By Ntambo Mabuza
A World Bank study reveals that cash remains the preferred method for trading agricultural goods and services, even against the growth of digital economies and the rise of mobile money. According to data from the World Bank’s Global Findex 2021 study, which is based on multi-year research, as much as 75% of agricultural trade in Sub-Saharan Africa still relies entirely on cash. This figure represents transactions among 140 million people, trading everything from labour to livestock.
While not focused on agricultural trade per se, a Reserve Bank study released in
September 2024 confirms cash’s dominance in South Africa, with 56% of people preferring it as their payment method. Similar to the Global Findex 2021 study, which examined cash use in agriculture across the DRC, Ghana, Kenya, and Madagascar, cash transactions in South Africa’s agricultural sector are also likely to be widespread, especially among small- scale farmers.
Across Africa, efforts are underway to integrate the large “unbanked” population into the formal financial system to boost financial inclusion and improve the efficiency of agricultural value chains. Leveraging widespread mobile phone use, Kenya’s M-PESA fintech innovation offers transparent and secure basic banking services, extending far beyond its country of origin. Converting millions of cash transactions in agriculture to digital currency would improve financial management for farmers. However, agricultural experts warn that cash is likely to remain dominant for years due to the dual financial practices common in many farming businesses.
In the end, the current reality is that cash remains the lifeblood of farms, big or small. In between major transactions as those expected at harvest times, the odd sale of vegetables, baled grass, or a goat for umsebenzi become indispensable sources of operational cashflow. These cash transactions are crucial for farms to maintain smooth operations by providing funds for daily expenses like feed, equipment maintenance, and labour.
Unfortunately, cash is also a magnet for criminal elements. Farmers are advised
against keeping large amounts of money on the farm whenever possible.
Moreover, Xplore Agri has canvassed some tips from seasoned farmers on managing the risks of working with cash:
- Improve cash management practices by planning your cash requirements carefully and in advance.
- Keep as little cash as possible on the farm.
- Unless necessary, it’s advisable not to keep more than R10,000 on the premises.
- Ensure staff are aware that there is no cash left unattended on the premises, as information could be leaked to the wrong people.
- Develop the habit of visiting the ATM or bank to withdraw money for specific purposes, such as paying casual workers during planting or harvesting seasons.
