Uganda

Uganda

Goodbye Notebook, Hello Tablet

Uganda

Goodbye Notebook, Hello Tablet

How Dairy cooperatives in Western-Uganda are digitizing their records
December 06 , 2017
Kampala, UGANDA - 

Digitizing basic transactions such as records of milk delivery and sales, is essential for the further growth of the dairy sector in Uganda. A small change can bring big changes. If instead of writing down the 15 litres brought to the collection centre by farmer Godfrey this data is entered into an application, farmer organisations unlock the power of data. And with this information farmer groups can potentially access financial services which are now not willing to provide financing, because of the lack of collateral.

Nearly 80% of the people in Uganda live in rural areas where banks have no or limited presence. Consequently, the countryside is lacking financial services needed to develop the local economy. Over 70% of Ugandans are active in agriculture. The sector is largely organized through farmer organisations such as cooperatives, who typically have their own Savings and Credit Cooperative Organisations, SACCOs, that provide financial services to their members.

However, cooperatives and SACCOs struggle with many issues such as limited access to finance, high loan default rates, safety concerns around large quantities of cash and cumbersome admin processes. It is challenges such as these that prevent cooperatives and SACCOs from growing and professionalizing their business; becoming an agri-business that can impact the lives of small-holder farmers, their members. Especially in rural areas.

That is why the UNCDF supports the development of an app that will provide dairy cooperatives with the right tool to digitize their transaction records. Across the dairy sector UNCDF is supporting digital payments on mobile phones instead of in cash. One of the key lessons learned from digitizing these payments, is that the foundation first needs to be laid. Paper-based cooperatives need to go digital.

Together with Laboremus Ltd., UNCDF is designing and creating an app that will do just what is needed for dairy cooperatives. Pius Peter, General Manager from Dwaniro Dairy Cooperative says that he is looking forward the new application being used. “I feel with the step to digital we are entering a modern Uganda, where we can ensure our members, small holder farmers, access to the finance they need to grow. Entering our delivery and sales in this application will advance and strengthen our cooperative and the way we serve our farmers.”

In order to build on experiences from organisations that already digitized their records, UNCDF is organizing the third FinTech4AG meet-up on the 7th December 2017. In this event, cooperatives SACCOs as well as NGOs and other organisations, will share their main learnings. What are the main challenges for farmer groups who would like to go digital? And how can these challenges best be overcome?

Jointly answering these questions will provide feedback and a clear way forward for the further development of the application. Insights that will accelerate the digitization of farmer cooperatives all across the country, in different value chains to drop their notebooks and pick up their tablet.

FinTech4AG: Digitizing Farmer Organisations
7th December 2017
The Design Hub
10:00 - 12:30

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

Disrupting the savings and lending market in Uganda: The story of MoKash

Uganda

Tue, 12/05/2017 - 10:50 -- anna.ferracuti

The MM4P programme in Uganda, in collaboration with PHB, supported MTN in its journey to launch and refine the MoKash product. Starting with initial research to define the route-to-market strategy for rural areas, MM4P and PHB helped MTN overcome barriers and design an effective customer engagement strategy. Drawing on that experience, this focus note highlights some of the key success factors for MoKash in the first year after launch.

Digital Financial Services can reduce worries on how to pay school fees

Uganda

Digital Financial Services can reduce worries on how to pay school fees

UNCDF is working with PEAS schools to explore ways on how digital financial services can make it easier to pay school fees and increase school attendance.
November 15 , 2017
Kampala, UGANDA - 

Godson Kayiza, a farmer in Kira, Uganda has four school-going children, two of whom are in secondary school. One of these, his daughter, goes to the Kira View secondary school, which is run by PEAS (Promoting Equality in African Schools), an NGO that runs 28 secondary schools in Uganda. Kira View secondary school is about one kilometer from their home. The other child studies in Entebbe, which is about a four-hour drive from home.

Godson explains that he chose a PEAS school, because it provides quality education at an affordable cost and most of all is very flexible on fee payments. As we chat, Godson clarifies that the education of his children is a priority on his expenditure list. Nevertheless, he also mentions that the beginning of the school year is financially strenuous, as it does not coincide with the harvest period when he has enough money to pay for the fees. What is more, his financial planning is often distorted by illness in the family, creating additional financial strains.  

