Mobile Money for the Poor (MM4P) Uganda Technical Specialist Amani M’Bale maintains, “Since government and private sector stakeholders have engaged, we have made progress in expanding financial inclusion to those in need.”
Ms. M’Bale is stepping down from the United Nations Capital Development Fund (UNCDF) after six years of working to bring financial inclusion to underserved populations in least developed countries in Africa. MM4P spoke with Ms. M’Bale to gather insights about her work on the ground in the MM4P countries of Liberia and Uganda.
MM4P: Ms. M’Bale, how do you remember your time in Liberia?
Amani M’Bale: I assumed the position of UNCDF Liberia Chief Technical Advisor in 2013 to expand our work in financial inclusion. One of the highlights of my time was working with the Central Bank of Liberia to modernize the national mobile money regulations. The Central Bank is staffed with visionary leaders who remain close colleagues today. The new mobile money regulations were approved soon after my departure in April 2014, enabling digital financial service (DFS) provision to rural areas; this advance was pivotal and established the presence of MM4P in Liberia. Unfortunately, by mid-2014, the Ebola virus emerged and devastated communities in Liberia and neighbouring West African countries. My assignment had come to an end in Liberia, but an opportunity to continue my work with MM4P materialized in Uganda.
MM4P: How was your work different in Uganda?
Amani M’Bale: Uganda presented a different and broader context in which to engage. My role at MM4P Uganda entailed not only working with regulators but also concerted effort working with private sector actors for the delivery of financial services to underserved communities. With the focus of MM4P Uganda on service provision, there was a great deal of attention on designing and testing products and services with clients; thus, our field presence was greater. The Ugandan context provided an excellent platform for the team and me to engage in DFS ecosystem development, an approach which promotes integrated solutions to the delivery of financial services—not simply aiming for client access but designing for client usage. When clients use services, it demonstrates that those services add value; financial services designed with MM4P support are designed to encourage access to a broad suite of financial products and services, which provide opportunity for saving, investing, lending, sending/receiving remittances, etc. that enable livelihood and household economic development.
Another new aspect of work in Uganda was collaborating with a specialized team. I had the great privilege of working with local experts in designing the MM4P Uganda investment programme. Isaac Holly Ogwal, MM4P Uganda DFS Expert, and I rolled up our sleeves and cooperated with market stakeholders, including mobile network operators, banks and payment service providers, amongst others, to research how new solutions could support digital financial inclusion for the clients the programme sought to serve. The result of our efforts was an approach through which MM4P Uganda reaches marginalized communities via bulk payment initiatives, which are complemented with DFS such as saving and lending products. This body of work was made possible through fruitful collaboration with MM4P programme partners Kyagalanyi Coffee Ltd, Mobile Telephone Networks (MTN) Uganda, Fenix International, Yo! Uganda and Mukwano Industries, amongst others.
From a policy perspective, the programme worked to advocate for more awareness of digital financial inclusion amongst regulators, including the Bank of Uganda, the Ministry of Finance and the Uganda Communications Commission. This work involved research, diagnostic efforts to assess the state of digitization in the national payments ecosystem (Better Than Cash Alliance Payments Diagnostic) and the regulatory instrument impact on mobile money (Regulatory Impact Assessment), trainings, and exchange visits with advanced regulatory environments.
MM4P: What did MM4P Uganda research show that demonstrated that working in agricultural value chains was sound?
Amani M’Bale: Our research clearly demonstrated that the most prominent agricultural value chains are well structured and heavily dependent on cash, which presents great opportunity to digitize payments to farmers, traders, suppliers and processors. The research showed that one of the major issues of a cash-laden payments system is security and fraud: agro value chain actors, including farmers, traders and bulk payer employees, are exposed to theft and fraud due to cash in transit. Our job was to identify the bulk payers who were interested in testing digital payments and to encourage the provision of DFS.
MM4P: What is the potential scale of the bulk payment work MM4P supports?
Amani M’Bale: It’s significant. In Uganda, approximately 85 percent of the total population is based in rural areas; the rural economy is the bedrock of the national economy. Thus, the work of MM4P to modernize payments systems and provide financial services has the potential to affect millions of people. Specifically, our research revealed that the coffee value chain employs 2.5 million people, while the tea value chain employs 0.2 million and the dairy value chain employs 1.2 million. Youth are heavily employed in these value chains, as are women. Likewise, by building a DFS ecosystem, the programme supports employment of agents (predominately mobile money agents, currently) who serve as cash-in/cash-out points and provide critical customer support to DFS users.
MM4P: You mentioned working with Kyagalanyi Coffee Ltd, a coffee exporter. Could you briefly explain the work of MM4P in the coffee value chain?
Amani M’Bale: With the financial support of the Bill & Melinda Gates Foundation, MM4P began working in 2015 with several companies to digitize a coffee value chain. The coffee bulk payer with which we partner is Kyagalanyi Coffee Ltd (KCL), which aims to digitize payments to over 10,000 of its farmers. KCL is the third largest coffee exporter in Uganda, and it seeks to complement its sustainability initiatives with financial inclusion for farmers; KCL strives to improve farmer livelihoods. MM4P worked with KCL to improve its financial systems with technological improvements (engineered by Yo! Uganda) so that its systems can capture and engage farmer payments using mobile money or cash, effectively enabling digital payments.
