La monnaie électronique se développe au Bénin
Bien que la croissance des services financiers digitaux au Bénin n’ait pas été aussi rapide que chez ses voisins, la modeste base de départ du pays signifie encore plus de gains potentiels. En tant que membre de l’Union économique et monétaire ouest-africaine (UEMOA), le Bénin pourrait beaucoup apprendre des expériences des pays membres, dont le Sénégal et la Côte d’Ivoire, où la monnaie électronique joue un rôle prépondérant dans l’accès aux services financiers. En effet, les données sur les points d’accès recueillies par MIX montrent qu’il se peut que le Bénin suive déjà les pas de la Côte d’Ivoire dans son histoire de redressement concernant la monnaie électronique.
Le Bénin est considéré comme un marché émergent en ce qui concerne les services financiers digitaux, mais cela pourrait commencer à changer. Depuis la dernière mise à jour du tableau de bord interactif pour le Bénin en 2016 (selon les données de 2015), les points d’accès à la monnaie électronique ont augmenté de 118 %. À l’exception du Couffo, qui n’a connu aucune croissance, tous les départements ont connu une augmentation de 50 % (le Mono) à 250 % (l’Atlantique). Selon nos données, l’Atlantique possède 2 000 points d’accès de plus, alors que le Littoral en a 1 900 de plus. L’Atlantique est passé de 7,93 à 24,48 points de service pour 10 000 habitants au cours de l’année dernière. Et, en ce qui concerne les canaux, le nombre de points d’accès des agents a augmenté dans tout le pays de près de 7 000, pour la même période de temps. Alors que le nombre de points d’accès d’autres prestataires de services financiers a légèrement progressé (institutions de microfinance, banques et bureaux de poste confondus ont ajouté 138 points d’accès) le développement de la monnaie électronique a vu le nombre moyen de points passer de 6,02 à 13,22 pour 10 000 personnes.
Sans surprise, donc, les opérateurs de réseaux mobiles sont le type de prestataires de services financiers le plus répandu au Bénin, en ce qui concerne les points d’accès. Ces opérateurs sont les plus présents dans tous les départements, représentant plus de 93,7 % de tous les points d’accès dans le pays, contre les 88,7 % enregistrés lors de notre mise à jour précédente. Quoi qu’il en soit, il y a toujours des possibilités d’expansion au Bénin, où seuls 17 % des adultes disposent d’un compte en banque. D’une part, les opérateurs de réseau mobile pourraient analyser les communes qui présentent un pourcentage plus élevé de ménages ayant accès à internet et un faible nombre de points d’accès aux services financiers. Ces communes, dont Ouinhi, Gogounou et d’autres, semblent occuper les premiers rangs en termes d’utilisateurs actifs de la téléphonie portable, mais avec un accès limité aux services financiers.
Comme nous l’avons mentionné l’an dernier dans notre billet intitulé « Partenariats pour le progrès : le Bénin pourrait tirer parti d’une coordination de tout le secteur financier », les opérateurs de réseaux mobiles devraient poursuivre la recherche de possibilités de collaboration avec d’autres prestataires de services financiers. Par exemple, les institutions de microfinance font un meilleur travail lorsqu’elles couvrent les communes ayant un pourcentage élevé de ménages agricoles, l’agriculture étant la principale activité économique au Bénin. De la même manière, les institutions de microfinance sont « jugées prioritaires par le gouvernement dans sa stratégie de réduction de la pauvreté » et augmentent déjà le nombre de points d’accès à la monnaie électronique, une tendance bienvenue au cours de la dernière année, et qui devrait se poursuivre.
L’UNCDF, en partenariat avec la Fondation MasterCard, a lancé en octobre 2015 au Bénin le programme Mobile Money for the Poor (MM4P) et s’est engagé à soutenir les institutions de microfinance dans leur intention de tirer parti du numérique afin d’améliorer l’inclusion financière dans les zones rurales. MM4P a investi dans plusieurs ateliers de renforcement des capacités et dans la formation d’un réseau d’agents, pour de nombreuses institutions de microfinance au Bénin. Le programme travaille également à faciliter la première intégration Bank-to-wallet (entre un compte bancaire et un porte-monnaie électronique) entre un opérateur et une institution de microfinance dans le pays.
En raison de son appartenance à l’UEMOA, le Bénin peut profiter de bon nombre des avantages que lui confère sa proximité avec les leaders régionaux de l'inclusion financière, et de l'approfondissement de ses relations avec ces derniers. Les parties prenantes ont clairement démontré leur volonté de revigorer l’écosystème au Bénin. En mars 2017, MM4P a organisé une retraite avec le gouvernement, qui a permis l’harmonisation de la vision des parties prenantes dans la finance digitale, et qui a encouragé la priorisation des projets pouvant favoriser les services financiers digitaux au Bénin.
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Mobile Money Grows in Benin
Though Benin hasn't seen the same rapid growth in digital financial services as its neighbors, the country's small starting base means even bigger potential gains. As a member of the West African Economic and Monetary Union (WAEMU), Benin could learn from the experiences of fellow member countries including Senegal and Cote d'Ivoire, where mobile money plays a leading role in access to finance. In fact, access point data collected by MIX shows signs that Benin may already be following in the footsteps of Cote d'Ivoire and its mobile money turnaround story.
