Digital Finance

Digital Finance

A Digital Dream Coming True in Nepal

Digital Finance

A Digital Dream Coming True in Nepal

How going cash-less is making life easier
September 15 , 2017

Subhadra Dahal, mother, entrepreneur and mobile money beneficiary.

Kathmandu, NEPAL - 

“My day starts at 5 am. I wake up, wash and then get on with my house chores. I have a 10 year old son who I get ready and then drop off to school. Around 10 am I open my store. We live in a small community with about 150 people, our village is far from developed but we have access to television, electricity (about 5 hours a day), fresh drinking water from our community reserve and internet. It’s not much but we are happy here.” Subhadra Dahal is a 33-year-old women from a small village in Nepal, 35 km away from Kathmandu. I met her as we were in Panauti shooting a short documentary. Subhadra lives alone in a two-flour house with her son, her husband has been in Qatar for the past 6 year, common practice for men in Nepal to travel abroad for employment.

She is the owner of a small store where I stopped to buy a bottle of water. I couldn’t help but notice her using a ‘smartphone’. With a smile she said it was a gift sent by her husband. A small courtesy chat turned into an hour long talk when she mentioned that she was just about to pay her electricity bill with an App on her phone. She went on to explain that it enabled her to do everything from paying her utility bills, to top-up to checking her accounts online. The name of the App: IME Pay.

The United Nations Capital Development Fund (UNCDF) programme MM4P has been providing technical assistance to IME Ltd to develop their digital finance project. Best foreign practices have been brought in to create an enabling environment for IME team to develop their mobile wallet system.  The mobile money products, namely the mobile wallet is offered through the existing 7000 remittance agent network of IME Ltd.  Reports show that 23 million people in Nepal are registered mobile phone users. The growing rates of internet banking services shows Nepalese people’s genuine interest in moving away from cash to a more cash-less arrangement.

In 2015, the department for payments systems of the central bank of Nepal, released its by-laws on payment and settlements. Since then, IME together with many other institutions that did not belong to the banking sector applied for a license. On June 21st 2017, IME became the first non-bank payment service provider to receive this license for operations in Nepal. This is an excellent news for people like Subhadra who can now reap the benefits of mobile money. “I don’t have to wait for hours in line to pay my utility bills now as I did over a year ago. I remember my customers complained that I closed my store on peak business hours and that was very inconvenient for them. I have also lost many customers who thought I didn’t take my job seriously. Now, those days are behind me and I can truly focus on my work and family.” says Subhadra with a bright smile.

Subhadra’s case is not an exception but a norm in context of sub-rural regions of Nepal. The majority of people who do not have access to personal computers or laptops have access to smartphones, which are their most valued asset. My encounter with Subhadra reminded me of an old saying, “A lack of knowledge creates fear. Seeking knowledge creates courage.” She is a true example of a new generation Nepalese women. Having to take care of her family, she has broken the age-old dogma of women being confined to kitchens and house chores. She has set an example that with the right knowledge and access to digital finance she can very well take on new endeavors to sustain the economic development of her family.

By Aliska Bajracharya, KM Consultant in Nepal

For more information, please contact
Aliska Bajracharya
KM Consultant, Nepal
Additional Information
Aliska Bajracharya
KM Consultant, Nepal

Making mobile money more attractive to farmers

Digital Finance

Making mobile money more attractive to farmers

Value Proposition Mapping for digital payments in Uganda’s coffee value chain
July 12 , 2017

Closed mobile money agent rural Uganda.

Kampala, UGANDA - 

In 2015, UNCDF MM4P partnered with Kyagalanyi Coffee Ltd (KCL), a leading coffee exporter in Uganda, to digitize the payments to its 7,000 farmers around Mount Elgon. As part of this effort UNCDF MM4P, in collaboration with CGAP, contracted PHB Development to analyse the attractiveness of digital payments versus cash for stakeholders in the coffee value chain. For that purpose, PHB introduced a new approach that compares the cost of cash with the cost of digital payments for every transaction smallholder farmers and coffee traders engage in. PHB gives a name to this new approach Value Proposition Mapping (VPM), which is based on a methodology derived from accounting: Activity Based Costing.

