Disclaimer:
Please be aware that the content herein has not been peer reviewed. It consists of personal reflections, insights, and learnings of the contributor(s). It may not be exhaustive, nor does it aim to be authoritative knowledge.
Title
Please provide a name for your action learning plan.
Establishment of an AgriFinTech Accelerator - Supply Chain Financing
Challenge statement
Challenge type: If you are working on multiple challenges, please indicate if this is your "big bet" or "exploratory" challenge.
Please note: we ask you to only submit a maximum of 3 challenges - 1x Big Bet, 2x Exploratory. Each challenge must be submitted individually.
BIG BET
Challenge statement: What is your challenge? (Please answer in specific terms: "Our challenge is that...”.)
The AFA is designed to address constraints on accessing supply chain finance in the agricultural sector by catalysing the adoption and scale up of innovative digital supply chain finance solutions.
Background: What is the history of your challenge? What is causing or driving it? Who is involved? How does the current situation look like? What undesired effects does it produce?
Eswatini is a small economy nestled between two super economies in the region, South Africa and Mozambique. Eswatini has a very high level of informality which is a source of livelihood for many. Access to credit for MSME is very difficult given that most MSME's do not meet the minimum requirements for credit banks are looking for particularly the agriculture sector which is one the biggest contributors' jobs in the Economy. As such, this necessitates innovative finance solutions such as the proposed AgrFinTech (AFA) initiative that seeks to provide supply chain financing for the horticulture value chain. The AccLab in collaboration Africa Sustainable Finance Hub, the Centre for financial Inclusion (CFI), leading institutions in the agriculture sectors, bank and non-bank financial institutions and the Eswatini FinTech Working Group (EFTWG) sought to pilot the AFA. The proposed AFA has been well received by stakeholders at large given its uniqueness in contributing to access to finance. Even though MSME's have always expressed concern on the lack of accessible financing instruments within Banks, the reality is that banks have time and time again indicated that they have excess liquidity. The challenges are often the quality of application and the risk averse nature of banks and non-banks financial institutions.
Quantitative evidence: What (official) data sources do you have on this challenge that better exemplifies the importance and urgency of this frontier challenge? You can add text, a link, or a picture.
https://finmark.org.za/system/documents/files/000/000/214/original/FinScope_MSME_Report_Eswatini_2017.pdf?1601980048
Qualitative evidence: What weak signals have you recently spotted that characterizes its urgency? Please provide qualitative information that better exemplifies the importance and urgency of this frontier challenge. You can add text, a link, or a picture.
Value proposition: What added value or unique value proposition is your Accelerator Lab bringing to solving this challenge? Why is it your Lab that needs to work on this challenge and not other actors within UNDP, other stakeholders in the country respectively? Why is it worth investing resources to this challenge?
The AFA is its current shape and form is an experiment that must be tested. The UNDP African Finance Hub issued a call last year for countries to submit a bid for being selected as pilot countries for testing of the AFA. The AccLab heard the call and responded and given the comprehensiveness of submitted proposal backed by a clear value add the AFA would bring, Eswatini was selected. Given that this a new concept, Eswatini went on to convene a number of workshop and engaged stakeholders to better understand the state for access to credit for MSME's who are in the horticulture value chain. The insights solicited in these workshops culminated in the development of a PIP and the adoption of the AFA proposal. Such experimental initiatives that require alot of collective intelligence gathering and other related assessments are generally led by the AccLab.
Short “tweet” summary: We would like to tweet what you are working on, can you summarize your challenge in a maximum of 280 characters?
The Eswatini AccLab is set to pilot and accelerate the scale up digital supply chain finance solutions through
the creation of a single point of integration for trade and supply chain
finance in the horticulture value chain through the AgriFinTech accelerator.
Partners
Who are your top 5 partners for this challenge? Please submit from MOST to LEAST important and state Name, Sector and a brief description of the (intended) collaboration.
Please state the name of the partner:
UNDP Africa Sustainable Finance Hub (ASFH)
Centre for Financial Inclusion
Eswatini FinTech Working Group
Eswatini Water and Agriculture Development Enterprise (ESWADE)
National Agricultural Marketing Board (Namboard)
What sector does our partner belong to?
United Nations
Please provide a brief description of the collaboration.
ASFH offers a comprehensive package of methods and tools to support the private sector and international financial institutions to accelerate financing of SDG's. From time to time, the ASFH develops new instrument and tools that would help in the financing of SGD's and the AFA is one of those. Given that this was a novel idea that had never been tested anywhere in the region, ASFH had to partner with CO offices to refine the concept and ascertain if indeed it does potentially provide value add. The AccLab headed the call and undertook to not only submit a proposal but also undertook an extensive stakeholder consultation in a bid to garner a buy in for the AFA amongst key stakeholders and possible beneficiaries. This led to the finalization of the PIP and launching for an RFP for the development of the platform.
Is this a new and unusual partner for UNDP?
No
Learning questions
Learning question: What is your learning question for this challenge? What do you need to know or understand to work on your challenge statement?
Can supply chain financing through single point integration be made accessible for a particular value chain be made accessible as an alternative source of financing solution for value chain actors?
To what stage(s) in the learning cycle does your learning question relate?
Test
Usage of methods: Relating to your choice above, how will you use your methods & tools for this learning question? What value do these add in answering your learning question?
Given that this experiment will be based on a FINTECH solution that must be developed from scratch, there is a need to work with the central bank to access sandboxes that will allow for prototyping of the FinTech solution. Collective intelligence has and will be used in ensuring that this platform is used by value chain actors. Part of the process of developing the solution is through sensemaking and design thinking.
Existing data gaps: Relating to your choice above, what existing gaps in data or information do these new sources of data addressing? What value do these add in answering your learning question?
Given that the primary target beneficiaries for the AFA are informal traders and SME's, the data that will be generated will be vital in opening doors for value chain actors in finding access to finance. The AFA will general transactional history that otherwise would not have been observed and recorded against value chain actors.
Closing
Early leads to grow: Think about the possible grow phase for this challenge - who might benefit from your work on this challenge or who might be the champions in your country that you should inform or collaborate with early on to help you grow this challenge?
MSME's will definitely benefit from this work but also, financial institutions and individuals will be given an opportunity to provide access to finance on businesses that would otherwise be considered as unfinanceable. There is a every incentive for banks and non-banks to host the AFA platform going into the future if the concept proves to be successful. CFI has every intention to support the platform given that it potentially will increase and deepen access to credit.
END OF ACTION LEARNING PLAN: Thank you! The form saves automatically and your submission has been recorded. You may now exit this window.
1No poverty
2Zero hunger
8Decent work and economic growth
Comments
Log in to add a comment or reply.