Benin is considered a nascent market when it comes to digital financial services but that may be starting to change. Since we last updated the Interactive Dashboard for Benin in 2016 (based on 2015 data), mobile money access points have increased by 118 percent. With the exception of Couffo, which saw no growth, all departments experienced an increase between 50 percent (Mono) and 250 percent (Atlantique). According to our data, the number of access points in Atlantique grew by over 2,000 while Littoral added 1,900. In Atlantique, the number of service points per 10,000 people increased from 7.93 to 24.48 over the past year. And, in terms of channels, the number of agent access points grew across the country by nearly 7,000 over the same time period. While the number of access points of other financial service providers grew slightly – microfinance institutions, banks and post offices together added 138 access points – mobile money growth resulted in doubling the median number of access points per 10,000 people, from 6.02 to 13.22.
Unsurprisingly, then, mobile network operators are the most prevalent type of financial service provider in Benin in terms of access points. These operators are the most widespread across all departments representing over 93.7 percent of all access points in the country, up from the 88.7 percent recorded in our previous update. Yet there is still opportunity to expand in Benin where only 17 percent of adults have a bank account. For one, mobile network operators could investigate communes with a higher percentage of households with access to the internet and a low number of financial access points. These communes, including Ouinhi, Gogounou and others, seem to be home to active users of mobile phones but with limited access to financial services.
As we mentioned last year in our post Partnerships for Progress: Benin Could Benefit from Financial Sector Coordination, mobile network operators should continue looking for opportunities to work with other financial service providers. For example, microfinance institutions are doing a better job at covering communes with high percentages of agricultural households, the leading economic activity in Benin. Also, microfinance institutions are "prioritized by the government in its poverty reduction strategy" and are already adding mobile money access points, a welcome trend over the last year that should be continued. Launched in October 2015 in Benin and in partnership with The MasterCard Foundation, UNCDF’s program Mobile Money for the Poor (MM4P) is committed to supporting microfinance institutions in their journey to leverage digital technology to improve financial inclusion in rural areas. MM4P has invested in several capacity building workshops and agent network training for numerous microfinance institutions in Benin. The program is also working to facilitate the first bank-to-wallet integration between an operator and a microfinance institution in the country.
Because of its membership in WAEMU, Benin can enjoy many of the benefits of proximity and deepening relationships with the regional leaders in financial inclusion. Stakeholders have clearly demonstrated their willingness to boost the ecosystem in Benin. In March 2017, MM4P organized a retreat with the Government that harmonized the vision of stakeholders on digital finance, and encouraged the prioritization of projects that can promote digital finance services in Benin.
Pour lire en français, cliquez ici.
Mobile Money and Digital Financial Inclusion in Senegal
Last year, in a blog post titled 10,000 Data points: New Senegal Workbook Explores Access at the Commune Level, we explored the state of financial inclusion in the West African country. Through that analysis of access point distribution, we uncovered a few key findings, including the major growth of mobile money access points and Senegal's impressive progress in financial inclusion since signing the Maya Declaration in 2012. With the recent release of the updated Interactive Dashboard for Senegal, it seems like a good time to revisit the state of financial access in the country and examine what has happened over the past year.
The central role of digital financial services in Senegal has, if nothing else, become more defined as the market continues to evolve. For one, Ecobank launched a mobile banking app for customers and Masterpass QR codes for merchant payment. Additionally, Wari, a money-transfer and bill payments service provider has announced the acquisition of SENTEL GSM (Tigo) the second largest telecommunications firm in the country. And Société Générale Bank is planning to launch a mobile money offering soon. But even for the established operators, growth continues; Orange recently registered its 10 millionth customer on its mobile payment platform, Orange Money. Finally, it is becoming clear that mobile money is an indispensable tool for many Senegalese, even becoming one of the preferred methods to purchase sheep for the Muslim holiday Eid al-Adha.
Given these developments, it is unsurprising that mobile money continues to drive financial inclusion in Senegal. Last year the median number of access points per 10,000 people was 3.8; this year that number increased to 5.2 (see graphs below). The data we collected shows that over 81 percent of financial access points belong to mobile network operators and, additionally, mobile money access points grew by 37 percent over the past year. All regions within Senegal experienced growth in mobile money indicating the widespread impact mobile network operators are having throughout the country. In terms of the number of new access points, the three most populous regions saw the largest growth with Dakar adding over 1,100 new access points from mobile money alone.
However, there is still opportunity for mobile money to expand its reach. In a handful of regions – Fatick, Kaffrine, Louga, Thies and Diourbel – people get paid in cash more than the rest of the country (see chart below). If mobile network operators can encourage the digitization of wages, they could also grow the number of access points in those areas, providing increased security for individuals and greater revenues for agents. Additionally, similar to our findings last year, there are still underserved populations living in urban areas. When drilling down to the commune level in Dakar, for example, many areas within the city have unmet demand for financial access points.