We also partnered with MTN Uganda to provide customized mobile money services to KCL farmers. Initially, we worked with MTN to improve network coverage in the mountainous target geography by installing a mobile base transceiver station, which MM4P guaranteed against losses for the first year. Subsequently, in 2016, MTN introduced the first mobile financial product, MoKash, to the Ugandan market; this product is likewise being offered to KCL farmers. With partner Fenix International, the programme designed a financial product (lease to own) to facilitate cell phone and solar solution ownership amongst farmers, especially women.
MM4P: Did you have to disburse the guarantee fund to MTN Uganda?
Amani M’Bale: In spite of very low initial expectations, once installed, the MTN mobile base transceiver station registered profits in the first month. In fact, the tower never experienced any losses, instead, it over performs on voice and data to this day.
The project is a success and caught the attention of other organizations as a case to study. It was the first of its kind, and MM4P is now piloting similar initiatives in other value chains across Uganda.
MM4P: What was the secret?
Amani M’Bale: There is no secret! If stakeholders work together, we can make progress; and we don’t let failure stop us—we allow it to teach us.
For example, designing this project resulted in a number of operating principles related to bulk payments. Initially, we thought bulk payment initiatives should target farmers first. However, we learned that instead it’s better to target bulk payer employees first, in order to allow for product and service correction. Thus, the programme’s first clients were bulk payer employees who interface with farmers directly because, if we could get the service delivery right with them, they would sell the service and teach farmers how to use the digital payment tools and financial services. This is just one example of the lessons we learned.
MM4P: Initially you mentioned the programme advocated for awareness of digital financial inclusion within the Government. As a UN staff member, how has being a neutral broker contributed to raising awareness and generating dialogue?
Amani M’Bale: The UN is indeed a neutral broker, which is an important and privileged status. As a UN staff member promoting the work of MM4P, I was able to engage with regulators, such as the Bank of Uganda and the Ministry of Finance, without market interests or bias due to my UN affiliation. Our engagement efforts were positive and thus our relationship is strong.
For example, MM4P is supportive of new regulatory guidelines on bank agency, upcoming policy for payment service systems and providers, and the first National Financial Inclusion Strategy. These policy frameworks and instruments bring clarity to the market and, I believe, advance digital financial inclusion in Uganda.
MM4P: New regulations will open new windows of opportunity. What are some remaining constraints or challenges?
- Although the UN has influence and no control, with donor funding the UN exercises powerful levers. The UN has no control over regulations or business practices; rather, the UN exerts influence, provides convening power and advocates for marginalized communities. For example, due to flexible funding from the Bill & Melinda Gates Foundation, UNCDF Uganda was able to co-invest in rural low-income areas, deemed too risky for the private sector to invest in alone; this approach is a powerful form of influence and advocacy and an example of why donors should continue to invest in institutions like UNCDF.
- The Ugandan financial services industry needs to offer more diversity of products customized to low-income earners. We need more financial product offerings, including DFS, for low-income and rural Ugandans. Considering the economic impact of the agricultural sector, financial products that suit farmer and trader cash flows and consumption cycles are required to support livelihood development and ultimately economic growth.
- New entrants in the financial sector need financial literacy. Today, Ugandans can access a saving and lending product via the MTN MoKash product, which MM4P supported with market research. This product represents a critical advancement in the DFS sector. Notwithstanding, many Ugandans have low financial and technological literacy; essentially, clients’ understanding of how to use financial products is limited, much less how to use digital financial products. For example, the level of end-user knowledge on how to manipulate a phone, and the USSD codes contained therein, is low. To accelerate usage, both of these knowledge gaps need to be closed.
MM4P: To conclude, what lessons can you share?
Amani M’Bale: There are two key lessons that were validated in Uganda:
- Remember that relationships are paramount. Relationships lead to partnerships, which are required not only to launch projects but to manage difficulties and failures during implementation—failure is simply an opportunity to improve performance. If we didn’t have strong relationships with MTN, KCL and Yo! Uganda throughout the project, we would not have arrived at the lessons learned and progress of the coffee value chain project we have today. It was through the development of true partnership that we were able to sustainably problem solve and begin to reach end users.
- Understand partner incentives and motivations to build strong projects. Partners are not the same and are not looking for the same outcomes when they engage in a project. It is key to understand each partner’s motivation so as to design the process accordingly. When each partner derives value from the project, all partners engage successfully and actively seek to support and strengthen outcomes.
Uganda Annual Monitor 2015: http://uncdf.org/sites/default/files/Documents/uganda_country_monitor.pdf
‘Customer profiles to improve reach of MTN mobile savings and loan product in rural Uganda’ article: http://uncdf.org/en/customer-profiles-improve-reach-mtn-mobile-savings-and-loan-product-rural-uganda
‘MTN MoKash: Savings and lending for the last mile’ article: http://uncdf.org/en/mtn-mokash-savings-and-lending-last-mile
‘Building branchless and mobile financial services ecosystems in the last mile’ article: http://uncdf.org/en/building-branchless-and-mobile-financial-services-ecosystems-last-mile
September 2016. Copyright © UNCDF. All rights reserved.
The views expressed in this publication are those of the author(s) and do not necessarily represent the views of UNCDF, the United Nations or any of its affiliated organizations or its Member States.