Farmers and traders were interviewed to map their market behaviour, all their sales and purchases and where these took place. Next, for each transaction the associated costs were calculated.

Ciprian Panturu, Digital Financial Services Expert at UNCDF MM4P, explains: “If we look at payments from KCL to farmers at coffee collection points for example, the cost of cash for an average farmer is around UGX 27,000 per transaction. This includes the costs of transportation, time and the perceived risk of carrying cash back to the farm. If farmers are paid with mobile money, the cost would be reduced to around UGX 3,500 per transaction. Farmers would only have to pay for cash-out at a mobile money agent, something that is done frequently.” While this looks like a great value proposition at first sight, the situation is more complex.

“Farmers will still need to travel to the collection points even if they are paid with mobile money, simply because they need to supervise the weighing and grading of their coffee. And ensure they get the best price for their product. So, if farmers still have to travel, even when being paid digitally, the actual cost of cash is much lower, around UGX 3,500. Cash is also more versatile and the cost associated to the risk of carrying it, although acknowledged, remains theoretical.” says Ciprian.

“The analysis shows that farmers have a hard time spending the money on their mobile wallet. In some cases, they can pay school fees using mobile money or they use it to send remittances to family members, but those are limited use cases. It simply doesn’t make sense for them to pay for farm inputs or food with mobile money,” according to Ciprian. UNCDF and its partners in this project are using such insights to find ways to enhance the mobile money ecosystem. It is one thing to pay people digitally, it is another for these farmers to make their everyday payments digitally.

Nathan Were from CGAP thinks that the data collected during the VPM exercise is very valuable. “This information can be used as leverage to talk to MNOs [mobile network operators] about their current business models. Most MNOs are making profit from remittances cash-outs.” However, according to Nathan, “Mobile money can become an attractive alternative to cash, provided that merchant registration is made easier and accessible, and pricing is adjusted. When for example farmers are able to pay for their daily shopping with mobile money, digital payments can be perceived more positively, with tangible benefits for all users. Bringing a sense of security and access to financial services for people in rural Uganda, this is our ultimate goal”. 

The data collected is currently being used to design new business models with the leading MNOs in Uganda to unlock the potential for day-to-day use of digital payments beyond just remittances. 

By Páll Kvaran, Research Associate at PHB Development and Bram Peters, Technical Specialist at UNCDF MM4P in Uganda

For more information, please contact
Naomi de Groot
KM Consultant, Uganda
Additional Information
Naomi de Groot
KM Consultant, Uganda

Strengthening the capacity of Benin’s banks in digital finance

Digital Finance

Strengthening the capacity of Benin’s banks in digital finance

Press Release - for immediate release
June 08 , 2017

Participants attending two days training on digital finance in Benin

Cotonou, Benin - 

The UNCDF’s programme MM4P, organized two days of training for banks on June 7th and 8th, at the Benin Royal Hotel, as part of the implementation of its 2017 annual work plan.

The aim was to share with the banks of Benin tools and best practices which can help them initiate and develop digital finance products and services.

The banking sector in Benin is in a new dynamic with the multiplication of initiatives to develop alternative distribution channels to get closer to clients, and to target new customers using digital tools. These training workshops are timely, to guide Benin banks shifting effectively in this new dynamic.

"These two days of exchanges have proved the great interest of Benin’s banks on developing digital financial services. Participants paid great attention to the presentations done by guest speakers from Equity Bank of Kenya and Fidelity Bank of Ghana who shared their experiences in digital finance. "said Jamelino Akogbeto, Digital Finance Services Expert for MM4P in Benin.

This interest clearly displayed by the banks points to a real opportunity of collaboration, and as a next step, banks will submit their digital finance projects to MM4P evaluation. The most promising projects will benefit from MM4P technical assistance for implementation.

