The rapid spread of mobile money, and the use of smartphones and digital wallets to pay bills such as utilities, has in recent years enabled a small percentage of the significant global unbanked population to gain access to responsibly-priced credit via alternate credit scoring methodologies that take bill paying behavior into account. However, there remains a number of key market segments who cannot take advantage of this new method for credit scoring.
Farmers and ranchers have seasonal income. In areas without government support for farmers and ranchers, they may have only two or three times a year when they are paid for animal or crop products. It is traditional for those in these types of business to be allowed to run up bills and pay them off when the seasonal work rolls around.
An example would be the Navajo sheep ranchers in the American southwest. They have income when they sell the new lambs in the spring and wool in the summer. They can sell and butcher a sheep for food during the year, but usually income is restricted to spring and summer. Local Trading Posts run accounts, and families are allowed to buy essentials such as food and fuel on account; when the pay season comes around, they are expected to pay off the Trading Post in full. The local utilities companies do not allow this system, and many Navajo families who have a traditional ranching income end up becoming in arrears to the utilities.
In Africa, farmers of commodities such as coffee and cocoa beans have contracts with local or government coops for the successful delivery of a crop. Expenses such as transportation of the crop from the fields to the docks is often the responsibility of farmers. Unless they are members of a cooperative that guarantees income throughout the year, these farmers often have to wait for the crop to be approved and sold before receiving any recompense. They have to pay for farming and labor costs, including transportation, out of pocket. For many, a traditional look at their finances would show them being constantly in arrears, with yearly or biannual receipts of income.
In the developed world, government support for farmers and ranchers has allowed a more traditional financial picture. In the developing world, assistance programs are encouraging the development of cooperatives, which keep the smallholders from being taken advantage of financially, and allow a greater degree of profit sharing. However, there still remain a number of small communities that depend on seasonal income from ranching or farming work. For these workers, a new method of credit scoring that takes into account their traditional methods of paying bills and saving money will allow them a greater degree of financial inclusion.
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