For the rest of the financial services ecosystem in Senegal, the financial access points offered by other types of financial service providers decreased by 3 percent over the last year, even if these institutions still provide valuable products and services to various populations throughout the country. Our analysis found that microfinance institutions in Senegal have a denser presence in areas with high poverty rates when compared to commercial banks, perhaps due to products tailored to their needs. The appropriate mix of financial services should be a key consideration for operators looking to expand within the country. And to that end, partnerships between operators and microfinance institutions are necessary in order to extend the second-generation of digital financial services (DFS) products such as digital credit, savings and insurance in underserved areas in Senegal.
The UNCDF’s Mobile Money for the Poor (MM4P) program, launched in Senegal in April 2015, and in partnership with The MasterCard Foundation, provides support to build a robust DFS ecosystem that reaches low-income people in least developed countries (LDCs).
MM4P is committed to improving financial access points in Senegal particularly in rural areas. Through a deep dive analysis of the Interactive Dashboard for Senegal, the following 10 departments were identified for assistance in agent network expansion based on gaps in financial service points and economic opportunities for viable agent networks: Nioro, Podor, Fatick, Bambey, Foundiougne, Velingara, Linguere, Kanel, Kaffrine, Guinguineo. For 2017, MM4P will be supporting an aggregator to increase the active number of mobile money agent networks in those targeted areas.
With an estimated 15 percent of adults currently with access to an account, the country has a long way to go in reaching full financial inclusion. It is likely, given what we’ve seen, that digital financial services will continue to increase the number of access points. It is also important that Senegal keeps its focus on connecting its underserved and excluded populations to appropriate financial services.
Pour lire en français, cliquez ici.
Monnaie électronique et inclusion financière digitale au Sénégal
L’an dernier, dans un billet du blog intitulé 10,000 Data points : New Senegal Workbook Explores Access at the Commune Level (10 000 points de données : Le nouveau dossier de consultation sur le Sénégal examine l’accès au niveau des communes), nous avons exploré le statut de l’inclusion financière dans ce pays d’Afrique de l’Ouest. Grâce à cette analyse de la distribution des points d’accès, nous avons fait quelques découvertes clés, notamment la croissance importante des points d’accès à la monnaie électronique et les progrès impressionnants réalisés par le Sénégal en termes d’inclusion financière depuis la signature de la Déclaration de Maya en 2012. Suite à la récente publication de la mise à jour du tableau de bord interactif pour le Sénégal, il semble que le moment est opportun de revenir sur la situation de l’accès aux services financiers dans le pays et d’examiner ce qui s’est passé durant l’année écoulée.
Le rôle central des services financiers digitaux au Sénégal continue à se préciser à mesure que le marché évolue. D’une part, Ecobank a lancé une application de services bancaires mobiles pour les clients, ainsi que des codes Masterpass QR pour les paiements chez les commerçants. D’autre part, Wari, opérateur de transfert classique d’argent et de paiement de factures, a annoncé l’acquisition de SENTEL GSM (Tigo), la deuxième société de télécommunications du pays. Et la Société Générale envisage de lancer bientôt un service de monnaie électronique. Même pour les opérateurs établis, la croissance se poursuit ; Orange a enregistré récemment son dix-millionième client sur sa plateforme de paiement mobile, Orange Money. Enfin, il est évident que la monnaie électronique est un outil indispensable pour de nombreux Sénégalais, et qu’elle est même devenue l’une des méthodes privilégiées lors de l’achat de moutons pour la fête musulmane de l’Aïd al-Adha.
Compte tenu de ces développements, il n’est pas surprenant que la monnaie électronique reste la force motrice de l’inclusion financière au Sénégal. L’an dernier, la moyenne des points d’accès pour 10 000 habitants était de 3,8 ; cette année, ce chiffre est passé à 5,2 (voir graphiques ci-dessous). Les données que nous avons recueillies nous montrent que plus de 81 % des points d’accès financiers appartiennent aux opérateurs de téléphonie mobile ; de plus, les points d’accès à la monnaie électronique ont augmenté de 37 % l’an dernier. Toutes les régions du Sénégal ont connu une croissance en termes de monnaie électronique, ce qui indique que les opérateurs de téléphonie mobile ont un énorme impact dans tout le pays. En ce qui concerne le nombre de nouveaux points d’accès, les trois régions les plus peuplées ont connu la plus forte croissance, avec Dakar qui ajouté plus de 1 100 nouveaux points d’accès liés à la monnaie électronique seulement.
Cependant, la monnaie électronique peut encore étendre sa portée. Dans quelques régions (Fatick, Kaffrine, Louga, Thiès et Diourbel), les gens sont davantage payés en argent comptant que dans le reste du pays (voir tableau ci-dessous). Si les opérateurs de réseau mobile peuvent encourager la digitalisation des salaires, ils pourront également augmenter le nombre de points d’accès dans ces zones, tout en offrant une sécurité accrue aux particuliers et des revenus plus élevés aux agents. Par ailleurs, tout comme nous l’avions constaté l’an dernier, il reste des populations non bancarisées en milieu urbain. Lors de notre exploration au niveau de la commune de Dakar, par exemple, nous avons pu constater que de nombreux quartiers de la ville sollicitent, sans réponse, des points d’accès aux services financiers.
