Types of Research
351a: Review of Digital Credit Products in India, Kenya, Nigeria, Tanzania, and Uganda
A “new wave” of digital credit products has entered the digital financial services (DFS) market in recent years. These products differ from traditional credit by offering loans to borrowers that can be applied for, approved, and disbursed remotely (often without any brick-and-mortar infrastructure), automatically (generally minimizing or eliminating person-to-person interaction), and instantly (often in less than 72 hours). Digital credit also increasingly considers creditworthiness by using alternative (nontraditional) data—ranging from mobile phone activity to utility payments and social media data—potentially allowing for loans to populations previously unable to access bank credit.
We conducted a review of digital credit products in India, Kenya, Nigeria, Tanzania, and Uganda, focusing on products established within the last 10 years that offer loans to individuals or small business owners (rather than groups or business entities). This report summarizes findings from a review of 68 digital credit products in these five countries, identifying common technology platforms, business models, and loan terms used. In addition, we outline major types of partnerships and stated customer segments of digital credit products, and summarize the types of alternative creditworthiness data used to score potential borrowers. We then present early information about digital credit default rates and potential risks to the consumer as the market develops.
Some features of digital credit products, such as interest rates and repayments lengths, differ by geography: Indian products, on average, typically offer longer repayment terms and lower interest rates than African products, potentially because they more frequently require links to bank accounts so may perceive lower risk in their loans. Due to limited loan volumes and performance data it is currently unclear how these digital credit products might impact borrowers and markets, but we find that the digital credit products reviewed often have relatively high interest rates and charge multiple fees, which may adversely affect borrowers if these are not clearly communicated. Most products require borrowers to provide social media and other personal information to receive loans, potentially supporting individuals without a formal credit history to access formal loans but raising privacy concerns. 15 of the products we identified specifically state that they target underserved populations such as low-income populations, but it is not clear what efforts they make to reach these populations or how successful they are in doing so. Many of the products are very recent (16 products are less than a year old or in the planning stage) so their uptake and impact among target populations remains to be seen, though some provider claims on client numbers suggest widespread use.
351b: Digital Credit Regulation in Selected Countries in Africa and Asia
We conducted a targeted review of peer-reviewed and grey literature to identify specific regulatory concerns arising from the growth of digital credit products. We identified five regulatory issues related to digital credit that concern market conduct (data management and privacy, product disclosure, customer redress, consumer over-indebtedness, and rates and pricing) and five issues that concern systemic risk (licensing and reporting requirements, lending prohibition, regulatory sandboxes, capital requirements, and governance requirements). All of these issues concern financial services more broadly, but we find evidence of specific concerns related to characteristics of digital credit.
We found no regulatory documents from Africa or Asia that specifically mention "digital credit," but identified 20 regulatory documents from multiple African and Asian countries and jurisdictions that specifically target different aspects of the online and mobile credit and lending industries and that include regulations addressing the digital credit regulatory challenges highlighted in the literature. Existing regulations that do not specifically mention online/digital credit/lending may also be applied to address these digital credit regulatory issues, so a low number of regulatory documents does not mean a particular issue is not covered in country regulations—only that few new regulatory documents have emerged to address the particular potential concerns around digital credit.
While we found few documents with regulations addressing the ten current regulatory issues we identified and specifically mentioning digital/online credit/lending, countries may implement additional regulations or modify regulations if they determine existing regulations inadequately cover digital credit challenges. For example, more data management and privacy regulations may be needed to address the unique nature of using alternative data as criteria for financial decisions. Existing regulations may be amended to more clearly specify whether different types of digital credit business models and providers are covered by the terms of the regulations. Additionally, as more information is collected on the digital credit market (e.g., the amount of new debt created by digital credit products; the number and types of new consumer groups that access digital credit products), regulations may be developed to address issues that have yet to be identified.
Read the blog post summarizing findings from our study.
