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Zittnet - harnessing information to make rural markets work better

SUMMARY

Using appropriate ICT to make information available on-site and in real-time in remote markets, Zittnet aims to make rural markets work more efficiently, driving greater economic value from agricultur

ESTIMATED COST: $0

This idea won a prize in the 2009 Africa Rural Connect Competition and therefore cannot compete in any subsequent ARC competitions.

Summary and Needs Assessment

Rural market places in southern Kaduna, Nigeria generate only marginal returns for all market actors which constrains the effectiveness of local markets, the principal theatre for business and trade, to stimulate wider economic development and fight poverty.  The lack of access to information about demand and supply makes it difficult for both suppliers and traders to plan, drive out waste from the value chain, improve their activities and thereby increase margins.

By making information available on-site and in real-time in remote markets, Zittnet aims to make rural markets work more efficiently, driving greater economic value from agricultural activities benefitting the economic and social livelihoods of the poor farming communities which dominate the local economy.

Zittnet aims to establish Agricultural Network Centres (ANC) in local villages connected to ANCs in local and regional markets.  An ANC manager will monitor activity on an electronic farm register so that both farmers and traders can find real-time prices and levels of supply and demand and complete transactions before incurring travel and related expenses.  The financial risk associated with bulk supply and purchase will be reduced as information provides greater certainty, allowing businesses to exploit economies of scale more effectively.   The ANCs will also publish market information regularly to assist rural businesses to plan more effectively. 

Communication will be through internet or mobile telephony as appropriate and each ANC will have its own (solar) power supply and network connection to prevent the service being disrupted by infrastructure failings (power and mobile networks).  Information will be posted at the ANCs so that clients will not need their own ICT hardware to access information, although it is intended that this will be available as demanded by the community.

By charging affordable prices for market information it is also intended that the ANCs themselves will become profitable and viable businesses and use the existing capital investment in power supply and network link to expand ICT services throughout their communities including ICT training and internet access.

Required Resources and Business Case

Income for the ANCs is earned by charging a 10% commission on products sold through the farm register (5% to buyers and 5% to sellers). The centre will advertise prevailing market prices to remote sellers who will then confirm what they will bring to market at the price, which will be entered on the register.  Payment will be made at point of delivery/collection ofgoods.   Economies of scale will prevail to drive up profitability as traded volumes increase.

We estimate that following an initial capital injection of N700,000 (approximately $4,579), the first two ANCs will break-even in nine months, returning 7% net profit year one subject to a conservative 45% growth in traded volumes from month two.  Monthly operating profit in month 12 will be 20%.

Plan and Execution

Zittnet will use it relationship with Fantsuam Foundation to raise awareness of the project and market the service.  Zittnet is part of Fantsuam Foundation which works with local communities to fight poverty and disadvantage through integrated development programmes. By adopting an integrated rural development model, Fantsuam is capable of achieving a deep level of influence in its local communities by interlinking its service provision.  This depth of engagement, coupled with the breadth of its microfinance activities, which currently  provides micro-loan and savings facilities to over 1,000 almost exclusively agricultural clients, give Fantsuam a unique and wide base from which to launch its Agricultural Network Centres.

The proposal is to launch the service in a particular community 20km from Kafanchan, Ungwa Rimi, where Fantsuam has over 100 active microfinance clients, a Positive Concern Support Group for people living with HIV/AIDS and support from the local community for an agricultural facility on its 'permanent site'.

Investment in marketing will be focused on training community members in how to use the centres complemented by local marketing activities (handbills, posters etc.) in Kafanchan and Ungwa Rimi.  All Fantsuam employees (approximately 50 staff and volunteers) will be encouraged to promote the service.

As well as having a ready-made market place in the communities and clients that Fantsuam Foundation currently works with, Zittnet has also received support from the Nigerian Communications Commission to establish a Community Communications Centre in Ungwa Rimi where the first ANC is planned.  The complementary network centre will be in Kafanchan market, the region's main market,  within range of Fantsuam's existing communications mast.  Fantsuam's reputation and relationship with the local community is very good and political problems with implementation are not anticipated.

Zittnet is already well established as a local internet service provider in Kafanchan with 63% of the computer-literate local population familiar with its services. Approximately 90 people outside of Fantsuam Foundation use its internet services daily.  Over 3,300 students have passed through Fantsuam's ICT training facility.

Fantsuam conservatively estimates that over 100,000 local individuals have been positively impacted by elements of its integrated service provision, outlined above  since the Foundation was established in 1996. The microfinance department has seen the majority of its 12,500 clients to date progress through the loan cycle as their businesses improve, and daily we hear of students of our ICT facility who have secured jobs. 

Real World Impact

Information is a critical success factor in the efficient operations of markets.  This project aims to fast-track relevant information delivery through appropriate ICT to fast-track market development in rural areas. As has already been shown by the phenomenal success of platforms such as eBay and Amazon, the internet is a powerful and effective tool for linking markets and customers.

The project will improve the ability of rural entrepreneurs to build better and more sustainable businesses.  By increasing information, risk will be lower and business opportunities increased, thereby injecting real value into the supply chain and releasing potential for farmers, wholesalers and network centre operators to increase the profitability of their businesses and the size of their operations.

More effective markets will release greater levels of profitability for all economic actors in the value chain and therefore generate wealth across the economy with improvements in education, health and business.  Greater wealth and access to information will also drive adoption of improved agricultural practices across the area.

The area is rich with agricultural resources however the reliance on traditional farming methods, local markets only to support what is predominantly a subsistence economy, is stifling economic progress. The objective of the ANCs is to help release greater returns into the value chain and unleash the agricultural and commercial potential of Nigeria's Middle Belt within five years.

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