Pour le reste de l’écosystème des services financiers au Sénégal, les points d’accès financiers offerts par d’autres types de prestataires de services financiers ont diminué de 3 % l’an dernier, même si ces institutions fournissent toujours des produits et services de qualité à diverses populations dans tout le pays. Notre analyse a révélé que les institutions de microfinance du Sénégal ont une présence plus importante dans les zones à taux de pauvreté élevé, par rapport aux banques commerciales, peut-être en raison de produits adaptés aux besoins de ces populations. La combinaison appropriée de services financiers devrait être un facteur important pour les opérateurs qui cherchent à se développer dans le pays. Et à cette fin, des partenariats entre opérateurs et institutions de microfinance sont nécessaires, afin de déployer la deuxième génération de produits des services financiers digitaux, tels que le prêt, l’épargne et l’assurance numériques, dans les zones non bancarisées du Sénégal.
Le programme Mobile Money for the Poor (MM4P) de l’UNCDF, lancé au Sénégal en avril 2015, en partenariat avec The MasterCard Foundation, appuie la construction d’un écosystème solide de services financiers numériques qui atteigne les personnes à faible revenu dans les pays les moins développés.
MM4P s’engage à améliorer les points d’accès financiers au Sénégal, et en particulier dans les zones rurales. Grâce à une analyse profonde du tableau de bord interactif pour le Sénégal, les 10 départements suivants ont été retenus pour une aide à l’expansion du réseau d’agents, en fonction des lacunes identifiées au niveau des points de services financiers et des possibilités économiques pour des réseaux viables d’agents : Nioro, Podor, Fatick, Bambey, Foundiougne, Vélingara, Linguère, Kanel, Kaffrine et Guinguinéo. Pour 2017, MM4P appuiera la mise en place d’un agrégateur, afin d’augmenter le nombre actif de réseaux d’agents de monnaie électronique dans les zones ciblées.
Avec environ 15 % des adultes ayant actuellement accès à un compte, le pays a encore un long chemin à parcourir pour arriver à une inclusion financière totale. Il est probable, compte tenu de ce que nous avons vu, que les services financiers digitaux continuent de voir le nombre de points d’accès augmenter. Il est donc important que le Sénégal poursuive ses efforts pour donner à ses populations non bancarisées et exclues l'accès à des services financiers appropriés.
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Creating a new world of banking in Lao PDR
On 12 May 2015, the first branchless banking transaction was completed in a rural village in the Lao People's Democratic Republic (Lao PDR). This ground-breaking transaction took place with a service launched by Banque pour le Commerce Exterieur Lao Public (BCEL), one of the country’s leading banks. The service, BCEL Community Money Express (BCOME), was the first of its kind in this largely agrarian and rural nation. Digital financial services (DFS) in Lao PDR can have significant impact by providing access to services that the dispersed population is sorely missing. The first branchless transaction opened a new world of banking that is fast, safe, inexpensive, convenient and reliable, though the story behind the project was neither swift nor simple. The journey to launch digital finance and branchless banking took investment and planning that began years ago, in 2012, with the engagement of the Bank of the Lao PDR (BoL) and the United Nations Capital Development Fund (UNCDF).
Bringing digital finance to Lao PDR required a serious commitment by BoL, which had not yet established a regulatory framework for DFS at the time. But BoL had a vision for digital finance, that it would be an important service to broaden financial inclusion and to accelerate local development. The 2014 FinScope survey of the country revealed that access to banking services was twice as high in urban areas than in rural, with the areas without year-round road access severely affected. The two main reasons for the finding were the following:
- Distance: It takes more than one hour of travel time for at least 40% of rural people to travel from the often remote mountainous areas where they live to a bank branch or an ATM.
- Income: Most rural dwellers have unpredictable income.
In sum, banking was an awkward, time-consuming and expensive proposition for many people (see the figures for greater understanding of the financial context at the time).
In 2013, BoL hosted a two-day stakeholder conference with the support of UNCDF and International Finance Corporation to explore the benefits of digital finance for financial inclusion and to develop a strategy to implement DFS for the benefit of rural Lao people. BoL also requested a scoping mission to assess the potential for DFS in the country be conducted by the UNCDF programme Mobile Money for the Poor (MM4P), through the national implementation programme called Making Access to Finance More Inclusive for Poor People (MAFIPP). The project received generous financial support from the Australian Government.
In parallel, with the support of UNCDF, BoL went to work on creating an enabling regulatory framework for DFS to permit banks and non-banks to offer services. As Akhom Praseuth, Director General of the Financial Institution Supervision Department at BoL, explained, “The Bank of the Lao PDR has a vision for digital finance and we work on its promotion. We are focused on building a strategy for expanding access to financial services, and set the laws and regulations for mobile banking as a tool to control digital finance.” UNCDF supported BoL in its regulatory efforts by assisting BoL staff to attend different workshops and go on exposure visits to Cambodia as well as providing international regulatory experts to advise on the development of appropriate regulations. In 2014, two members of the BoL regulatory committee also travelled to the United Republic of Tanzania to meet with staff of the country’s central bank, Bank of Tanzania, to understand its role and the framework that had helped that country develop its own successful DFS ecosystem.
