Financial Inclusion

Financial Inclusion

Uganda Annual Monitor 2016

Financial Inclusion

Wed, 09/20/2017 - 12:53 -- anna.ferracuti

Uganda started the journey from a cash-dominated economy to a digital-based economy in 2009. The country is emerging as a strong performer in digital financial services (DFS). Two major mobile network operators (MNOs) dominate the market alongside active third-party providers. In 2016, most active customers used one or more ‘second-generation services,’ such as digital savings or lending products. While rural Ugandans are still half as likely to use a mobile phone, the growth rate parallels that of urban users—about 3% per year.

Benin Annual Monitor 2016

Financial Inclusion

Wed, 09/20/2017 - 09:31 -- anna.ferracuti

Benin is writing its mobile money turnaround story with increased investment by mobile network operators (MNOs) in their agent networks and in standalone subsidiaries to manage their mobile money businesses. A significant rise in customer usage and agent activity is being observed. To find out more about the changing digital financial services landscape in Benin in 2016 read the full document.

A Digital Dream Coming True in Nepal

Financial Inclusion

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

The state of the digital financial services (DFS) industry in Zambia

Financial Inclusion

The state of the digital financial services (DFS) industry in Zambia

By Nandini Harihareswara, UNCDF
September 06 , 2017
Lusaka, ZAMBIA - 

I have had the privilege of working with UNCDF for almost two years as the Regional Technical Specialist for one of its seminal programmes, MM4P. In Zambia, UNCDF MM4P has launched a programme that is focused on accelerating the uptake and usage of digital financial services (DFS). The objective is to have 35% of the adult Zambian population actively using digital finance by the end of 2019.

We know, after decades of work in development – that when you are trying to make deep, lasting change – you can’t support one part of the ecosystem – you have to support the larger ecosystem. When it comes to DFS market development, MM4P uses an ecosystem approach that simultaneously addresses issues at the levels of Customers, Providers, Distribution, High Volume, Policy & Regulation and Infrastructure to improve market conditions and facilitate shifts. We call this “the honeycomb approach” (as you can see below). 

When I first came to this market, the narrative I heard was that “Zambia is stuck in a sub-scale trap”. From that daunting start, I can proudly say that we are now more at a tipping point. In 2014, only 2% of the adult Zambian population were active registered users of DFS[i] and there were a total of 1,656 active agents in the country. As of 2016, our data shows that 18% of the adult Zambian population are active registered DFS users and there are a total of 12,307 active agents.

Zambia- Small but mighty

When it comes to DFS, what many do not realize is that Zambia was the earliest adopter of DFS in Africa. Way before Safaricom launched M-Pesa in Kenya in 2006, Celpay had launched Zap in Zambia in 2002. Fast forward to 14 years later and the Zambian DFS market is competitive and diverse. We have three mobile network operators – Airtel, MTN and Zamtel who are offering mobile money services. We have several banks/MFIs – Ecobank, FINCA, FNB, Investrust and Zanaco that offer agency banking and popular mobile applications. We also have several third party operators – like 543 Konse Konse, Kazang and Zoona. For a market of 16 million people and approximately 9 million adults, we’ve got loads of innovation and competition. Zambian may be small, but it is mighty when it comes to DFS. And what we are learning is that not only does Zambia have a lot to learn from its peers in Africa and elsewhere, but the world has a lot to learn from Zambia.

Pollyanna & Discovery

While we are driven by the optimism of our colleagues in this work, we don’t take a “Pollyanna” approach. We recognize the great challenges that the DFS Ecosystem faces – especially the low population density of 27 people per square kilometer. But for each challenge that the market faces, we have also made fascinating discoveries on how the market is testing ways to address these challenges.

  • While meaningful awareness remains one of the biggest challenges to the uptake of DFS… Providers and Ecosystem players are testing cheaper, more effective ways of customer education (e.g., IVR).
  • While low profitability and liquidity of agent networks continues to be a challenge… There will soon be new financial products to improve liquidity management for agents across Zambia.
  • While there is still a low level of demand to digitize bulk payments both in the one-to-many and many-to-one space… To our surprise, the Government Payments Diagnosis has spurred bulk payments to be prioritized in 2 top DFS providers in Zambia.
  • While there are regulatory gaps and uneven levels of knowledge regarding DFS by BoZ and other relevant regulators… Regulators are open to dialogue, and responsive to private sector needs, especially when voiced collectively.

Looking to the future: What are our big bets?

As we look to our past, what we are seeing across the globe and the successes and challenges in this market, we’ve identified four “big bets” that we think will be game changers.

Partnerships. The coolest products you are starting to see in the market are all because of partnerships – the Kazang partnership with Azuri Solar, MTN Kongola credit product, the Zoona Sunga Wallet, the upcoming FINCA agent liquidity product. The more the market can figure out how to leverage each other strengths and weaknesses, the better the products that will be coming out of the system that meet the needs of Zambians.