Paying School fees

For his daughter at the PEAS school, Godson pays the fees in cash. For his other child, enrolled in Entebbe, he mainly uses mobile money to pay for fees, as it is cheaper than travelling there to pay with cash in person. For both kids, he pays in three to four installments in the school term (quarter).

Before the children have their exams, he must clear all fees so that his children are allowed to take their exams. “When I’m short on cash, I am able to negotiate with the school director at PEAS for patience. They will ask me to pay even as little as UGX 5,000 (USD 1.37). In this case they give my child an admission card that allows her to attend school until the date specified on the card. Beyond this date, I need to pay again. Otherwise my child will not be allowed back in to school.”

Collecting School fees

“We receive our school fees mostly in cash from the parents or the students themselves. Some parents, mainly those who live far from the school send it via mobile money to my personal phone or that of the bursar. Sometimes we also accept a part of the payments in kind, like food items”, Richard Ayaga, School Director, PEAS Kira View. “Paying and collecting fees is a major pain-point for both parents and the school respectively. We have to be firm in gathering fees, while being very considerate towards the parents’ financial capacity.”

Even though most parents pay the fees in cash, handling this cash has its challenges. The bursar receives cash in the school office and must in turn bank this money. Handling all this cash comes with significant risks, such as:

  • Human mistakes made when counting the money
  • Receiving counterfeit notes
  • Keeping large sums of cash in the school’s office
  • Staff safety when travelling to bank with cash

Mobile money payments are convenient for some parents, but it too has risks. When the director or bursar receives money on their phone, they call that number to confirm who has made the payment and for which student. Most senders do not add the withdrawal fee, so the school has to pay for these withdrawal fees, making a loss. Payments to personal numbers also put the director or bursar into temptation to use the money for personal needs.

Payment behavior for Education

Valuable insights can be drawn from mapping the parent’s payment behaviour of concerning school fees as well as the way schools process these payments. Insight that helps understand how digital finance can solve some of the major pain points around payments in the education sector.

This baseline study is part of a partnership between UNCDF and PEAS, which seeks to provide answers to some pertinent questions: What are the advantages of moving from cash to digital payments for different stakeholders? How does that impact access, affordability, quality and sustainability of secondary education? One of the potential solutions could be a system where parents can pay school fees based on their cash flow linked to the seasonality of the different crops they grow.

All of this is set against the background that in Sub-Saharan Africa, only one in four children are able to continue their education beyond primary school, as secondary education is still largely underfunded and under-provisioned (PEAS, 2015). In Uganda, the Africa – America Institute reports that in 20151, 72 percent of secondary school-aged children were still not in school.

In the months to come UNCDF together with PEAS will prototype and pilot some of the potential digital finance solutions aimed to increase the attendance rates. Which in turn, would allow more and more children in Uganda to finish secondary school.  

By Richard Ndahiro, Digital Financial Services expert, UNCDF

1State of education in Africa report 2015, The Africa America Institute

 

 

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

Agency Banking “El Dorado” in Uganda – what to expect?

Uganda

Agency Banking “El Dorado” in Uganda – what to expect?

November 02 , 2017
Kampala, UGANDA - 

The game is on. The legislation needed to enable agency banking in Uganda has been passed and so now, banks in the country are preparing to roll out their agency banking strategies. To acquire new customers, especially in the rural areas of the country.

Although most banks in Uganda have implemented mobile banking, agency banking will be a real game changer for the Ugandan market since it will allow end-to-end ownership of the distribution channel, without relying on the Mobile Network Operator’s (MNOs) other than for their communication services. This opens the door for increased competition, mainly on pricing and quality of service provided.

Within this context, UNCDF is supporting several Ugandan banks in their preparations to launch and roll out agency banking solutions. “We foresee a number of players to go live before the end of the year, with many others to follow early next year. As of now there is room for everyone. That’s how big the opportunities are. However, the competition will become fierce and not only amongst banks. The first pain will be felt in the fight for scarce resources to manage a network of agents in the Ugandan market; working capital of agents as well as experienced staff to manage this distribution channel. This is a space to watch, as it will certainly reshape the DFS landscape in Uganda”, says Bram Peters, UNCDF’s Country Technical Specialist – Digital Finance.

As Michael Nuwagaba – Agent Banking Manager at Centenary Bank – highlights, “Agent Banking is an efficient model that will help us in driving our Financial Inclusion strategy of reaching the unbaked, majority of whom are located in rural areas. The channel shall enhance customer service experience by bringing banking to the neighborhoods of the customers we serve. With this increased outreach, customers shall conveniently access financial services through duly appointed agents near them without feeling the need to visit a Bank branch.”