In the intervening period, BCEL became attracted to DFS and started developing its own vision to promote a suitable service for the Lao context. BCEL worked concurrently with a UNCDF-supported consultancy to develop a five-year business case that established a target of serving 150,000 customers annually through a network of 410 agents. “The inspiration to create this project began when we received the statistics on Lao people’s access to financial resources and the banking system in the country,” said Nanthalath Keopaseuth, Deputy Director at BCEL (the service provider for BCOME). “We like to bring the technology into the system to reduce costs and at the same time to offer the communities accessibility to funding resources. That is how it made BCEL to be interested, to carry out studies and have a hands-on approach to the project,” stressed of Mr. Keopaseuth.
BCEL is one of the oldest and largest banks in Lao PDR in terms of retail customers, branches and ATMs. In the last few years, BCEL has successfully rolled out i-Banking—a corporate Internet-banking platform—within its organization as well as a popular, highly functional mobile banking application for individual clients called BCEL One. Introducing branchless banking was a wholly new concept for BCEL and for the country that required the bank to think outside the box and to be ready to manage a range of complex challenges like merging traditional retail banking with branchless banking and digital finance. Addressing these challenges meant considering not only the technology required but the manpower and knowledge needed—as well as the capital required. Most significantly, BCEL had to change its views of the customer.
Typically, a bank builds branches and customers go to the branches. In the new world of branchless banking, the bank is in the position of going to the customer, bringing them much needed services. The concept of banking at the customer’s doorstep is highly appealing to customers, but at the same time, it can represent some level of risk for the bank.
The BCOME service relies on agents, so BCEL needed to build a relationship of trust with them and in turn inculcate trust in the agent within the community and by individual customers. To create a meaningful value proposition for BCOME agents, BCEL invested significantly in training its agents, conducting substantial marketing campaigns with agents, and teaching agents how to proactively promote the service and serve customers.
To create a clearer picture of the service, UNCDF and MAFIPP brought the BCOME development team to visit countries that have similar market situations. The team exchanged lessons learned and brought back know-how to develop a system that was well-suited to the bank, its customers and the Lao context.
After operating for over a year, the BCEL branchless banking service has seen positive signs of development. By the end of 2016, there were 128 agents working in all provinces nationwide.
“What surprised me is the result of the products that BCEL has developed, and it has been introduced to communities. The service has been well accepted in society and the product has been widely used by customers, and the number of the agents has increased,” reported Sengchanh Manivanh, BCOME Coordinator.
The success of the BCOME project is a result of the hard work of the BCEL team—and that team clearly includes the agents. As trusted leaders in their communities, they have become the face of banking for many people and are educating them about financial services. People are understanding the services and realizing that banking is not something incompatible with them. With the creativeness of BCEL to build its business model around the circumstances of the country and with the help of external organizations, BCOME is now a reality.
This is the third blog post of a series about the dawn of digital financial services in Lao PDR. Read also "Community development through digital finance in Lao PDR" and "Agents—The revolution on the ground in Lao PDR" .
June 2017. Copyright © UN Capital Development Fund. All rights reserved.
The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.
Zoona recognized as the most creative DFS provider in Zambia
Every year since 2013, the Bank of Zambia (BoZ), in collaboration with other key stakeholders in the financial services ecosystem, has organized the Financial Literacy Week (FLW) campaign to encourage more Zambians to take control of their financial lives. In 2017, the theme for FLW was “Know and plan your finances for a better life”. In the month following the week-long campaign, the Governor’s Financial Literacy Awards ceremony was held to recognize the efforts of financial service providers that actively contributed to the success of the campaign.
This year for the first time, the Awards featured the category Most Creative Digital Financial Services (DFS) Provider for which providers were judged by BoZ based on the level of innovation, simplicity and availability of their DFS product or service in the market in the market.
Finally, the day of the Awards arrived and hundreds of individuals representing over 50 financial service providers crowded into a ballroom at the Intercontinental Hotel in Lusaka, eager to find out which of their peers would walk away that night with a coveted award. Nervous anticipation filled the room as the representative from BoZ announced the DFS category and the entrants, Airtel (for their MasterCard for mobile money wallet), FNB (for their mobile banking e-wallet), MTN (for their Kongola loan product), Zoona (for their Sunga Wallet) and Spargris Zambia (Kazang) – Azuri (for their Pay-As-You-Go Solar option). And then the winner was announced…it was Zoona!
Launched in February 2017 by Zoona, Sunga is an e-wallet product that enables customers to keep money safe at no charge. In this way, customers are empowered to reach their savings goals, for example, for school fees, building a house or expanding a business. With over 35,000 users in a relatively short time, Sunga is poised to revolutionize financial inclusion in Zambia. A key advantage of a Sunga account over similar products on the market is that it is easy to set up and no paperwork is required, there is no minimum balance necessary- customers can open an account with less than USD 1 and there are no monthly fees associated with maintaining the account.
Having worked with Zoona as they were preparing to launch Sunga, MM4P was happy to see the efforts of this entrepreneurial and innovative organization recognized publicly. Zoona is one of several DFS providers that have contributed to moving the market forward in Zambia. Zoona Managing Director, Robert Keating, received the award on behalf of Zoona saying “you can expect even greater things from Zoona in 2017”. DFS in Zambia is at a tipping point and the market is growing and expanding. We are excited to see not just what the future has in store for Zoona but also for DFS in Zambia in the coming years.