The MM4P Program was launched in Benin on 6 October 2015 to contribute to increase the active use of digital financial services up to 122 of the adult population of Benin by 2019.

 

About Mobile Money for the Poor (MM4P)

MM4P is a global programme funded by UNCDF, the Swedish International Development Cooperation Agency, the Australian Department of Foreign Affairs and Trade, the Bill & Melinda Gates Foundation and The MasterCard Foundation. The programme provides support to branchless and mobile financial services in a select group of Least Developed Countries to demonstrate how the correct mix of financial, technical and policy support can build a robust branchless and mobile financial services ecosystem that reaches low income people in these countries.

Please visit www.uncdf.org/mm4p or follow @MM4P1

About UNCDF

The United Nations Capital Development Fund (UNCDF) is the UN’s capital investment agency for the world’s 48 least developed countries. It creates new opportunities for poor people and their small businesses by increasing access to microfinance and investment capital. UNCDF programmes help to empower women and are designed to catalyze larger capital flows from the private sector, national governments and development partners, for maximum impact toward the Millennium Development Goals.

For more information, please visit www.uncdf.org, follow @UNCDF and UN Capital Development Fund, and subscribe for news.

About The MasterCard Foundation

The MasterCard Foundation is an independent, global organization based in Toronto, Canada, with approximately $9 billion in assets. Through collaboration with partner organizations in 46 countries, it is creating opportunities for all people to learn and prosper. The Foundation’s programs promote financial inclusion and advance youth learning, mostly in Africa. Established in 2006 through the generosity of MasterCard Worldwide when it became a public company, the Foundation is separate and independent from the company. Its policies, operations and funding decisions are determined by its own Foundation Board of Directors and President and CEO.

For more information, please visit www.mastercardfdn.org or follow @MCFoundation

These two days of exchanges have proved the great interest of Benin’s banks on developing digital financial services.

Jamelino Akogbeto
For more information, please contact
Bery Dieye KANDJI
Knowledge Manager Consultant MM4P Benin - Senegal
Jamelino AKOGBETO
Spécialiste en finance digitale MM4P Benin
+229 21 31 30 45/95 000 270
Additional Information
Bery Dieye KANDJI
Knowledge Manager Consultant MM4P Benin - Senegal

Nepal - Let’s talk about digitization

Digital Finance

Nepal - Let’s talk about digitization

Stakeholder consultation to move forward Social Security Allowance e-payments
July 04 , 2017

Sharing of the plan for an e-payments strategy in Nepal with stakeholders

Kathmandu, NEPAL - 

A consultative workshop held at Summit Hotel brought together stakeholders to discuss a proposed Social Security e-Payments Strategy in Nepal. The workshop served as a platform for stakeholders to share their input on the proposed strategy and implementation plan, before it is finalized and tabled for approval by the Government of Nepal. The workshop was organized by the Department of Civil Registration (DOCR) working under the Ministry of Federal Affairs and Local Development and in collaboration with the World Bank, United Nations Capital Development Fund (UNCDF), Mobile Money for the Poor and Local Governance and Community Development Programme Phase II.

The Government of Nepal has been providing social assistance to its citizens for more than 15 years. The annual number of beneficiaries now exceeds 2 million, and the types of social security allowances (SSAs) currently include a Senior Citizen Allowance, Single Woman Allowance, Disability Allowance, Endangered Ethnicity Allowance and Child Protection Grant. These grants are currently delivered manually to beneficiaries in cash through a complex institutional framework. The manual process to deliver SSA payments, which comes at an annual cost of Nr1.327 billion (~US$13 million),[1] presents some serious disadvantages, such as errors in recordkeeping due to ghost beneficiaries and system leakages.

DOCR plans to transition from manual to electronic payments, championing a vision for the country where efficient SSA distribution ensures the right amount to the right person at the right time.

The transition aligns with a government directive to transfer all SSA payments through bank accounts. In this context, the World Bank and UNCDF are providing technical assistance to DOCR to develop and implement an e-payments strategy.

