“Before Esoko, we didn’t know the prices; we just sent the products when they are ready. But now we know the prices and also when to sell our products. Before, I sent my 100 tubers of yam to Accra and could get GHc 20 for it, now I check prices and go to Accra when prices are good. I get up to GHc 200 for 100 tubers.”
Prosper Biche, Kpandai, Ghana.
Prestat and Esoko Partnership:
Before acquiring Prestat with my half-brother Nick Crean I was the West Africa correspondent for the Financial Times and spent 3 years living in Ghana and Nigeria. Much of West Africa – and the farming community in particular – remains extremely poor but it is not because of a lack of hard work or a wish for greater financial reward.
There is a laudable desire among Western consumers to enable those who supply the West with goods to get a fair price. This has led to the Fair Trade movement. The latter has both strengths and weaknesses. It is principally a top-down approach, paternalistic in nature, that requires farmers to group into cooperatives and then, through a bureaucratic overlay, provides a premium to the market price of a commodity. This premium is often not paid in cash but through investment in, say, a new school-house or local health centre.
The Fair Trade movement is a big step in the right direction but still falls short on several grounds. It is only open to farmers who are willing to group together into a cooperative. It often does not pay the market premium in cash. The bureaucracy of Fair Trade is quite costly and dilutes the premium the farmers receive. The typical farmer will be growing three or more crops (yam, cassava and banana in addition to, say, cocoa) so receiving a Fair Trade premium on just one will have only a small impact on overall income.
For several years Prestat has been in touch with Esoko, an entrepreneurial IT company in Ghana, to find a system that will complement Fair Trade and that will cover the latter’s weaknesses.
The system that has been developed by Esoko is all about making the market more efficient and transparent in order to empower the farmer. There is minimal to no bureaucracy. It is open to all-comers. It covers all the farmer’s crops. And the premium in price to that the farmer would otherwise receive is paid as cash direct into the farmer’s hand.
Up until now, traders who visit farms have often taken advantage of a farmer’s lack of market knowledge and the farmer has been selling for far less than the effective market price. If making the often long trip to market, farmers have been ignorant of price fluctuations and have been unable to best time their journey.
The Huge Benefits for Farmers:
Esoko has an innovative service that gives farmers more power when negotiating deals. Esoko has market agents that collect price data from key regional markets and uploads them online; farmers then automatically get alerts on their mobile phones (mobile phone coverage is extremely comprehensive in Africa) with the current prices for their commodities in their markets. Now when traders come to their communities to buy, the farmers can simply pull out their phone and point to current market trends. They are able to negotiate better prices, discover new markets, and save money for their family, education and health.
Esoko is a business, not a charity. It needs to charge for these SMS texts so that it can build itself into a sustainable business. In the initial stage, Prestat is sponsoring 1,000 farmers in Ghana to receive these alerts from Esoko. Partnering NGOs (like SEND West Africa, which represents these farmers) will work with Esoko to get farmers up-and-running on the system. By so doing, we believe we are creating a direct, cost effective way to change how markets work in Africa and to empower the continent’s poorest.
My brother Nick and I have thought long and hard about this programme. We wanted to do something innovative (an approach we take to chocolate), truly effective and in which we could be directly involved. It is important, however, that you – the customers of Prestat – believe in what the company is doing. We live in an imperfect world and we would love your feedback. Please do write to us with your own thoughts and feedback to firstname.lastname@example.org.