Mobile Money

Mobile Money

FINCA: Easing Access to Liquidity for Mobile Money Agents

Mobile Money

Mon, 12/11/2017 - 09:33 -- anna.ferracuti

FINCA Zambia, with the support of UNCDF, decided to explore the current challenges confronting agents and whether FINCA could provide a solution to them. FINCA is currently building ‘push-pull’ functionality for its customers to link their accounts to their Airtel Money or MTN Mobile Money wallets. 

The Gender Impact of Digital Payments

Mobile Money

The Gender Impact of Digital Payments

Female coffee farmers save and invest more after receiving their pay on their phone
October 18 , 2017

Nafina; Napanga and Tweke.

 

Kapchorwa - 

When you drink your exquisite cup of Arabica coffee, close your eyes and think beyond the wonderful aroma. Behind it lie the stories of farmers such as Nafina, Napanga and Tweke; three farmers from Kapchorwa, in the Mont Elgon region of Uganda. In efforts encouraging farmers to accept digital payment for their produce, Nafina, Napanga and Tweke are part of a UNCDF programme focused on digitizing agricultural value chains across the country. Within this programme, they were introduced to receiving their payment on their mobile phone in 2016. A year later, all three women consider themselves active users of mobile money and are quick to praise its impact on their lives.

Mobile money has proven to help, even transform, the economic lives of women.  A 2016 Kenyan study looked at the longitudinal impact of M-Pesa at the household level. Not only did it find that mobile money had a positive economic impact on nearly 200,000 households, but that female-headed households experienced the greatest uplift.  Financial resilience, savings and occupational choice improved substantially as a direct result of access to M-Pesa.  Over the course of the study, 185,000 women moved from subsistence farming to business occupations - a trend the researchers attribute to mobile money access. 

The insights yielded from Kenya provide tangible evidence of the meaningful impact digital financial services can have on the lives of users—particularly for more vulnerable populations, such as women and rural communities.  However, the barriers to effectively serve these communities have yet to be overcome.

Although the number of financially included women increased between 2011 and 2014, women are still 23% less likely than men to have access to an account1 in sub-Saharan Africa.  Digitizing payments can be a powerful hook to increase access to financial services for women, particularly in agricultural sectors where it is estimated that women make up half of agricultural labour in sub-Saharan Africa. However, the challenge that UNCDF is working to overcome is how to increase the relevance and utility of digital financial services for people who need it most. This is what underpins the work with Nafina, Napanga and Tweke in Uganda.

Nafina farms coffee on two acres of land that is owned by her husband. As for Napanga, she owns eight acres of land and farms coffee and matooke (bananas). Tweke has three acres of land and farms coffee, Irish potato and matooke. Working in partnership with Kyagalani Coffee Limited, a coffee exporter, Yo! Uganda, an aggregator and MTN, a mobile network operator, UNCDF’s project aims to digitize coffee payments and lay the foundation to develop a mobile money environment that meets the needs of the farmers and their community. A key part of this is understanding how to transform a digital payment made to Nafina, Napanga and Tweke into a suite of services that meets their financial needs. 

When Nafina, Napanga and Tweke sold their coffee at the weighing station last year, the ladies had the opportunity to participate in a financial literacy and mobile money training programme led by IDEO, another partner on this project who specializes in human centered design; a methodology to keep the customer at centre during product development. Through a user-centered approach, these women developed personalized financial goals and aspirations alongside a savings budget and a realistic timeline.

This approach gave a practical application of mobile money that was flexible enough to be tailored to their individual needs. Nafina’s goal was to buy a cow and a solar panel for her home. She now uses mobile money to store her earnings from selling her coffee beans. For Napanga, mobile money gave her a more secure alternative to storing cash. Her savings are now safely stored on her mobile money account. This enabled her to buy two goats and open a shop in half the time she anticipated. Tweke uses mobile money just to keep her money away from the eyes of her family. And it worked; because she has less cash in her pocket and therefore limited her unplanned expenses.  As a result, her savings allowed her to increase investment into her agricultural inputs at the end of the harvest.

These success stories not only underline the impact that mobile money can have on women, they also highlight the importance of ensuring digital financial services need to be flexible and adaptable to the unique financial goals and ambitions of each individual.

1 According to the Global Findex 2014, an account can be at a bank, financial institution or a mobile account.

By Sabine Mensah, Regional Technical Specialist, MM4P & Lara Gilman, Independent Consultant

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

Uganda Annual Monitor 2016

Mobile Money

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

Mobile Money

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.

Creating a digital ecosystem for dairy farmers in Uganda

Mobile Money

Creating a digital ecosystem for dairy farmers in Uganda

By Naomi de Groot, MM4P Knowledge Management Consultant in Uganda
August 30 , 2017

Godfrey and his wife.

Nabitanga, UGANDA - 

Meet Godfrey. Godfrey and his wife are dairy farmers in a small town in central Uganda. Together they own six cows and about thirty goats. His wife mainly looks after the goats, which are sold for meat and Godfrey looks after their cows.

These six cows give a little less than ten litres of milk a day. Every morning, Godfrey takes the milk to the Nabitanga Dairy Cooperative (see location). Here, milk from about 120 smallholder farmers is collected every day, which is then sold to a larger milk company that processes, packs and distributes the milk. Since a few months, these milk farmers can receive the money for their milk digitally on their mobile phones. Godfrey was one of the first farmers who signed up for this.

In ongoing efforts to introduce bulk digital payments in agricultural value chains across the country, UNCDF is also collaborating with players in the dairy industry. Such as dairy cooperatives for example, who collect milk from smallholder farmers, which is then sold to larger dairy companies.

“I used to get paid in cash. Every two weeks someone from the cooperative would call me and tell me that my money was ready for pick up. I would then get a boda-boda (local motorcycle taxi) to take me to Nabitanga, which is about three miles away. A round trip that costs me UGX 10,000 (around USD 2,75). Just to collect my payment of around UGX 100,000”,Godfrey explains.

Now that he gets paid digitally on his mobile money account, Godfrey explains that it offers him a lot of advantages:

  • the privacy that receiving his payment on his mobile phone gives him. No one else in line can hear or see how much he is paid;
  • the fact that he doesn’t have to spend money for transport just to collect his payment;
  • he no longer has to worry about his safety when travelling with a large sum of money;
  • and the cooperative also doesn’t have to worry about their security measures when it is payday, which is normally a big burden as there is no local police station.

Godfrey also explains how he spends his income. This information is crucial to develop improvements to the digital payments eco-system, such as digital school fee payments and merchant transactions.

“Generally, I spend money on groceries, school fees for our four children, the agro vet, clothes and for medicine when someone is ill. And I also try to save some money on my mobile money account. I like saving money on my phone because I can easily access it in case of an emergency.”

UNCDF is currently exploring opportunities to create a more compelling eco-system for digital payments in Nabitanga. This includes introduction of mobile money merchant payments at the agro input store, the local boda-boda repair shop and the pharmacy amongst others. This way people can keep their money on their phone account and there is less need for withdrawals, and thus reduces the cost that comes with cash-outs. Godfrey, however, says that he doesn’t mind the cash-out fees as these outweigh the benefits for him.

“Receiving my pay on my phone works perfectly for me. There are no big challenges. I can easily send some money to family or pay school fees to the head-master directly. Mobile money is mobile, it keeps moving with you, it travels with you”.

The UNCDF pilot of testing digital bulk payments in the dairy value chain will run for the next months. During this project UNCDF also supports the dairy cooperative in digitizing their administration and accounting system. More about this activity will be shared in the months to come.

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

How to make mobile money more appealing than cash?

Mobile Money

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

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