Surprise! Esoko’s Agricultural Market Prices Are Private Sector Failures

We’ve all heard of Esoko, the ICTforAg company specializing in market prices for farmers. Starting in Ghana in 2007, then expanding across West Africa and beyond, it quickly became a donor-darling by promising an African ICT success story with:

¬ Market prices that could alleviate smallholder farmer poverty.

¬ Technology that could bridge systematic transportation failures.

¬ A private-sector for-profit model that didn’t rely on donor grants.

I personally remember a leading USAID expert on ICTforAg solutions singing Esoko’s praises as a sustainable business. She was adamant that we needed more Esoko-type companies that could succeed as private businesses and less donor-supported projects that focused on public goods.

Guess what: Esoko was never financially sustainable!

That is why I was shocked to read Hillary Miller-Wise share the real truth behind Esoko’s financial position in a recent NextBillion post:

The flagship product – market prices – was losing money. The costs of Esoko’s model for market price collection, which entailed enumerators in the field, was too high for the scale that Esoko had achieved, even though many considered Esoko to be the leading example of a scaled m-agri solution.

In fact, Esoko’s original business proposition to share market prices, ag tips and weather forecasts was such a financial loss that at the end of 2016, Esoko stopped selling those products as stand-alone services.

This reminds me of the largest lie in ICT4D: fishermen using mobile phones for market prices.

Esoko is no longer. Welcome Tulaa and Insyt

Luckily for Esoko, they were able to “pivot” and survive by breaking the company into two separate businesses:

¬ One team started doing mobile data collection contracts to support UNICEF and Ghanaian government ministries, which led to the survey company, Insyt.

¬ Another team developed financial services to help farmers save and borrow for inputs, in addition to selling their crops, which led to the m-commerce business, Tulaa.

Esoko Networks Ltd. is now a holding company with shares in both businesses, but there are no business activities under the Esoko brand.

We should all be more like Esoko

While it may bring faint satisfaction to learn that a donor-darling didn’t make it, we should be cautious in our celebrations. Esoko has multiple reports showing its effectiveness, and yet it lasted just a decade in development, while other organizations, with much less empirical evidence of success, have survived for decades.

Obviously, our industry has perverse incentives that reward success unevenly.

In addition, Esoko does show that African-based ICT companies can compete, innovate, and survive on a global level. Expect more and better ones to be coming for a larger share of development dollars in the future.

Source Credit: Wayan Vota, ICTWorks. Article originally published on ICTWorks

Editor’s Note: At Agricinghana Media, we recognise the difficulties periodically faced by AgTech Companies in getting smallholder farmers and other agribusinesses to pay for services. We however encourage AgTech companies in Ghana to continue to innovate and iterate their services,  deploy robust business models, and work with local specialised media like us to promote their services to potential agribusiness clients, including farmers.

Email us: Editor@agricinghana.com


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