The consultative workshop brought together representatives from the Ministry of Finance, Nepal Rastra Bank (the country’s central bank), Financial Comptroller General Office and financial institutions, among others. It kicked off with a presentation of a draft strategy agenda that touched upon the scope of the e-payments strategy in building institutional capacities and partnerships to create an ecosystem with the infrastructure to support widespread cashless payments to SSA beneficiaries and ultimately to work towards a less cash-dependent society. Stakeholders raised questions about banking interventions that are necessary for building such a system. They also identified banked and unbanked areas in each region of the country in order to map out potential hubs to support agents located in various branches, branchless banks and payment service providers.

The workshop came to an end with closing remarks from the DOCR Director General:
“Digitization of social security allowance[s] in Nepal is going to re-structure our payment system. The questions and issues raised by our stakeholders today will not go unnoticed; they will be further discussed in our Steering Committee meeting. I thank UNCDF for organizing this meeting and for their support and guidance towards this project.” With this, the hope of establishing an effective, efficient, transparent and centralized SSA payment mechanism has been set in motion.

 

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.

 

[1] Conversion rate: Nr1 = US$0.00968921 (Source: www.xe.com, 23 June 2017).

 

 

Digitization of social security allowance[s] in Nepal is going to re-structure our payment system

DOCR Director General
For more information, please contact
Aliska Bajracharya
Knowledge Management Consultant
Jaspreet Singh
Technical Specialist Digital Finance
Additional Information
Aliska Bajracharya
Knowledge Management Consultant

Mobile Money Grows in Benin

Digital Finance

Mobile Money Grows in Benin

Joy Kim, Financial Inclusion Analyst (MIX) and Sabine Mensah, Technical Specialist Digital Finance (UNCDF)
June 29 , 2017
Cotonou, 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.

For more information, please contact
Bery Kandji
KM Consultant, Senegal
Sabine Mensah
Regional Technical Specialist, Digital Finance
Additional Information
Bery Kandji
KM Consultant, Senegal

Mobile Money and Digital Financial Inclusion in Senegal

Digital Finance

Mobile Money and Digital Financial Inclusion in Senegal

Joy Kim, Financial Inclusion Analyst (MIX) and Sabine Mensah, Technical Specialist Digital Finance (UNCDF)
June 29 , 2017
Dakar, 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.

For more information, please contact
Bery Kandji
KM Consultant, Senegal
Sabine Mensah
Regional Technical Specialist, Digital Finance
Additional Information
Bery Kandji
KM Consultant, Senegal

Unlocking DFS innovation in Uganda: The role of Open APIs

Digital Finance

Unlocking DFS innovation in Uganda: The role of Open APIs

By Richard Ndahiro and Bram Peters, UNCDF MM4P in Uganda
June 26 , 2017
Kampala, UGANDA - 

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.

For more information, please contact
Naomi de Groot
KM Consultant, Uganda
Bram Peters
Technical Specialist, Digital Finance
Additional Information
Naomi de Groot
KM Consultant, Uganda

Moving further down the digital route

Digital Finance

Moving further down the digital route

June 01 , 2017

Images: pictures from the workshop

Dakar, SENEGAL - 

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.

This exchange was deepened during two discussion panels that followed. The first panel, facilitated by IFC, focused on key factors in the choice among the digital finance options that are currently being piloted by some of the institutions represented. Whether related on an agent banking option (used by Microcred in Senegal) or a mobile banking option in partnership with a mobile network operator (adopted by Advans in Côte d’Ivoire), discussions revealed that customers had rapidly taken up the products proposed by the microfinance institutions. One constraint that the participants noted, however, was that of defining a good business model.

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.

For more information, please contact
Bery Kandji
KM Consultant, Senegal
Sabine Mensah
Regional Technical Specialist, Digital Finance
Additional Information
Bery Kandji
KM Consultant, Senegal

Solutions from the front lines

Digital Finance

Solutions from the front lines

How co-creation with Airtel Money turned agents into problem solvers
May 26 , 2017
Lusaka, ZAMBIA - 

Agent networks, while expanding in Zambia, continue to face daily challenges with liquidity management. Airtel Money, one of the prominent mobile money operators in Zambia, is no exception to this issue. With the support of the United Nations Capital Development Fund’s Mobile Money For the Poor programme (UNCDF MM4P), Airtel Money set out to test novel float management solutions that would enable their agents to deal with their liquidity challenges.