MM4P is a joint program of UNCDF and FSDZ.
Unlocking DFS innovation in Uganda: The role of Open APIs
Mobile financial services in Uganda have come a long way and continue to hold huge potential for enabling access to financial and none-financial services for a large share of the population. Mobile money has grown from being a just money remittance service to become a platform that enables the delivery of many more innovative products and services.
Mwende Vincent, a coffee farmer in Kapchorwa was introduced to PAYG solar as part of UNCDF’s work in digitising agro-value chains. Vincent was able to have light in his home because he could pay for it in small instalments over time, making it affordable to acquire the home solar system. Delivering such a service is made possible by integrating the services of a solar company and a telecom company (mobile money). The integration is technically enabled by an application programming interface (API).
Many other services we enjoy today are enabled by APIs. A farmer accessing weather information by SMS, a market vendor receiving a micro loan or saving on mobile, being able to order for a cab (Uber) or a ‘boda-boda’ (Safeboda) in Kampala, are all enabled by APIs.
An API is what allows software programmes to talk to one another to enable the delivery of a given service. APIs connect third-parties (developers, fintechs etc.) to established payments platforms (of for example telecoms and banks), enabling the delivery of innovative services that address needs of many customers.
Recently, the UNCDF MM4P programme in Uganda was involved in technology innovation contests for young developers (DataHack4FI and MTN App Challenge) in Kampala. The innovative solutions presented were very encouraging about the potential for digital innovation to provide solutions to some of the pressing community challenges in agriculture, health, financial services, transport, and education. When asked teams that stood out what was holding them from taking their solutions to market, they mentioned access to the necessary APIs from payment service providers (PSPs).
By lowering the barriers to access key APIs, PSPs open up the innovation space for external developer talent to propose new solutions to the market. The benefits of this are immense for stakeholders: more solutions, more usage, more revenue.
Whereas the concept of Open APIs has been around for a while, in East Africa and Uganda in particular, it remains quite a new concept and business model for industry players.
Tomorrow 27th June 2017, MM4P Uganda is convening digital financial services (DFS) industry players in the country to discuss how to leverage Open APIs to unlock DFS innovation for the benefit of everyone. Attending will be top executives and decision makers from telecoms, banks, fintechs, regulators, donors and NGOs in the DFS space. The event will feature international and local key note speakers and panellists, experts in DFS and Open APIs.
Together, industry players will explore the concept of Open APIs and the benefits it holds for the DFS sector in Uganda. We will hear from the fintech community about their experience and challenges when dealing with DFS providers and the opportunities they see in open APIs. We will also hear from key DFS providers on the challenges they foresee in the progression towards openness in DFS. Industry players will also discuss what it takes to get started, from the business considerations, to the operational and technology considerations.
With more awareness and a shared understanding among industry players about the subject, MM4P will continue to engage with the sector to see traction on the path towards open APIs in Uganda.
To join the event, register through this link.
Community development through digital finance in Lao PDR
There is an old Lao saying, ‘If you don’t go out of the village, you will not see the land far away; if you don’t go study, you will not have any knowledge.’ It is still commonly used in the Lao People's Democratic Republic (Lao PDR)—a country with a surge in demand for education, with 78% of youth enrolled in lower secondary education while 56% of adults have primary education or less (see the figure for more detail). Sending children away from home for higher education is considered a requirement for parents to build their children’s future. So, there is little surprise that sending money to support children’s education has become a primary use case for the first branchless banking service in Lao PDR.
Banque pour le Commerce Extérieur Lao Public (BCEL), one of the country’s leading banks, developed the branchless banking service, which is called BCEL Community Money Express (BCOME). It is entirely new; no other bank offers this kind of service in Lao PDR. Supported by United Nations Capital Development Fund (UNCDF) and its national implementation programme Making Access to Finance More Inclusive for Poor People (MAFIPP) and PHB Development, BCEL launched BCOME
in June 2015 with a small pilot of only 11 agents. Today, with more than 125 agents in every province of the country, BCOME has more than doubled the size of the BCEL branch and service unit network. Villagers perceive BCOME as convenient, quick, safe and friendly, the latter because it is offered by someone they know in their community—a neighbour, relative or acquaintance in town whom they can trust and with whom they can comfortably share their needs.
Agriculture is the backbone of the Lao economy, but farmers are dispersed, living in remote, rural areas throughout the country. Travelling to a district town can be an undue burden for them, and accessing formal financial and banking services is even more difficult both because of the distance to a bank branch and because of insufficient income and low financial literacy. These challenges have understandably led farmers to depend on cash. For them, sending money to family members in other provinces by a bus driver is a method often used, but it is time consuming and sometimes risky.
Sompong Veosy, a farmer from Souvannaphoum Village in Paklai District, grows rice and raises buffalo and cows for his income. He normally spends all day looking after the rice paddy and livestock, only leaving his farm after sunset. Taking time from his work to travel to town to complete a transaction is exhausting. But, since a BCOME agency in his village opened, his outlook has changed. “In the past, I had to travel a long way to send money to my children for their education, but now it is easy, fast and convenient. I am very, very happy now. It is perfect,“ he explained with a happy smile.