Exploring the best entry strategy

The partnering banks are indeed eager to start and their strategies to do so are varied; some are betting on a first mover advantage, while others are hedging their bet on a delayed market entry while observing and learning from their competitors’ successes and failures.

“Leveraging on our experience in the East African markets, we have our robust and secure technology already customized to suite the Ugandan market and Central Bank Guidelines, our well trained and experienced staff are ready to train and handhold both agents and customers and take this exciting journey towards real social economic transformation”, says Julius Musiime Apuuli, Head Agency Banking, Equity Bank Uganda.

Arthur Nuwagaba, Project Manager Agency Banking, talks about DFCU Bank’s approach: “Collaboration with existing fintechs that have established Agent Networks not only provides a quicker time to market and an opportunity to learn from the ANM’s agency and operation’s experience but also the opportunity to leverage their technology and infrastructure to achieve faster growth and footprint at a much lower cost as compared to setting up an agent network from scratch.”

The Bank of Uganda is very active in evaluating the banks’ applications and started providing approvals to engage in Agency Banking operations.

“On the 11th of October 2017, KCB Bank got its letter of no objection from the central bank which officially allows us to rollout agency banking across the country. By all means, this was a great milestone for us however as we continue to do our homework in readiness for rollout. We have picked lessons and incorporated measures in our strategy and design in Uganda perspective; as KCB Bank we believe agents points should be treated as no less than our own branch extensions by ensuring that the bank’s core brand standards are preserved.” says Michael Ssekyondwa, Agency and Digital Finance Manager at KCB Bank Uganda

It is interesting and reassuring at the same time to see how many variables have been considered throughout the strategy definition, design and development phases conducted together so far. The workload is enormous and the pressure to deliver is high. The moment of truth is approaching as many of the banks will soon be moving into the pilot phase, where the theory will meet the practice.

Near Future

Richard Jabel, Head of Agency Banking at Stanbic Bank, has a very clear view on what’s coming next: “Successful pilot testing goes a long way in preparing banks for successful Agency Banking roll out, that achieves the intended objectives and decreases mistakes and the associated cost of those mistakes at go live. Pilot testing enables testing of the effectiveness of the bank and Agent Banking team structure in delivering Agent Banking services to customers. Testing systems and processes during pilot is critical as it contributes to ensuring that issues are identified and addressed before go-live. Risks are identified and mitigated appropriately throughout the pilot in a controlled environment, this limits bank, customer and agent exposure after go-live.”

If anything has been learned from other markets so far, there is no ‘too big to fail’, nor ‘too small to succeed’ when it comes to implementing agency banking. This alternative channel brings various players on a plain level. It will be a matter of consistency during implementation and roll out, as well as the ability to learn and adapt to make the difference in a context where banks strive to redefine themselves. This will not be a sprint, but rather a marathon. Only those with long term vision and commitment will prevail. 

By Ciprian Panturu, UNCDF Value Chain and Digital Finance (DF) Expert

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

Digitizing aid in refugee settlements in Uganda; good for business, great for beneficiaries

Uganda

Digitizing aid in refugee settlements in Uganda; good for business, great for beneficiaries

October 26 , 2017

'tower in settlement' 

Kampala, UGANDA - 

Our role as UNCDF is often to highlight opportunities. Opportunities for both the private sector and NGOs. That is also what UNCDF is doing this time in refugee settlements in Northern Uganda; showcasing that it is in the best interest of all parties involved to consider digitizing cash based interventions.

In refugee settlements, such as Bidibidi, one of the largest in the world, people need all kind of things: food, materials for shelter, household tools, etc. Humanitarian aid agencies assist in different ways; In-kind, by distributing food, or by distributing vouchers, which people can use to purchase items on a conditional basis, such as input supplies for farming. However, increasingly refugees and their host communities receive support in cash, which they can use at the local market to buy their own food, household items and other needs. This is what they call ‘cash based interventions’.

In Northern Uganda, several humanitarian organisations are currently supporting refugees with cash based interventions, especially those considered more vulnerable, such as child-headed households, widows or disabled. Around 13,000 people now receive three installments of about USD 50 over certain months, through NGOs that UNCDF has partnered with - Mercy Corps and DanChurchAid. This money is intended for so called income generating activities such as opening a small barber shop, a tiny restaurant, a little shop selling soap and other house-hold items.