Finding the right mountain to climb

MM4P and Airtel Money Zambia commissioned a team from 17 Triggers to map agent and customer journeys, digging deeper to uncover the reasons behind their behaviors and motivations around the usage of mobile money.

Airtel Money wanted to find how to increase uptake and usage of their service. While the customer and agent journeys lead the team to identify several major challenges to the uptake and usage of services, one of the consistent underlying issues was agent liquidity. The investigative trail with agents kept leading the research team back to their chief complaints about low customer traffic and difficulty accessing float when needed. MM4P and Airtel Money both agreed that liquidity was the right problem to focus on and decided to take the “inside-out” approach to problem solving, by involving those affected by the problem in the development and testing of proposed solutions. In a whirlwind of activity, they quickly set about working with the agents in Chipata to co-create their own solutions. These solutions were then tested by a different group of agents, also located in Chipata.

An agent who was about to give up

Billy is one of the agents who has been working with Airtel Money for some time. He is a tall, soft-spoken man in his early 30s with immaculately kept hair, who runs a dreadlocks salon in the heart of Kapata market. In his free time, he hosts a radio show at the local station. By the time the MM4P and 17 Triggers research team arrived at the doorstep of his salon, Billy was ready to quit being an Airtel Money agent.

“I started working as an agent two years ago. I liked the idea of being able to provide additional services to my customers and help them.”

But a series of changes to the overall distribution of float had left him high and dry, and disillusioned. His main problem, he told the research team, was that he was too busy to leave his shop to go to the bank and top up his balance when he was running low. When he runs out of float, it is not only bad for business but Billy feels that it reflects poorly on him with his current clientele. What was the point of continuing with Airtel Money, he wondered, if nothing had been done so far to solve his problems?

A simple question, and the freedom to ask it

A few days later Billy found himself shaking hands with a few of his fellow agents in Chipata, some of whom he was meeting for the first time. They stood facing a large blank wall, armed with colorful post-its, and a simple question: “what if…”.  What if they could solve the very problems that were plaguing them?

Gathered around the cabana hut, the agents were soon absorbed in their thoughts, forgetting the hot Zambian sun as they scribbled ideas down, hesitating but then gaining courage and speed as their facilitators reminded them that they were after quantity, not quality, and that every idea, however small or improbable, was welcome. Billy watched as the blank piece of manila paper stuck on the wall quickly filled up with ideas, transforming all the agents present from helpless complainers into “solutionists”.

Many of the ideas were fun and borderline ridiculous – that was intentional. Creativity does not flow from a tap, it often springs to life when reacting to other ideas, especially when those ideas feel outrageous.  Many of the ideas were simple, a lot were downright practical, and the agents found themselves nodding in satisfaction. Suddenly there was a strong possibility that their voices could be heard.  

Airtel Money was excited by what they saw emerge from the co-creation session with agents. They had had their share of solutions launched from spreadsheets and boardrooms, and they decided to explore the float solutions that their front liners were proposing by testing them out immediately.

Tips for effective ideation sessions

Participatory design is a process of involving the very people whom you are designing for in solving the problem at hand. By respecting and harnessing the experience of the people who have to regularly deal with the problem, design teams can uncover deeper and richer insights and solutions a lot faster.  When structured and properly executed, design sessions can help the target audience focus on what they want to achieve, and accelerate and refine ideas before implementing them.

