Innovations and policy design for development for cross-value chain services (logistics and financial services)

INITIATIVENOTENo.3 DECEMBER2022 Innovationsandpolicydesignfor developmentforcross-valuechainservices(logisticsandfinancialservices) CountryScopingReport-Nigeria BedruBalana,OpeyemiOlanrewaju,KateAmbler,AlandeBrauw,andJeffreyBloem InternationalFoodPolicyResearchInstitute(IFPRI) DidierKadjo,TesfamichealWossen,SawedaOnipedeLiverpool-Tassie,andTahirouAbdoulaye InternationalInstituteofTropicalAgriculture(IITA) CONTENTS 1.INTRODUCTION1 1.1Background–WP31 1.2Methodsandobjectives1 2.REVIEWOFAGRI-FOODCROSSVALUECHAINSERVICES(CVCSs)2 2.1Situationanalysis-logisticsservices2 2.1.1GeneralBackground2 2.1.2Typesandsourcesofagri-foodlogisticsservicesprovidersinNigeria4 2.1.3Governmentschemes/programsintheagri-foodlogisticssector10 2.2SituationAnalysis–FinancialServices(Digital)11 2.2.1Generalbackground11 2.2.2KeyfeaturesofagriculturalfinancialservicesinNigeria12 2.2.3Governmentschemes/programsintheagri-foodsectorfinance16 2.2.4Smallholdersanddigitalfinancialservices(DFS)inNigeria16 3.EMERGINGLOGISTICSANDDIGITALFINANCESERVICES(DFS)18 3.1Emerginglogisticsservices18 3.2Emergingdigitalfinancialservices(DFS)22 3.2.1Emergingprivatesector-ledinitiativesinDFSintheagriculturalsector23 3.2.2Government-ledinitiativesinDFS25 4.CURRENTCHALLENGESANDOPPORTUNITIES–LOGISTICSANDFINANCIALSERVICES.26 4.1Crossvaluechainlogisticservices26 4.2Crossvaluechaindigitalfinancialservices(DFS)30 5.PROMISINGLOGISTICSANDFINANCIALINNOVATIONSFORPILOTING34 5.1Innovativelogisticsservicesandpotentialpartners34 5.2InnovativeDFSandpotentialpartners36 6.CONCLUSION38 AbouttheAuthors40 Acknowledgments40 References41 Annexes43 TABLES Table1.Creditandsavingsbehaviorofruralhouseholds12 Table2.Logisticsservicesprovidersinagri-foodsectorinNigeria19 Table3.Innovationsandpotentialpartnersforagri-foodlogisticsservices34 Table4.InnovationsandpotentialpartnersforDFSinagri-foodcrossvaluechainsservices37 FIGURES Figure1.TotaldemandforagriculturalfinancinginNigeria13 Figure2.Commercialbankcreditstoagriculturalsector(2014-2020)14 Figure3.(a)Growthofinformalfinancialservices;(b)Informalfinancialserviceusebysmallholderfarmers15 Figure4.Keyfeaturesagri-financeservicesamongSmallholderfarmersinNigeria17 1.INTRODUCTION 1.1Background–WP3 WP3intendstoaddressthequestion:Howcancross-foodvaluechainandmarketservicesfunctionbettertoincreaseemploymentandboostincomeofsmallholdersandSMEs?TheWPfocusesontwotypesofcross-valuechainservices,logisticsandfinancialservices. (1)logisticsservices–supplychainmanagement,transportation,traceability,digitalplatformsfore-com-merce,and(cold)storage. (2)value-chainfinancialservices–mainlyfocusingondigitalfinancialservices(DFS)thatfacilitatetrans-actions,savings,accesstoanduseofcredit,andinsurance. Thelogisticsservicesinagri-foodsystemsinlow-andmiddle-incomecountries(LMICs)areoftentar-getedatlarge-scaleenterpriseswithgreatermarketpowerandlessaccessibletosmallholderfarmersandsmallandmicroenterprises(SMEs).WP3aimstoassessthewaysinwhichtheseemerginglogisticsservices(includingdigitalplatforms)canbecost-effectivelytargetedatsmallholderfarmersandagri-foodSMEs.RegardingDFS,theWPwillinvestigatecost-effectivewaysofimprovingaccesstoandadoptionofDFSamongsmallholdersandagri-foodSMEs,especiallyamongwomenandyouth.ThoughtheseemergingDFSappeartohaveahighpotentialtobenefitsmallholdersandSMEsacrosstheagri-foodvaluechainsinLMICs,theyneedareliableinternetconnection,asuitablemobilephonenetwork,andabroadnetworkofmobilemoneyagentstobeeffective.WP3thusaimstoidentifyinnovations/emerginglogisticsandDFSandtesttheireffectivenesstosmallholdersandSMEsusingrandomizedcontroltrials(RCTs)inpilots,withthegoalofcountry-specificscalabledesigns. 1.2Methodsandobjectives Thisreportisbasedondeskreview,keyinformantinterviews,fieldvisits,andconsultationsofstakehold-ersincludingvirtualmeetingsandphonecalls.Thescopingreportdocumentssummaryfindingsfromlandscapeanalysisandstakeholdersmappingofcross-valuechainlogisticsandfinancialserviceprovid-ersoperatingwithintheagri-foodsectorinNigeria.Thelogisticsservicescomponentofthereportpro-videsasummaryofactivitiesgearedtounderstandlogisticsservicesprovisionwithintheNigerianagri-foodsystem,including–mappingkeylogisticsservicesproviders,whatvaluechainstheycover,thenodesatwhichtheyoperate(e.g.,production,processing,storage,anddistribution),whatspecificrolestheyplay,theirgeographiccoverageandtheextenttowhichtheyusedigitaltechnologies.Similarly,theDFScomponentofthescopingreportcoversmappingofkeyfinancialservicesprovidersidentifiedsofar alongtheagri-foodvaluechain,thenature/typesofemergingDFSinnovations,scaleofoperations,ge-ographicalcoverageswithinNigeria,andthegrowingdemandfortheDFSamongthebeneficiaries. Thekeyobjectivesofthescopingreport(onbothlogisticsandfinancialservices)are:(1)documentthestate-of-the-artintheseservicestobetterunderstandtheircurrentstateandfunctionality;(2)identifygapsandchallengestohelpusdesigninnovationsorinterventionsforpiloting;(3)identifythelistofpotential/feasibleinnovationstoexperimentorpilot;(4)identifydemandpartnersandscalingpartnersforpi