Zambia

Zambia

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

Zambia

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

Zambia: 20.000 refugees to profit from DFS solutions

Zambia

Zambia: 20.000 refugees to profit from DFS solutions

Kicking off research on potential DFS solutions to increase financial inclusion for migrants
August 28 , 2017

Meheba Refugee Settlement

Meheba Refugee Settlement, ZAMBIA - 

If I had to sum up my first visit to the Meheba Refugee Settlement in Zambia in November 2016 in one word, it would be “confrontation”. From the 45 minute, bumpy bus ride it took to get from the main entrance to the UNHCR offices, to the tour of the different blocks in the settlement, to the impromptu town hall meeting where over 50 residents of the settlement emphatically voiced their opinions about the proposed project. Everything I witnessed made me realize how urgently the refugees want access to financial services. That visit made me rethink everything I thought I knew about migration, freedom of mobility, human rights and access to services that I took for granted.

In the 9 months that have passed since our initial visit, UNCDF and UNHCR have laid the groundwork for a project to develop, and test market-led DFS solutions to transition the Cash-Based Interventions (CBI) within the Meheba refugee settlement to digital (electronic) payments. The objective is to create a thriving and sustainable DFS ecosystem where refugees can have safe and easy access to affordable financial services that could potentially transform their lives such as ability to send and receive money, pay bills such as school fees and access savings and credit facilities.

As we made our way back to Meheba for a second time on August 14th, 2017, it was with a sense of hope and determination. This time, we were coming with good news. Working with UNHCR, the Ministry of Community Development, and the Office of the Commissioner of Refugees in collaboration with DFS consulting firm MicroSave, for the next 8 months, we will spend time doing field research with the residents of Meheba to determine what the proposed DFS solution could look like. We will be talking to and training all the key personnel involved in the CBI program. We will identify and on board one or more DFS providers to implement and test the proposed solution. Hopefully, 8 months from now, we will be able to report back with great news-that the recipients of CBIs and indeed every one of the over 20,000 refugees in the settlement (including current and former refugees and low-income Zambians who have been resettled in the camp) now have access to financial services that previously did not exist.

However, the second journey did not come without surprises. As time has passed, some refugees have left the camp and new arrivals have been received, staff from UNHCR and Ministry of Community Development and Social Services have transitioned to new roles or moved on changing some of our key counterparts in the settlement. This means that we will need to rebuild the knowledge and trust, not just of us but also of DFS.

As we presented the objectives and scope of the project to the field team who are on the ground, day in and day out, working to ensure that the CBI program remains operational and effective, it was encouraging to see their level of excitement and engagement.

Stay tuned and follow us on this journey as we keep you updated on the progress of the project. 

By Uloma Ogba, UNCDF MM4P Knowledge Management Consultant.

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

Zambia Annual Monitor 2016

Zambia

Fri, 08/04/2017 - 16:31 -- anna.ferracuti

While Zambia was the earliest adopter of digital financial services (DFS) in Africa in 2002, it had lagged behind in leveraging those services to advance financial inclusion in the country for many years. Years of inertia have shifted to a period of momentum, which is reflected in an exciting 2016 for DFS.

Quick tests, fast results, strong signals

Zambia

Quick tests, fast results, strong signals

July 03 , 2017

Caroline Chali, Airtel Money Agent

Smiles infront of her shop in Mumbwa

Lukasa, Zambia - 

In a previous blog, we focused on how human-centric design approach was used to co-create ideas with Airtel Money agents. In this blog, we will talk about what followed next, the process of setting up behavioral trials and iterative testing.

Following the process of ideation and co-creation with the Airtel Money agents, 17 Triggers and UNCDF were left with several ideas to test, to determine which ones could become viable solutions to address the liquidity management challenges that agents were facing. The ideas were ranked in order of desirability (is this something the agents want), feasibility (do the providers have the technology and processes in place to support such an idea) and viability (will the resulting solution be cost effective).

Setting up behavioral trials

Once the top three ideas were selected, the research team went about setting up behavioral trials where agents would be exposed to prototypes of the ideas they had helped co-create, for a short period of time in a setting that mirrored their everyday experiences. During the trials, the agents’ interactions with the prototype and any changes in their behavior and actions would be recorded and analyzed. This analysis would help determine the impact the introduction of the intervention is likely to have once it is fully implemented in the agents’ daily practices.

To design the trials, the research team scouted different locations and reviewed the profiles of various agents in each of these locations. With input from Airtel, the team settled on 3 locations where each of the 3 concepts that made the final ranking list would be tested with a group of 10 agents for a period of 3 weeks. The 3 week time frame was chosen because it was a relatively quick time frame to get results but long enough for the agents involved in the trial to get past the initial novelty of the interventions and allow the research team to understand actual usage patterns that emerged.