Previous research has shown that men and women, on average, have different risk attitudes and social preferences and may therefore see different value propositions in response to new economic opportunities. We use data from smallholder farm households in Mali to test whether risk perceptions differ by gender in this setting and across risk domains. We model the association between gender and perception or expression of concern across six risks (work injury, extreme weather, community relationships, debt, lack of buyers at market, and conflict) while controlling for demographic (age, education, health, wealth, time poverty, number of children) and attitudinal (social orientation, access to information, worldview, optimism, and beliefs about self-efficacy) characteristics. Factor analysis highlights extreme weather and conflict as eliciting the most distinct patterns of participant response. Regression analysis reveals an association between gender and risk perception, with women expressing more concern across all risks studied except for extreme weather. Also, we find lower risk perception associated with an individualistic and/or fatalistic worldview, a risk-seeking outlook, and optimism, while education, better health, a social orientation, self-efficacy and access to information are generally associated with more frequent worry – with some inconsistency for extreme weather, debt, and conflict risk. Further, income, wealth, and time poverty exhibit important, and complex, association patterns. Understanding if, and how, men’s and women’s risk preferences differ could help development organizations to shape interventions targeting women, to increase the likelihood of adoption, and to avoid inadvertently making certain sub-populations worse off by increasing the potential for negative outcomes.
We use OLS and logistic regression to investigate variation in husband and wife perspectives on the division of authority over agriculture-related decisions within households in rural Tanzania. Using original data from husbands and wives (interviewed separately) in 1,851 Tanzanian households, the analysis examines differences in the wife’s authority over 13 household and farming decisions. The study finds that the level of decision-making authority allocated to wives by their husbands, and the authority allocated by wives to themselves, both vary significantly across households. In addition to commonly considered assets such as women’s age and education, in rural agricultural households women’s health and labour activities also appear to matter for perceptions of authority. We also find husbands and wives interviewed separately frequently disagree with each other over who holds authority over key farming, family, and livelihood decisions. Further, the results of OLS and logistic regression suggest that even after controlling for various individual, household, and regional characteristics, husband and wife claims to decision-making authority continue to vary systematically by decision – suggesting decision characteristics themselves also matter. The absence of spousal agreement over the allocation of authority (i.e., a lack of “intrahousehold accord”) over different farm and household decisions is problematic for interventions seeking to use survey data to develop and inform strategies for reducing gender inequalities or empowering women in rural agricultural households. Findings provide policy and program insights into when studies interviewing only a single spouse or considering only a single decision may inaccurately characterize intra-household decision-making dynamics.
Previous EPAR research considered how public good characteristics of different types of research and development (R&D) and the motivations of different providers of R&D funding affect the relative advantages of alternative funding sources. We summarized the public good characteristics of R&D investment for agriculture in general and for commodity and subsistence crops in particular, and hypothesized how these characteristics might be expected to affect public, private, or philanthropic funders’ investment decisions.
This paper builds on this previous research, using data on public sector investment in agricultural R&D in Sub-Saharan Africa. Drawing on data from FAOSTAT and the Agricultural Science and Technology Indicators (ASTI), we explore relationships between indicators of agricultural R&D investment and various factors hypothesized to influence public investment decisions, including national demographic and economic indicators and indicators of crop production and value. We analyze which factors appear to be most strongly associated with investment patterns in public agricultural R&D, and whether these patterns align with theoretical expectations of where the public sector would be incentivized to invest.
Our analysis for this project is not yet complete, but in the meantime we invite you to view our interactive data visualization which allows you to explore our data and some of our initial analysis. We have also uploaded a spreadsheet of the data used to produce this visualization.
This brief presents an overview of EPAR’s previous research related to gender. We first present our key takeaways related to labor and time use, technology adoption, agricultural production, control over income and assets, health and nutrition, and data collection. We then provide a brief overview of each previous research project related to gender along with gender-related findings, starting with the most recent project. Many of the gender-related findings draw from other sources; please see the full documents for references. Reports available on EPAR’s website are hyperlinked in the full brief.