The BCOME service has drawn this new customer segment to BCEL, which has been surprised to learn just how much money from rural farming communities flows throughout the country. Through the service, BCEL can stay close to these new customers and learn about their requirements.
Thong Khoun, a villager from Thakokhai in Pakngum District, regularly sends money through BCOME to her son who is studying in the southern part of the country. Sometimes, though, it is the opposite: she has an urgent expense of her own, and her son sends money back to her. “My son asked me to open a bank account so that he can send money to me in the future. So, I wish that BCOME can open the account here. It is convenient because it is close to our house,” Ms. Khoun explained. “I used to ask the agent if I can open my account with her. I want to save money, and I also want to have an ATM card. I feel that I don’t want to carry cash anymore. If I have a card, wherever I go I can withdraw money from the machine—that is what I want now. If we can open the account with BCOME, it would be wonderful,” she added.
BCOME is not only a solution for farmers to support their children’s education, it also allows them to have more opportunities to trade their products more broadly—helping them to break free of poverty. It helps farmers increase their income by providing a quick and easy payment system. BCOME responds directly to the needs of communities with a service that old-fashioned banking cannot provide. Siavone Phomavong, an agent in the capital city of Vientiane, shared an example: “I have a customer who sells organic vegetables. He sends money to buy them from farmers in Pakse, Champasak Province.” The BCOME service assists the growth of agribusinesses, as the money from buyers in the main cities flows out to farmers in the provinces, where the farmers can save and re-invest for better techniques and more productivity.
The access afforded by branchless banking does not only support education of farmers’ children and their agribusiness, it is also suited to many different types of business requirements, such as paying for insurance and making monthly payments for the purchase a car. Early adopters who have experienced the efficiency of the first branchless banking service in Lao PDR have greater understanding of the new system and value the system more. It benefits them in many ways, relieving stress in their lives and reducing the time and the cost of transactions, which in turn gives them a chance to save and thereby prepares them to take a first step out of the poverty trap.
In the future, BCOME will continue to grow with new product and service offerings and to play an important role in accelerating the growth of all kinds of businesses. The convenience and accessibility can be applied to any customer segment, from low-income populations who deal in small transaction amounts to large organizations that can network with people in any isolated region. These advancements will contribute to a greater number of people improving their livelihood by using a low-cost, easy and friendly system, which will drive the economy of the household and in turn the communities that form the core of the country’s wealth.
This is the second blog post of a series about the dawn of digital financial services in Lao PDR. Read also "Agents—The revolution on the ground in Lao PDR" for an agent's perspective.
June 2017. Copyright © UN Capital Development Fund. All rights reserved.
The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.
 Lao People’s Democratic Republic, Ministry of Education and Sports, Education and Sports Sector Development Plan (2016–2020) (Vientiane, December 2015).
Going digital, or stick to cash?
“Sometimes I am forced to travel with tens of millions of shillings in my pocket and I fear for my life. Someday, something will happen”, says James Odega, a coffee trader in Eastern Uganda. James is one of hundreds of coffee traders who buy coffee from many of smallholder farmers around the Mount Elgon area and sell it to Kyagalanyi Coffee Limited (KCL) in Mbale, Uganda. After being paid for the coffee he has bought from farmers, James has to travel back to his village. This trip takes him around two hours using public transport or a ‘boda-boda’ (a motorbike taxi), often with over UGX 3 million (over USD 1,000) in his pocket.
In addition to buying from traders in Mbale, KCL operates six coffee collection stations in remote areas, where undried coffee is purchased directly from farmers in surrounding villages. Like James, KCL staff members are faced with a risk when they make one to three hour trips to Mbale multiple times every week to pick up over UGX 35 million (over USD 10,000) to pay farmers. Finally, the farmers themselves have to keep the cash safe, as this will get them through to the next season.
Instead of being paid in cash, KCL with assistance from UNCDF’s MM4P programme now offers farmers and traders the option of receiving mobile money instead. In an effort to alleviate the risks he is faced with James would like to use mobile money to pay his farmers. “I would even pay for their withdrawal fees" he says, " But I don’t think the farmers would accept.” When asked why, James says he has discussed it with many coffee farmers and most of them simply say no. “I don’t think they understand. They don’t know how it works.”
However, according to Bram Peters, Country Technical Specialist in digital finance for UNCDF Uganda, the reasons many farmers are not accepting mobile money may run deeper than simply a lack of understanding. “We have run a series of sensitization efforts and most farmers already use mobile money to send and receive remittances. The people we work with in our projects know very well what is best for them. Most of them have limited financial resources, so smallholder farmers are already used to making cost-sensitive decisions on what makes more sense for them; being paid in cash or via mobile money.”
In collaboration with CGAP, UNCDF engaged with PHB Development to take a closer look at whether being paid digitally makes economic sense for each of the stakeholders in the coffee value chain. Or in other words, is there a value proposition for each player to move from cash to digital payments?
