The use of mobile phones and banking applications has grown substantially in the past decade in East African countries, and particularly in Kenya, allowing consumers living in rural farming communities to participate in the new digital economy. In turn, MasterCard is seeking to expand on the services it offers to this population by introducing 2Kuze, a new platform that digitizes transactions between the small farmers and their buyers.

Backed in part by funding from the Bill & Melinda Gates Foundation, this service allows farmers to reach new markets for distribution, build their credit history, and apply for small loans that these households can use to escape extreme poverty. Launched in 2015 with an $11 million grant from the Gates Foundation, the technology was developed by developers and designers at MasterCard Labs for Financial Inclusion. The application is currently used by about 2,000 farmers in Kenya, and the company hopes to expand adoption of the application to at least 40 million small agricultural merchants in East Africa over the next five years.

Furthermore, 2Kuze also allows for certain organizations, such as the nonprofit Cafedirect Producers Foundation, to act as mediators and submit orders from wholesale suppliers directly to farmers. In turn, the small farmers can work together to fulfill larger orders, opening up a whole new market to individual growers who, in the past were severely limited in the size of orders that they could commit to filling. For example, most small farmers in the region own less than three acres of land, and growing space is limited.

Finally, 2Kuze offers another benefit for the small farmer: The digital platform pays farmers electronically as soon as goods are delivered to the buyer. Without this digital platform, many farmers were required to travel hours to small wholesale markets to sell their goods. Alternatively, a trader might visit the farm directly to collect the crop, but in that case, payment would not be delivered for several weeks, after the goods were sold. The automatic payment feature allows farmers to put the money from sold goods immediately to use. Reducing their need to travel also should open up additional work opportunities for busy farmers and women, who remain primarily responsible for housework in this society.

Buoyed by the success of the application, MasterCard and Cafedirect further hope to increase the number of farmers using the 2Kuze application and, eventually, to expand its use beyond Africa. Targeted markets include India and several underdeveloped economies in Latin America.

Discussion Question:

1. What segmentation method is appropriate for designing an expansion plan for 2Kuze?

Source: Sara Castellanos, “Mastercard Mobile Effort Targets East Africa’s Small Farmers,” The Wall Street Journal, January 17, 2017