If you are going to try this on your own projects, here are a few key points for making the most out of your ideation session:

  1. Reframe the problem carefully. A weak-sounding problem statement will leave people uninspired, but a too-bold problem statement may take people too far out of their comfort zone. Take the time to get to the core of the problem, and turn it into a worthy, workable challenge that invites solutions.
  2. Quantity first, over quality. Drawing ideas out of people who are not used to the format takes practice. The need for quantity helps participants push past the first obvious solutions to delve into the often unexplored fringes of the problem.
  3. Avoid judgment. To encourage ideas, hold back both praise and criticism, otherwise this creates an impression of what is expected, and participants will try to find ideas that fit into those boundaries. Accept all ideas, push for more, and save the judgement for later when it’s time to refine.

After the session, keep the momentum going by reviewing the generated ideas to find which are feasible, what aspects of other ideas can be used, and build on those. Ideation sessions with the front liners will help you get perspective on the issue that you could have missed, giving you a strong indication of how your target users think and what they will positively react to.

A brighter future for agents

Alfred is the territory sales manager for the Eastern province including Chipata. He watched with great interest as the float experiments unfolded. Having moved to the region three years earlier, his hard-working manner and friendly disposition had made him a popular and well-recognized figure in town.  Alfred knows each agent personally and feels responsible for each of them, so he was delighted to see their enthusiasm. He noted how small actions lead to big change, like how simple meetings such as this gave agents the opportunity to voice their suggestions and made them feel part of the business.

“They [the agents] have a voice on how they want things done. And even when we [Airtel] bring things onboard that they should adopt, they will be comfortable with it because they know that they were part and parcel of the design.  Unlike where something is just brought to them and they simply have to accept it.”

As MM4P and 17 Triggers prepared to wrap up the behavioral trial and report back to Airtel Money with their findings, they asked Billy what he thought about it all. In the space of a few weeks, they had watched him come back from the brink of quitting. Business was slowly picking up, and he was forming a new view of Airtel Money and his fellow agents. He was no longer as concerned about float - in fact he had his sights on something bigger, beyond his own needs.

“This [being an agent] is a good way of creating employment, if you look at how many young graduates are jobless and how many of them are sitting in bars drinking at this time because they do not have options. I would love to see Airtel tapping into these school leavers, help give them a chance.”

Other changes we observed might be small to those sitting in boardrooms but are incredibly rewarding and can change the intrinsic inspiration and motivation to become – and stay – an agent.

“When you look at it, we [the agents] should not be looking at each other as competitors, we should be looking at each other asyou knowone family.”  Billy smiled.  “My favorite part of all this is that I made some friends.”

So, co-creation. Then what?

Challenges will always crop up in any situation, and for MM4P, supporting their partners to identify the right problem to work on is a key first step for any project. Participatory design through ideating and co-creating with the very people who are affected can lead to creative and insight-driven solutions with better outcomes, and stronger buy-in and ownership.

What happens after ideation – testing the proposed solutions – is just as critical. Stay tuned for the next blog where we will continue to share lessons learned from the field.

By Uloma Ogba, UNCDF MM4P, and Kim Chaterjee, 17 Triggers

For more information, please contact
Uloma Ogba
Knowledge Management Consultant, UNCDF MM4P Zambia
Additional Information
Uloma Ogba
Knowledge Management Consultant, UNCDF MM4P Zambia

The tip of the (data) iceberg in Uganda

Digital Finance

The tip of the (data) iceberg in Uganda

May 04 , 2017

Data and analytics for financial inclusion in Uganda

Kampala, Uganda - 

Faith owns a small fruit-selling business in Uganda. Like most small business owners in Uganda, Faith started her enterprise with her own income and lacks access to finance to grow beyond the few fruit stalls she owns. She doesn’t keep full financial records and lives most of her life informally and in cash, but has started using mobile money to make payments to the truck driver that delivers the fruit to the market and to receive payments from her customers. Faith, like Gimei Roberts from our first blog post, lacks access to financial services that support and improve their livelihoods.

But can new ways of collecting and analysing data tell us more about the economic lives of Faith and Gimei? For example, what do the payments that Faith has made and received through mobile money tell us about her cash flow management? And what about information on what we don’t see – her informal financial engagements?

Could these insights be used to design financial services that improve the lives of Faith or Gimei? If so, what type of financial services? 

