have national identification number.

Figure: Changes in financial inclusion rate in Tanzania

Source：Kantar. “Tanzania Data at a Glance”

(2) Low financial literacy in rural areas

In Tanzania, lack of basic financial knowledge and low education completion rate remain as an issue.
Agricultural workers with secondary education remains to be 8%. Moreover, women without primary education accounts for 23%. Therefore, lack of knowledge in financial services and literacy rate remains an issue.
Financial service utilization rate is particularly low for women and agricultural workers with low literacy rate and education level as well as young population below 24 years old.

(3) Inadequate infrastructure for accessing financial services

Rural areas in Tanzania have poor geographical access to financial services, with only 78% of the population have a financial institution within 5km of their home (86% nationwide). This is partly due to underdeveloped hard infrastructure in many parts of the country, which makes access to urban areas challenging.
Insufficient public systems including a lack of national ID management are a stumbling block for financial inclusion in rural areas.
In terms of communications infrastructure, the network coverage rate is as low as 16%, which prevents people from using financial services such as mobile banking. There are shortages of financial services that are available for use even in such poor communications infrastructure.

Source：
Research results from current project,
Finscope (2017) “Insights that Drive Innovation - Tanzania”
Finscope (2017) “Agriculture Niche Report”

Figure: Percentages of population living within 5km of a financial institution

Source： FinScope (2017)

FOR REFERENCE: CURRENT STATE OF FINANCIAL INCLUSION IN TANZANIA

Project：Technical cooperation project
Area：Agricultural development/ rural development
Period：January 2019〜December 2023
For further details：https://www.jica.go.jp/oda/project/1700376/index.html
Overview：
In Tanzania, agriculture represents an important sector that involves around 70% of its population and makes up for approximately 25% of its GDP. While some 80% of the population in the rural areas relies on agriculture for livelihood, it is low in productivity and profitability, and a shift to higher value-added agriculture is required to improve their levels of living and close a gap with the urban areas. The SHEP project is aimed at increasing agricultural income in the target areas through the establishment of the SHEP approach in Tanzania (TANSHEP), among others.

Farmer group developing a plan for market research (Moshi)

TANSHEP workshop for farmers and agricultural extension officers (Meru)

Market research for wholesalers (Market in Arusha prefecture)

Baseline research by Farmer groups (Karatu prefecture)

Map of Project Operating Areas

Source：https://www.jica.go.jp/oda/project/1700376/index.html

SCHEDULE

Application

November 4th ～
December 7th 2020

Apply from entry form

Selection

Early December 2020-Late January 2021 Proposers will be notified of the results by December 18th Proposers will have a meeting※1 with JICA in mid-January 2021 Final presentation※2 will be conducted in late mid-January 2021

Proof of Concept

PoC will be implemented for about 3 months between February and June 2021

Report

June ~July 2021

※1　 An online meeting (less than an hour) will be set up with ZOOM or other tools.
※2　Selected proposers will be asked to brush up the PoC plan in consultation with JICA and make an online presentation about your company, the details of your solution, the PoC plan, etc.

ENTRY

Click on the "Apply" button, go to the entry form and fill in the required information.

The evaluation criteria for proposals will be as follows. Please note that we will not disclose any evaluation results.

Potential of the proposal as a solution to the given challenges
Feasibility of the proposed solution
Competitive advantage of the proposed solution
Validity of the PoC plan
Any relevant experiences of proposer

Apply

CONTACT

If you have any questions, please send them to the email address below. The secretariat will reply to your inquiry.

The secretariat for Africa Open Innovation Challenge powered by JICA
E-mail: jpopeninnovation-jica@tohmatsu.co.jp

NOTE

Contract for PoC
This verification testing will be conducted based on the business consignment contract, and the proposer will be required to submit the report specified in the contract as a product of the business consignment contract.
The management of this process is carried out in the Africa Open Innovation Challenge powered by JICA Management Secretariat (hereinafter referred to as the "Secretariat"). The secretariat is operated by a joint venture of Deloitte Tohmatsu Venture Support Co., Ltd., which is entrusted by JICA. Thus the proposer will make a business consignment contract for the implementation of the verification testing not with JICA but with the secretariat (Deloitte Touche Tohmatsu).

The secretariat and JICA will not disclose any evaluation details or results related to the selection.
The ownership of the materials and equipment procured by the proposer with the budget allocated by JICA shall belong to JICA, and in principle, JICA will transfer the materials and equipment to the government agencies of the project implementing country after the completion of the verification testing.
The intellectual property rights of the prototypes produced by the proposer and other organizations related to the verification testing shall belong to the proposer even after the termination of the business consignment contract. However the proposer grants the license to JICA and the government agency of the project implementing country. (separately confirmed in writing by the proposer and JICA).
The intellectual property rights of the report prepared by the proposer, which is the product of the business consignment contract, shall be transferred to JICA.
In principle, JICA will disclose the submitted report to the public. If the report contains confidential contents for the proposer, the contents will be kept private. The contents of non-disclosure will be decided after discussion among the proposer, JICA, and the secretariat.
The verification testing may suspended or canceled due to local conditions or the spread of COVID-19 infection.