PHB Development introduced an innovative approach to gain a deep understanding of the value propositions different players in the coffee value chain are faced with. “PHB has developed a method called Value Proposition Mapping (VPM), which borrows from traditional activity-based costing. This is a popular methodology used in management accounting, to give insight into costs associated with operational activities related to paying and receiving funds", says Ciprian Panturu, PHB Development Associate who recently joined the UNCDF MM4P programme in Uganda.
PHB Development researchers first interviewed farmers and traders that have links with KCL and mapped their market behaviour on a month-on-month basis over the course of a year. They looked at virtually all their sales and purchases, where the transactions took place and the associated transport and time costs. They then incorporated the value of risk the interviewees place on travelling with cash.
“The data gathered is used to calculate a per-activity and per-transaction average cost of cash, which allows for a comparison to what the cost of using mobile money instead would be. This is a very efficient way of comparing the cost of cash and the cost of digital payments for all players along the coffee value chain - a method which can easily be used in other agricultural value chain in Uganda in the future,” says Ciprian.
Data and information of the VPM are currently being analyzed and the first results are expected in the coming weeks, just in time for the next coffee harvest season. A momentum where the introduction of digital payments can be of real value. Depending on the results, UNCDF and CGAP are looking to use this method in other agricultural value chains in Uganda, such as tea, dairy and maize.
By Páll Kvaran, Research Consultant at PHB Development
Moving further down the digital route
The West African Economic and Monetary Union (WAEMU) has a regulatory framework that enables microfinance institutions, as well as non-banking actors such as mobile network operators and money transfer specialists, to provide decentralized financial services to individuals and businesses. The regulatory authority, the Central Bank of West African States (BCEAO, Banque Centrale des États de l'Afrique de l'Ouest), is in favour of introducing new cashless and electronic payment methods and now includes increasing the banking service penetration rate and protecting digital finance users among its priorities.
One objective of the MM4P programme is to help develop the branchless banking ecosystem in countries where it is already established. In West Africa, the programme is helping to determine the regulatory conditions that will enable a large number of actors to offer appropriate services in the most remote areas. The aim is to better address customers’ needs while improving the security of their operations.
In order to enable microfinance institutions to gain a better understanding of the stages involved in rolling out digital finance solutions and the possible options available to them within the current regulatory framework, MM4P organized a joint regional workshop on 8 May 2017 in the Radisson Blu hotel in Dakar with Consultative Group to Assist the Poor (CGAP), International Finance Corporation (IFC) and Microsave. The workshop brought together microfinance institutions from seven countries of the WAEMU zone (Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal and Togo), all of which already engage in digital finance or wish to do so, along with representatives of the regulators.
The participants had an opportunity to discuss the content of a guide produced by CGAP, ‘Branchless Banking and Digital Finance for Microfinance Institutions in the WAEMU Zone.’ This guide builds on the approach of a feasibility study conducted for a microfinance institution in Burkina Faso (RCPB, Réseau des Caisses Populaires du Burkina), when it introduced a digital finance solution to its operations.
The second panel, facilitated by MM4P, enabled issues such as electronic signatures, digital service subscriptions and interest rate caps to be considered—all essential issues for institutions embarking on their digital journey.
According to the regulation in Senegal, electronic signatures are officially recognised by all actors. Furthermore, ADIE (Agence De l'Informatique de l'Etat, the state agency for information technology) is also working on acceptance mechanisms. BCEAO remains committed to the expansion of digital financial services. However, participants raised certain challenges to their engagement in the digitization process. The need to open up the unstructured supplementary service data (USSD) channel to all actors was noted, as well as the importance of cooperation between the regulators to level the playing field between telecommunication and financial actors. Digital credit and savings services were also discussed, particularly aspects related to the appropriate pricing of such services, which can only emerge through multi-party partnerships between financial institutions, mobile network operators, e-money issuers and fintechs specialized in credit scoring. The context of the WAEMU zone, with interest rates capped at 24 percent a year for microfinance institutions and 15 percent a year for banks, limits the profitability of the mobile micro credit and savings schemes.
Good prospects are nonetheless emerging with the commitment by BCEAO to promote financial innovations in the regional financial inclusion strategy now being implemented.
In order to obtain a clearer overview of the challenges and impact of decentralized financial services, the participants listened to the experience of the Commercial Bank of Africa in Kenya, which has successfully launched the M-Shwari, M-Pawa and MoKash products respectively in Kenya, United Republic of Tanzania and Uganda respectively. Via videoconference, Andrew Mwithiga, Product Development Manager at the Commercial Bank of Africa, presented the three products, all of which offer savings and/or credit services, along with the regulatory context in which they are being implemented, the different stages in the product design and the various challenges encountered. These very successful products have enabled the Commercial Bank of Africa to move from sixth to first place among Kenyan banks in terms of client portfolio.
The aim of this workshop was to create a dynamic within the WAEMU financial ecosystem in which the regulators promote initiatives that are implemented by private sector actors, with the technical assistance of MM4P. MM4P also shared with the audience its plan to launch a request for application for the selection of financial and mobile partners to support the emergence of a digital credit and savings products adapted to the needs of clients in Senegal.
Objective achieved! At the end of the day, the participants went home with a clear vision of the challenges they face on their journey in digital finance route the opportunities available to them.
Pour lire en français cliquez ici.