Last week, these were the questions put to the teams competing in the i2i country DataHack4FI Innovation Competition in Uganda hosted in partnership with UNCDF MM4P, FSDU and Laboremus. The competition ran from 31 March to 22 April 2017 and attracted over fifty participants, comprising of seventeen teams. The final ten teams squared off at the Innovation Village in Kampala, Uganda and presented their prototypes to a panel of judges with representatives from Airtel, Stanbic, FSDU, Interswitch and Cellulant.

Presented with data from the Uganda National Small Business Survey (2013) and the recently released L-IFT Financial Diaries survey in Uganda, (2017), teams were challenged to design welfare-enhancing financial services for low revenue businesses and vulnerable segments of adults with a focus on the potential of technology to enable financial institutions to serve them.

The datasets provided important information on the financial needs of these groups, with a specific focus on SMEs. For example, most SMEs need access to finance to grow their business, but have poor record keeping of transactional information, making it difficult for credit-scoring models to evaluate their repayment potential.

The winning team, #KillerAnalytics, put forward the solution SmartCredit, which is a business intelligence and analytics engine that processes SME data to create accurate business profiles to identify financing gaps and design tailored solutions for SMEs based on their specific business scenarios. The solution leverages on data from MYAccounts™ which is a low cost mobile based tool that allows SMEs to record their basic transactions (sales, expenses, purchases, inventory etc.) in a simple, easy to use way and generates full financial reports automatically.

The team was mentored by Peter Kawumi, Innovations Specialist at FSDU, who shares his thoughts on the winning team’s solution,

“My engagements with #Killer Analytics supported their understanding of the National Small Business Survey dataset, allowing them to improve their solution to address the challenges of tracking records, getting access to formal credit that SMEs in Uganda face. Our engagements with SMEs within the Kampala area has already resulted in two new customers for the team and interest in addressing the credit linkage from two commercial banks. I have high hopes for their solution as it is addressing a real problem that SMEs face in Uganda.”

#KillerAnalytics will be heading to Kigali, Rwanda to square off against the top teams from the other eight country competitions in the Grand finale of the DataHack4FI Innovation Competition for a chance to pitch to investors at Transform Africa. The DataHack4FI innovation competition brings together data enthusiasts and FSPs to crowdsource data-driven solutions to real-world challenges in attempts to showcase the use of data-driven decision-making by FSPs.

Richard Ndahiro, a Consultant at UNCDF MM4P who served as a judge during the initial pitches at the launch of the competition and later as a mentor, reflects on his DataHack4FI experience,

“The hackathon was a very exciting event. It proved that Uganda not only has potential developers, but more so, that they care a lot and are ready to invest their time in solving the daily livelihood challenges of the low-income household in Uganda. The solutions developed were based on household data, an indication that availability and access to data in Uganda and the region can lead to great insight into the real challenges faced by the population and inform the development of the relevant innovative solutions powered by mobile payments, in key sectors like Agriculture, Health, Energy, Water and Sanitation. UNCDF will continue to support innovative platforms such as this DataHack4FI in order to improve the livelihoods of people such as Faith and Gimei.”

While the competition is ending, we hope that DataHack4FI is only the tip of the iceberg that catalyses interest in data and analytics for financial inclusion in Uganda.

The DataHack4FI innovation competition in Uganda is hosted by Laboremus in partnership with i2i, UNCDF Mobile Money for the Poor (MM4P) and FSD Uganda (FSDU), with additional datasets provided by Low-Income Financial Transformation (L-IFT) and additional support from The Innovation Village Uganda and GLADfarm Uganda.

Kate Rinehart is Researcher for the Client Insights work stream at i2i.

Peter Kawumi is an Innovations Specialist at FSDU.

Richard Ndahiro is Consultant at UNCDF MM4P

Access to data in Uganda and the region can lead to great insight into the real challenges faced by the population

Richard Ndahiro, a Consultant at UNCDF MM4P
For more information, please contact
Naomi de Groot
Additional Information
Naomi de Groot

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