There is a wide gap between realized and potential yields for many crops in Sub-Saharan Africa (SSA). Experts identify poor soil quality as a primary constraint to increased agricultural productivity. Therefore, increasing agricultural productivity by improving soil quality is seen as a viable strategy to enhance food security. Yet adoption rates of programs focused on improving soil quality have generally been lower than expected. We explore a seldom considered factor that may limit farmers’ demand for improved soil quality, namely, whether farmers’ self-assessments of their soil quality match soil scientists’ assessments. In this paper, using Tanzania National Panel Survey (TZNPS) data, part of the Living Standards Measurement Study – Integrated Surveys on Agriculture (LSMS-ISA), we compare farmers’ own assessments of soil quality with scientific measurements of soil quality from the Harmonized World Soil Database (HWSD). We find a considerable “mismatch” and most notably, that 11.5 percent of survey households that reported having “good” soil quality are measured by scientific standards to have severely constrained nutrient availability. Mismatches between scientific measurements and farmer assessments of soil quality may highlight a potential barrier for programs seeking to encourage farmers to adopt soil quality improvement activities.
This brief presents an overview of EPAR’s previous research on nutrition and food security and outlines summaries and key findings from 15 technical reports and research briefs. Key findings are drawn from our own original analyses as well as from other sources, which are cited in the individual reports. We also include appendices briefly summarizing EPAR’s research on health and climate change, topics somewhat related to nutrition and food security, and EPAR’s confidential work on nutrition and food security.
Relative to chronic hunger, seasonal hunger in rural and urban areas of Africa is poorly understood. No estimates are compiled, and limited evidence exists on prevalence, causes, and impacts. This paper contributes to the body of evidence by examining the extent and potential drivers of seasonal hunger using panel data from the Malawi Integrated Household Panel Survey (IHPS). Farmers are commonly thought to use various strategies to smooth consumption, including planting “off-season” crops, investing in post-harvest storage technologies, or generally diversifying farm portfolios including livestock products and/or wild crops. Similarly, when markets are available, farmers may diversify through off-farm income sources in order to purchase food in lean seasons. We investigate whether seasonal hunger – distinct from chronic hunger – exists in Malawi, drawing on two waves of panel data from the LSMS-ISA series. We examine the extent of seasonal hunger, factors associated with variation in seasonal hunger, and how recurring and longer-term seasonal hunger might be associated with various household welfare measures. We find that both urban and rural households report experiencing seasonal hunger in the pre-harvest months, with descriptive evidence suggesting male gender, age, and education of household head, livestock ownership, and storage of crops are associated with lower levels of seasonal hunger. In addition, we find that Malawian households with seasonal hunger harvest crops earlier than average – a short-term coping mechanism that can reduce the crop’s yield and nutritional value, possibly perpetuating hunger.
Labor is one of the most productive assets for many rural households in developing countries. Despite the importance of labor—and time use more generally—little research has empirically examined the quality of time-use data in household surveys. Many household surveys rely on respondent recall, the reliability of which may decrease as recall length increases. In addition, respondents often report on time allocation for the entire household, which they may not know or recall as clearly as their own time allocation. Finally, simultaneous activities such as tending children while preparing dinner, may lead to the systematic underestimation of certain activities, particularly those that tend to be performed by women. This paper examines whether the identity of the survey respondent affects estimates of time allocation within the household. Drawing on the Ugandan LSMS-ISA household survey, we find that individuals responding for themselves report higher levels of time use over the previous week than when responding for other household members. Moreover, male respondents tend to underreport time allocation for females over the age of 15 as compared to female respondents, especially time spent on domestic activities. In addition, an analysis of the effects of two economics shocks—having a baby and floods or droughts—suggests that the identity of the respondent can affect substantive conclusions about the effects of shocks on household time use.
This paper considers how public good characteristics of different types of research and development (R&D) and the motivations of different providers of R&D funding affect the relative advantages of alternative funding sources. We summarize the public good characteristics of R&D for agriculture in general and for commodity and subsistence crops in particular, as well as R&D for health in general and for neglected diseases in particular, with a focus on Sub-Saharan Africa and South Asia. Finally, we present rationales for which funders are predicted to fund which R&D types based on these funder and R&D characteristics. We then compile available statistics on funding for agricultural and health R&D from private, public and philanthropic sources, and compare trends in funding from these sources against expectations. We find private agricultural R&D spending focuses on commodity crops (as expected). However contrary to expectations we find public and philanthropic spending also goes largely towards these same crops rather than staples not targeted by private funds. For health R&D private funders similarly concentrate on diseases with higher potential financial returns. However unlike in agricultural R&D, in health R&D we observe some specialization across funders – especially for neglected diseases R&D - consistent with funders’ expected relative advantages.