UNCDF Uganda facilitates digitizing these payments. Instead of cash literally being driven into a settlement, recipients can receive their payment in their mobile phones through mobile money. A change that highly increases the NGOs efficiency, as less people are needed to distribute the cash.

Receiving cash based interventions on their phone rather than in cash provides refugees safety, saves them time of having to go to the nearest market to collect the money and allows them to store their money easily. Beyond these advantages, the mobile phone also gives them a tool to communicate with their family and relatives. For that reason, making the switch from cash to digital is a great solution to NGOs providing the assistance, as well as the recipients themselves.

However, much of the needed infrastructure to make this happen simply isn’t there. There is limited network in these remote areas, especially in the newer settlements, and refugees in Uganda very often don’t have a phone.

In order to overcome these challenges, UNCDF: 

  • Facilitates for one of the major mobile network operators in Uganda to expand their business in these remote areas
  • Supports mobile money agents in the areas and ensures that they have enough mobile money float and cash and
  • Trains refugees on how to use these mobile wallets.

So, with this pilot we are also showcasing the business opportunity for the mobile network operator.

Indeed, interesting business opportunity, as refugees spend an average of 12 to 15 years in these settlements. Uganda has very progressive refugee laws. People are entitled to work; have freedom of movement and are even entitled to own a piece of land. Receiving cash based interventions on their phone, enables people to slowly but surely rebuild their lives.

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

The Gender Impact of Digital Payments

Uganda

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

Uganda

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.

What Know-Your-Customer Regulations Apply in Uganda

Uganda

What Know-Your-Customer Regulations Apply in Uganda

By Richard Ndahiro, DFS Expert in Uganda
September 14 , 2017

Study on Know-Your-Customer Requirements for DFS in Uganda

Kampala, UGANDA - 

In the past couple of years Uganda witnessed a steady increase in financial inclusion, mainly driven by an increased uptake in mobile money. Financial inclusion insights Uganda (2016) shows that close to 4 in every 10 Ugandan adults (39%) now have access to financial services. 35% have a mobile money account, 11% have a full-service bank account, while 6% have an account in a non-bank financial institution. 

Financial inclusion, and exclusion on the flipside, is primarily a matter of access. Particularly for digital financial services (DFS), access is dependent on the ability of users such as consumers, traders, merchants, agents and aggregators, to be fully registered and compliant with the Know-Your-Customer (KYC) requirements by regulators. 

Talk to anyone working in DFS in Uganda and they will bring up the topic of KYC. These discussions mainly reveal:

  • A need for more clarity around the KYC requirements for the various DFS types of users 
  • Discrepancies in interpretation of requirements in the KYC regime
  • Challenges around registration and onboarding of, for example, agents, merchants and refugees due to strict KYC requirements. This results in excluding people from using DFS as well as lengthy onboarding processes, with a lot of paperwork for those registering.  

To fully understand all these issues UNCDF–MM4P researched all specific KYC requirements for DFS players in Uganda. The exercise sought to: 

  • Clarify the KYC requirements for opening and operating DFS accounts, including accounts for individuals, informal merchants and traders, formal businesses, and non-citizens such as refugees;
  • Understand how financial service providers are interpreting and implementing KYC requirements;
  • Assess the impact of the interpretation and implementation of KYC requirements on DFS adoption; and
  • Offer recommendations for addressing KYC challenges to foster DFS growth and uptake.

The results of this research are full of findings and insights for regulators, banks, mobile network operators and other financial service providers that operate DFS in Uganda. Please have a look at the summary or the entire study report.

In accordance with these findings, UNCDF-MM4P is engaging with the various stakeholders in a bid to address some of the issues highlighted from the report. 

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

Study on Know-Your-Customer Requirements for DFS in Uganda

Uganda

Wed, 09/13/2017 - 16:26 -- anna.ferracuti

The UNCDF MM4P program contracted BFA to conduct a Study on Know-Your-Customer (KYC) Requirements for Digital Financial Services in Uganda. The key objectives of the study were to: Clarify the KYC requirements for opening and operating different digital financial services (DFS) accounts; understand how financial service providers are interpreting and implementing KYC requirements for the aforementioned accounts today; assess the impact of the interpretation and implementation of KYC requirements on DFS adoption; and offer recommendations for addressing KYC challenges to foster DFS growth an

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