Smart Nkunganire System (SNS)

Summary

The Smart Nkunganire System (SNS) is a supply chain management system that has digitalized Rwanda’s agri-input subsidy program. By removing obstacles such as leakages, late delivery of inputs, and resource diversion, SNS has helped reduce the economic and operational deficiencies of the manual system. It has also enabled the government to monitor the subsidies granted to the input supply value chain. 

Challenge/Problem

Agricultural inputs are fundamental to modern agriculture, but their use remains very low in sub-Saharan Africa. There farmers use an average of 10 kilograms of fertilizer per hectare of arable land, compared to 100 kilograms per hectare in South Asia.

Smallholder farmers in Africa often depend on credit subsidies for items such as seeds and fertilizer, but high transaction costs and risks deter commercial lending. In Rwanda, for instance, total lending to the agriculture sector in 2017 accounted for only 5.2 per cent of all loans given in the country. As a result, governments have to implement national subsidy programmes to drive productivity.

Most subsidy programmes, however, have fallen victim to high administrative costs, government monopolies and even political manipulation. Manual systems such as vouchers often fail to reach the farmers who need them the most. In addition, many subsidy programmes are extremely expensive, and their advances in agricultural productivity are dependent on continued government support.

In Rwanda’s crop intensification program, farmers used to manually request inputs from agro-dealers, who would then order from importers. This process would prolong the time it takes for inputs to reach farmers. Rwanda is a moderate tropical country where seasons each last three months, so a single day’s delay is a loss for the farmer.

Digitalization has been used in developed countries for agricultural transformation, but progress towards this has been slow for the smallholders that produce 80 per cent of Africa’s agricultural output. This gap represents a missed opportunity to innovate for greater efficiency and sustainable increases in productivity, yield and income on the continent.

Solution

Smart Nkunganire System (SNS) is a supply chain management system built by BK TecHouse Ltd in collaboration with Rwanda Agriculture and Animal Resources Development Board (RAB) to digitalize the end-to-end value chain of the agri-input subsidy program.

To register with the SNS, farmers use the Unstructured Supplementary Service Data (USSD) system (by messaging *774#) and fill in details including their national identity card information, their land’s Uniform Parcel Identifier (UPI), and the kind of crops they plan to plant. The system calculates the quantity of seeds and kind of fertilizers needed, as well as their cost. After registering, farmers receive pop-up messages with registration numbers that they will use to log in for subsequent farming seasons.

By registering with SNS on their mobile phones, farmers can automatically order agricultural inputs such as mineral fertilizers and improved seeds from agro-dealers they have subscribed to. By using technologies such as the Mobile Application Ordering Process (MOPA) and e-Wallet (IKOFI), SNS can link farmers with financial institutions like banks and insurance companies. As a result, farmers can access micro-lending services that enable them to buy improved inputs or tailored insurance schemes before they grow their crops.

To prevent diversion, registered farmers do not receive the loan funds in cash. Instead, they can get the borrowed value as inputs from agro-dealers who also can access the system. Farmers will also receive messages from experts advising them on best practices, as well as warnings or general notifications from different stakeholders involved in the supply chain.

MOPA, which is an upgraded feature of SNS, is enabling agro-dealers to order inputs from suppliers and make payments via the platform. MOPA helps farmers specify which agro-dealers’ shops they want to buy subsidized inputs from, enabling agro-dealers to identify the number of farmers they serve and the amount of inputs they should order.                  

To increase inclusivity, the technology providers have negotiated with the Bank of Kigali so that agro-dealers can acquire the devices on loans that can be repaid within eight months at lower interest rates.

By having suppliers in the database, the system is also enabling the Rwanda Agriculture Board to ensure that only genuine inputs get to the farmer, keeping out counterfeit and uncertified products.

Results

SNS has significantly increased efficiency, productivity and transparency by bridging communication gaps within the agri-input subsidy program. It has improved financial inclusion and increased cashless transactions in the agriculture sector in Rwanda.

The government is now able to track and monitor the distribution of agri-inputs in the country, with MOPA providing real-time visibility of agri-inputs’ supply and demand. Agro-dealers are able to view lists of subscribed farmers as well as expected orders for the season so that they can plan ahead. More than 1,200,000 unique farmers have registered 1,600,000 farm plots through SNS.

So far, 1,167 agro-dealers and 11 agri-input suppliers use the SNS platform to tend to their business activities, with about 400 agro-dealers having acquired smartphones through the low-interest loan scheme.

The project also recorded a 23 per cent increase in the purchase of fertilizers between the 2017 and 2020 agriculture seasons.

“Smart Nkunganire came to revolutionize our operations. We have been receiving positive feedback from farmers using it. They are grateful. The system is much appreciated especially for agro-dealers because it helps us to anticipate agro-inputs to be made available in stock,” says Amos Nzabarinda, an agro-dealer in Nyabihu district.

Lessons Learned/Potential for replication

The use of IT in agriculture can be a game-changer in supporting and accelerating agricultural transformation across the continent. As the SNS system implementation grows, endless layers of quality data can be captured to transform agriculture.

If fully implemented to scale, solutions like SNS can result in a highly connected, intelligent, real-time agricultural ecosystem, thus significantly reducing the costs of service, inputs and information delivery for farmers and other value chain intermediaries.

Scaling up will depend on supportive government policies, such as digitizing land registries.  Rwanda has made considerable progress in this area, and such records are crucial in verifying information provided by farmers and preventing fraudulent activities.

More than 80 per cent of the population in Rwanda owns a cell phone. With the  rapid growth of ICTS in Africa, governments should aim to have a majority of smallholder farmers accessing digitalized services for agricultural transformation.

Next Steps

Overall, SNS plans to work with financial institutions and telecoms to facilitate farmers’ access to finance and promote cashless transactions. By de-risking agriculture in Rwanda, SNS intends to increase to double digits the country’s percentage of loans allocated to agriculture as well as make the agro-input subsidy programme a completely cashless and paperless business.

Immediate objectives include ensuring smallholder farmers’ near-universal access to mobile phones so that SNS can scale up registration. SNS is also increasing research into information outreach activities in order to make the system more farmer-friendly and increase awareness. SNS intends for the solution to be incorporated into farmers’ primary tools.