Responsible Digital Payments can unlock value for Indonesia’s Cocoa Smallholders

Jakarta, July 28, 2021–Cocoa Sustainability Partnership, Partnership for Indonesia's Sustainable Agriculture, and UN-based Better Than Cash Alliance convened a roundtable focused on the benefits of digitizing payments responsibly for Indonesia’s cocoa farmers. The virtual gathering saw the participation of more than 80 stakeholders including key cocoa companies and implementing partners such as Barry Callebaut, Cargill, Mars, Koltiva, and Mercy Corps; financial service providers such as Bank Rakyat Indonesia, BRI Agroniaga, and GrabKiosk; as well as key speakers from the Government of Indonesia.

Many financially under- or unserved Indonesians live in rural communities. This includes the 2.19 million cocoa-farming households and an additional 21,000 farm workers, who face challenges relating to digital connectivity, access to financial services infrastructure, and a lack of trust in the use of digital platforms. Ensuring that digital payments benefit Indonesians will be critical in achieving Indonesia’s national target of 90% financial inclusion by 2024.

“The Government has a National Strategy for the Digital Economy and the pandemic has highlighted the need to accelerate this transformation. Indonesia supports digital payments programs, which increase inclusiveness of financial systems and bring economic equity. If farmers can be supported to build trust and confidence in digital payments, they will embrace it and can benefit from the growing digital economy,” said Dr. Musdhalifah Machmud, Deputy Minister of Food and Agribusiness, Coordinating Ministry of Economic Affairs.

Recognizing these challenges, the roundtable focused on two objectives. Firstly, to discuss how digital payments can create value for smallholders by increasing access to formal financial products; and improving productivity and sustainability of the cocoa sector. Secondly, to focus on key challenges in the digital payment acceptance ecosystem, particularly in the far-flung areas in the island of Sulawesi, which contributes to more than 70% of Indonesia’s cocoa production.

“The digital economy in Indonesia has seen unprecedented growth. Responsible digital payments can help onboard cocoa farmers who can reap the benefits of this growth. By helping to boost productivity and improve farmer livelihoods, responsible digital payments can support Indonesia’s commitments to the Sustainable Development Goals and promote inclusive growth,” said Ms. Isvary Sivalingam, South-East Asia Lead, Better Than Cash Alliance.

The roundtable resulted in the following conclusions and collective commitments from participants towards responsible digital payments.

1. The Government of Indonesia has committed to addressing the digital divide through the Regional Financial Access Acceleration (PAKD) and the Acceleration and Expansion of Regional Digitization (P2DD) and these initiatives can be leveraged for also addressing specific challenges in cocoa-growing regions.
2. Creating value for cocoa and smallholder farmers requires the development of bundled financial products customized for their needs. Building trust in and security of digital platforms by supporting capacity building and access to timely recourse for farmers are also essential for responsible digitization of the sector.
3. Women in cocoa and other farming households are recognized as key changemakers and can play an important role in transitioning the currently cash-dominated sector to digital payments.
4. All actors agreed on the need for multi-stakeholder action and committed to increased partnerships between the Government, the cocoa companies, financial service providers, implementing partners to uncover value for cocoa smallholders and to build a viable business model to serve the last mile.

“As in any country’s digitization journey, cooperation and communication are essential ingredients of success. The more collaboration that takes place between all stakeholders affected by the shift to digital payments, the more inclusive those initiatives will be, and adoption would be quicker to support ‘Enabling Environment’ as stated in our Roadmap 2020 as well as enable our cocoa farmers to become professional farmers,” said Mr. Wahyu Wibowo, Executive Director, Cocoa Sustainability Partnership. 

“Digital transactions have become increasingly important and unavoidable, especially during this pandemic. At the same time, many Indonesian farmers who live in the rural communities are still struggling with digital connectivity, due to lack of knowledge or trust. We are committed to supporting the nation’s food security system through sustainable agriculture and working across supply chains to assist smallholder farmers utilize digital technology. Farmers’ livelihood and productivity can improve through the adoption of digital payments,” said Mr. Insan Syafaat, Executive Director, Partnership for Indonesia’s Sustainable Agriculture (PISAgro).

As a next step, the Better than Cash Alliance will be leading on research focused on identifying key actions to address both the demand and supply-side challenges. This is aimed at supporting the transition to responsible digital payments in the cocoa sector in Sulawesi. (CSP-PISAgro-BTCA)