Taking a Silcon Valley, Human Centered Design approach to testing. We are seeing this transform Skeptics to Believers, and more importantly helping DFS providers like Airtel and Zoona meet KPIs in customer uptake and usage!

A Wallet for What? We want to help the DFS Ecosystem crack the nut on providing sustainable, affordable services to those underserved -- especially women and those in rural areas. Through digital financial services, we want to see all Zambians have improved access to their basic needs, including power, water, education and quality agricultural inputs- all at an affordable cost.

DFS can drive Connectivity in rural areas. What we are finding from our colleagues in MM4P Uganda is that introducing digital financial services to underserved areas can spur increased usage of other mobile-enabled services, driving a completely different business case for Mobile Network Operators than ever considered. Putting up a cell phone tower in areas that previously were brushed off as “never never land” can change the game.

UNCDF MM4P’s vision for Zambia is to put the needs, wants and aspirations of Zambians at the center of DFS product design, agent liquidity and the policy and regulatory environment. What do you think our Zambians depicted below are thinking about? How can we help them achieve their aspirations?

This blog was originally written for ICTworks and published on September 6, 2017.

Nandini is a Regional Technical Specialist, responsible for the implementation of the United Nations Capital Development Fund Mobile Money for the Poor (MM4P) Digital Finance country strategy in Zambia. Partnering with Financial Sector Deepening Zambia (FSDZ), she is leading a team focused on increasing financial inclusion through digital finance. She is also leading MM4P’s efforts in Malawi.


[i] Based on Bank of Zambia data

 

For more information, please contact
Nandini Harihareswara
Regional Technical Specialist, Digital Finance
Uloma Ogba
KM Consultant, Zambia
Additional Information
Nandini Harihareswara
Regional Technical Specialist, Digital Finance

Senegal Annual Monitor 2016

Financial Inclusion

Fri, 09/01/2017 - 10:12 -- anna.ferracuti

The digital financial services market in Senegal is evolving on several fronts. Besides traditional financial service providers, the market has also seen the rise of numerous fintechs in sectors such as payment aggregation, goods vouchers, crowdfunding, mAgri and mHealth, to name a few.

The digital finance revolution in Senegal

Financial Inclusion

Fri, 08/18/2017 - 14:45 -- anna.ferracuti

The banking system continues to dominate the financial services industry in Senegal, with 25 separate banks operating in the market— compared with just 2 e-money institutions. In this member state of the Economic Community of West African States, the banking service usage rate has risen steadily since 2010, reaching around 17 % of the population by the end of 2015.

How to make mobile money more appealing than cash?

Financial Inclusion

How to make mobile money more appealing than cash?

By Pall Kvaran, Research Associate PHB Development
August 17 , 2017

Maize farmer in front of his shop. 

Kampala, UGANDA - 

Recent findings of UNCDF projects show that mobile money is an easy alternative to cash to facilitate bulk payments in the coffee value chain. However, coffee farmers who are being paid digitally for their produce, still see a lot of value in the usage of cash. To pay for their daily groceries such as rice, cooking oil and charcoal for instance.

“Something needs to change if agriculture value chains such as coffee are to be digitized”, argues Delia Dean, Value Chain & Digital Finance Specialist at UNCDF. “When we digitize such value chains, we need to consider every payment in a farmer’s day, all of which need to be considered for digitization. Our experience and observation tells us that, besides savings, many farmers have limited to almost no use case for mobile money. This means that if we are to create a positive value proposition and stimulate uptake of digital payments, we have to create additional use cases and these new options need to be integrated within their day-to-day spent patterns.”

Against this background, UNCDF and CGAP, with technical support from PHB Development are designing new business models for mobile money services in Uganda. Ciprian Panturu, Digital Finance Expert at UNCDF suggests that the Mobile Network Operators (MNOs) should start focusing on volumes rather than high-value services. “The current mobile money business model in Uganda is essentially driven by a single use case; person-to-person remittance services. People mostly use them to send money to family and friends living in rural areas. The recipients then find an agent and cash-out most or all of what they have received and pay a fee for doing that. This is where the MNOs get a big share of their revenues.”, says Ciprian. The main problem with this model is that there is a restricted demand and, more importantly, it ends up with a return to cash.

In the current model a strong and liquid agent network is required. But setting up and running an agent ecosystem for customers to collect these remittances is expensive. Agent commissions and other related costs are the main cost drivers and reduce profit margins for MNOs. At the same time, these cash-out fees represent an important barrier to regular use by customers. The digital journey systematically starts from and ends up in cash, which is what makes the model less efficient.

Nathan Were from CGAP says that MNOs are faced with large untapped opportunities; “People make several cash transactions every single day and there is always a cost associated with using cash. Such as the risk of losing money, theft and the inconvenience of carrying cash. If MNOs change their models so that the cost of using mobile money is well below the cost of cash, people will make the switch,” suggests Nathan and points out that this will lead to a reduced need for running extensive agent networks.

