Digital banking has definitely changed the banking sector in Nigeria. However, another sector that has also felt its impact is the Agribusiness sector.
The agribusiness sector in Nigeria and across Africa has witnessed some remarkable changes due to the influence of digital banking.
Before the emergence of digital banking in Nigeria, it was not always easy for small farm holders to gain access to funds and loans. Because the big banks were often located in the big city centres, it often made it difficult for farmers to access these loans and funds. There was also the issue of filling all the paperwork and sometimes getting guarantors and having collateral.
The consequence was that farmers most times could not scale up. As a result, they could not increase their profit and meet market demands.
Thankfully with digital banking, Small farm holders finally get the opportunity to gain access to funds and loans from the comfort of their homes just by using their mobile devices. Digital banking has made it easier for financial services dedicated to farmers to reach the rural markets that, up until recently, were cut off from the central economic hub. It has also made it easier for those interested in investing in agribusiness to do so comfortably without being at the farm and managing production personally.
With access to funds in the form of loans and insurance, farmers have the freedom and ability to buy the materials they need. This includes purchasing better-producing seeds and better farm machinery.
Digital banking has made it easier for funds to be transferred to farmers who can immediately purchase what they need to produce better. This ease of transfer of funds also applies to the investors and other parties in the value chain, including seed suppliers, equipment suppliers and even those responsible for purchasing and selling the finished goods.
The result is that farming becomes more profitable. This encourages investors and partners who are more willing to spend money investing in the sector when they can see the high dividend that agribusiness brings. The added benefit of digital banking is the insurance offered to investors. Having insurance coverage motivates and encourages potential investors to invest in agribusiness. Thus, bringing in more funds to a sector that needs it.