Jack and Brillian: e-vouchers help mitigate risk (Zambia)
Jack and Brillian Handando, an energetic couple with dreams of improving their farm, live off a dirt track in southern Zambia. With 14 children, five of whom are orphans, the Handandos manage their resources scrupulously. Everyone in the family works hard to grow cotton, peanuts, maize, sunflower, soya beans, and other vegetables—some for selling and some for consumption.
This year when Jack decided it was time to sell his cotton, he learned that the cotton company, Dunavant and a Zambian mobile payments company, Zoona, were offering farmers the opportunity to receive part of their payment for cotton on e-vouchers.
The e-voucher is like a scratch card with a value of ZMK100,000 (US$20) pre-loaded onto the card. A farmer can decide to receive a portion of his payment on the e-voucher and the rest in cash. Before the e-voucher, farmers received large sums of cash, posing a security threat to both the farmer and the company. Linking the farmer's national identification number to the code on the voucher activates the card and keeps the money securely in the farmer's control so that in case of theft or loss, the voucher and corresponding value can be reissued. When the farmer is ready to make a purchase, local retailers who have signed up to redeem the e-vouchers on mobile phones offer up to a 10 percent discount on goods purchased with e-vouchers.
Jack explains that there are still many farmers who are suspicious of receiving anything but cash as payment for their crops. In July 2012 Jack became the first farmer in his district to sign up, requesting 12 e-vouchers worth ZMK1.2 million (US$240) and the rest in cash. The 10 percent discount provided the initial motivation to get e-vouchers, but Jack said afterward he realized, "Vouchers are safe to handle. If I have notes maybe someone can take my money and use it somewhere, but if I have vouchers it can't be used."
Jack explained that the family does not have any bank accounts or other means to store money safely, so cash is stored in the house, leaving it vulnerable to theft or even damage from fire, which is common during the dry season in Zambia.
When it came closer to harvest season, Jack and his wife Brillian began to make a plan for the money they would receive for their cotton. There were many things on their wish list: an improved piggery, a metal roof for the kitchen and a bull to breed cattle.
In past years, they said it was difficult to keep their budget and purchase everything they had planned to because money was lost to temptations, like a drink at the local bar. Brillian explained, "The money that's put in vouchers is like it's in a bank, you can't disturb that money...it won't be misused." The ability to allocate money and keep it safely stored was particularly valuable this year as cotton prices fell by half in comparison to the previous year. Despite lower income, the e-voucher enabled the Handando family to stick to their budget and purchase the goods they planned for.
In addition to being a money management tool, the e-voucher helped the Handando family invest in assets. Brillian's eyes brightened when she talked about her hope that in the future she could use Zoona's e-vouchers to improve her family's opportunities.