“This is where there are big opportunities for MNO’s and we have only scratched the surface of what can be done”, believes Nathan. “MNOs could transition to a closed-loop digital payments eco-system within five years. Although it requires taking some risks, but relatively limited upfront investment is needed and there is a lot of space for growth. MNOs now have a vast user base, currently mainly using mobile money for remittances. Meanwhile, the average user is using cash for more than 10 basic transactions to pay for goods and services every single day. If we can digitize this type of transactions with a competitive enough fee structure that is low enough to ‘beat’ the cost of cash, people will start using mobile money to conduct their regular payment transactions. MNOs can tap into this market and we expect to see an exponential increase of their transaction volumes.”

More on Value Proposition Mapping and the results have been shared in two previous blogs: “Going Digital or Stick to Cash?” and “Making mobile money more attractive to farmers.” 

For more information, please contact
Naomi de Groot
KM Consultant, Uganda
Páll Kvaran
Research Associate, PHB Development
Additional Information
Naomi de Groot
KM Consultant, Uganda

Étude sur les Services Financiers Numériques au Sénégal

Financial Inclusion

Wed, 08/16/2017 - 12:27 -- anna.ferracuti

Avec plus d’un million huit cent comptes actifs de monnaie électronique, les Services Financiers Numériques (SFN) se développent au Sénégal.  Même si le cash occupe une place encore importante sur le marché, notamment en zone rurale ou la monnaie électronique est peu connue, un  nombre croissant de Fintechs se développent dans le pays et le cadre réglementaire régi par la BCEAO est favorable à la monnaie électronique.

MM4P a mené une étude sur l’état des SFN, qui donne un aperçu détaillé de l’évolution du marché de la finance digitale au Sénégal.

Digital Financial Services Research Review Senegal

Financial Inclusion

Wed, 08/16/2017 - 11:57 -- anna.ferracuti

With more than one million eight hundred active e-money accounts, Digital Financial Services (DFS) are growing in Senegal. Even if cash remains dominant in the market, particularly in rural areas where mobile money is barely known, a growing number of Fintechs are making their way in the country and the regulatory framework led by the BCEAO is favorable to e-money.

MM4P conducted a research review on the state of digital financial services, which gives a detailed overview of the evolution of Senegal DFS market.

Uganda Testing Digital in Tea

Financial Inclusion

Uganda Testing Digital in Tea

Watch Latest Video
August 10 , 2017

The video team on our way back to Kampala after three busy days.

Kiko tea plantation, UGANDA - 

When you are told that “Money falls from the sky to pay tea farmers”, you go through a moment of disbelief and astonishment. When you witness it, you feel the adrenaline rush through your veins as security officers rapidly make sure the airdrop is a success.

A few months ago, I was in Uganda for the production of a new MM4P video with the country team. The plan was to film and interview tea workers who chose to test digital payments. Every two weeks these workers receive their payment directly on their phone instead of spending a half day queuing for their payment at the factory.

Fort Portal the town nearby -half day’s walk -  is not small and has bank with an ATM, but the security measures and the amount of cash needed to pay the workers are just not available at the local bank. Reason why McLeod prefers to send the money by airplane to the tea estates west of Kampala.

Dropping cash comes with issues one might not think of at first. Weather is an enemy of such methods. When an airplane can’t fly, due to rain for instance, the pay day has to be postponed. The human factor can also create issues, when for example the wrong bag is dropped on the wrong estate or just one bag is released instead of two. When such issues take place the tea estate manager, Vikram Singh Ranawat takes his car and flies – literally flies with his car full speed on the road- to ensure he will be able to pay on time the workers lined up in front of factory gates.

Digitizing these payments can potentially come with challenges too. In the pilot phase, that covered payments to 100 workers on the McLeod Russell tea estates, specific challenges were uncovered and solved. The good management during this phase is critical to prevent hick ups from hampering a smooth roll-out to all workers volunteering to test receiving their pay on their mobile phones instead of cash.

The tea workers have to familiarize themselves with this new service and the options it offers. When we met 15 of them before the filming, they still have many questions about the payments they or their coworkers have received. Wycliffe Ngwabe, UNCDF MM4P Digital Finance Expert, spent 30 minutes improvising a Q&A session to answer all these questions and telling workers. The questions in fact mainly revolved around phone usage and how they could get their own phone through payment in installments, and about the fees, and the possibilities about saving money on their mobile money account. Despite that the team hadn’t planned any of this in our script, the cameraman had the bright idea to record the Q&A session with the consent of the farmers. This video with the questions farmers had for Wycliff, will soon be released.

While you wait for that extra video, I invite you to view the story of the tea estate manager Vikram and the tea workers telling us about their experiences during the MM4P pilot to digitizing payments (video is on the right-hand-side column).

Come back to view the next video!

For more on the digital payment pilot at McLeod please read this previous article.

by Karima Wardak, KM Senior Associate UNCDF-MM4P

For more information, please contact
Karima Wardak
KM Senior Associate UNCDF-MM4P
Additional Information
Karima Wardak
KM Senior Associate UNCDF-MM4P
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