Money falling from the sky
A small UNCDF team is driving on dirt roads for hours to get to Mwenge Tea Estate, one of the largest such estates in the country. Every now and then the team passes a small trading centre with a few signposts for mobile money agents. The nearest tea estate is a 30-minute drive away, a distance that most tea workers need to cover twice a month on foot to send some of their earnings back home, to family living in another part of the country or even abroad.
About 8,000 people work on six McLeod Russel tea estates, including Mwenge, located around Fort Portal in Western Uganda. Two times per month, pluckers, weeders and sorters receive their salary payment in cash. To pay these employees, who don’t have access to a bank account, McLeod Russel charters a small aircraft to distribute the cash needed. Bags of money are dropped out of the plane onto each of the six McLeod Russel estates.
The money bags are then collected and taken to administrative offices on each of the estates, where a team counts the money, puts it into small brown envelopes and finally pays the employees—a process that is lengthy and stressful. On paydays, regular security forces are supported by extra police officers to secure the whole process.
As soon as workers start queuing for their salary payment, a small market emerges outside of the estate gates. Local women sell vegetables and fruits, while boda-boda motor taxis are ready to take people to the nearest trading centres. Most workers have to find their way to a mobile money agent to send some of their earnings back home, to pay a family member’s school fees for example.
It is on these tea estates that UNCDF, together with McLeod Russel, is piloting the digitization of salary payments. Since April, tea workers can volunteer to receive their salary through mobile money instead of by cash. Slowly but surely more and more people are signing up. For some workers it is the first time they are using mobile money, and some have difficulty understanding how the transaction works. What is more, the use of mobile money services is not completely free of charge, so workers also need to understand and agree with the transaction costs.
But once these challenges are overcome, receiving their payment on their mobile phone can save the workers a lot of time, money and stress: time queuing to receive their pay, time and money travelling to the nearest village to send money back home, and worry about their safety, as travelling with two weeks’ pay can be very risky. As for McLeod Russel, paying employees digitally greatly reduces the stress and cost associated with handling vast amounts of cash and keeps workers focused on actually plucking, weeding and sorting tea on paydays, rather than on waiting to receive their salary in cash. It is a huge benefit for all parties.
Over coming months, this UNCDF pilot on digitizing bulk payments within the tea value chain will roll out to three of the six McLeod Russel estates. Results, success stories and lessons learned will be shared here. As the team travels back to Fort Portal this week, they will talk to some of the many migrant workers on the estates, who send a large part of their pay to neighbouring countries like the Democratic Republic of the Congo and Rwanda.
By Bram Peters and Naomi de Groot, UNCDF MM4P in Uganda.