Iterative testing in the field

When it comes to the human-centric design approach, a key part of the behavioral trials is the iterative testing process. This is a process by which every idea, concept, intervention goes through a process of continual testing and tweaking using observations and feedback gathered from the test subjects to inform subsequent iterations of the concept. Airtel appreciated this process because they were able to get fast results and strong signals.

For instance, prior to the start of the trials agents were asked to agree on the set of norms that would govern their interactions with each other and the provider for one of the concepts tested. However, in practice, the research team observed new norms emerge. This provided an opportunity for them to check in with the agents to ascertain what was going on and how this new set of norms could be incorporated into the product design. The iterative testing process also allowed the research team to quickly uncover what tools worked and which ones did not work when it came to testing tools for customer perception and float awareness.

Key takeaways

When it comes to employing behavioral trials and iterative testing methods, the key things for providers to focus on are that

  • It is quick and yields fast results. Testing periods can be relatively short e.g. a couple of weeks, as long as they allow enough time to observe changes in behavior due to the introduction of an intervention or a change in the normal working process
  • Helps identify strong signals that draw the providers attention to areas that need to be addressed for proposed solutions to be as effective as possible.

Stay tuned for the next blog where we delve deeper into one of the concepts that was tested, the results gained from applying human-centric design and iterative testing to understanding agent journeys and prototyping products with constant agent feedback.

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

Zoona recognized as the most creative DFS provider in Zambia

Zambia

Zoona recognized as the most creative DFS provider in Zambia

June 27 , 2017

From left to right: L-R Memory Chirwa (Zoona), Robert Keating (Zoona), Frida Tamba (BoZ), Junior Kwebiiha (UNCDF) and Musapenda Phiri (BoZ). © UNCDFMM4P

Lusaka, ZAMBIA - 

Every year since 2013, the Bank of Zambia (BoZ), in collaboration with other key stakeholders in the financial services ecosystem, has organized the Financial Literacy Week (FLW) campaign to encourage more Zambians to take control of their financial lives. In 2017, the theme for FLW was “Know and plan your finances for a better life”. In the month following the week-long campaign, the Governor’s Financial Literacy Awards ceremony was held to recognize the efforts of financial service providers that actively contributed to the success of the campaign.

This year for the first time, the Awards featured the category Most Creative Digital Financial Services (DFS) Provider for which providers were judged by BoZ based on the level of innovation, simplicity and availability of their DFS product or service in the market in the market.

Finally, the day of the Awards arrived and hundreds of individuals representing over 50 financial service providers crowded into a ballroom at the Intercontinental Hotel in Lusaka, eager to find out which of their peers would walk away that night with a coveted award.  Nervous anticipation filled the room as the representative from BoZ announced the DFS category and the entrants, Airtel  (for their MasterCard for mobile money wallet),  FNB  (for their mobile banking e-wallet), MTN (for their Kongola loan product), Zoona  (for their Sunga Wallet) and Spargris Zambia (Kazang) – Azuri (for their Pay-As-You-Go Solar option). And then the winner was announced…it was Zoona!

Launched in February 2017 by Zoona, Sunga is an e-wallet product that enables customers to keep money safe at no charge. In this way, customers are empowered to reach their savings goals, for example, for school fees, building a house or expanding a business. With over 35,000 users in a relatively short time, Sunga is poised to revolutionize financial inclusion in Zambia. A key advantage of a Sunga account over similar products on the market is that it is easy to set up and no paperwork is required, there is no minimum balance necessary- customers can open an account with less than USD 1 and there are no monthly fees associated with maintaining the account.

Having worked with Zoona as they were preparing to launch Sunga, MM4P was happy to see the efforts of this entrepreneurial and innovative organization recognized publicly. Zoona is one of several DFS providers that have contributed to moving the market forward in Zambia. Zoona Managing Director, Robert Keating, received the award on behalf of Zoona saying “you can expect even greater things from Zoona in 2017”. DFS in Zambia is at a tipping point and the market is growing and expanding. We are excited to see not just what the future has in store for Zoona but also for DFS in Zambia in the coming years.

MM4P is a joint program of UNCDF and FSDZ. 

For more information, please contact
Uloma Ogba
KM Consultant, Zambia
Additional Information
Uloma Ogba
KM Consultant, Zambia

Solutions from the front lines

Zambia

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

Zambia at the tipping point

Zambia

Zambia at the tipping point

By Nandini Harihareswara, Regional Technical Specialist, UNCDF
April 27 , 2017

Image #1: MM4P Zambia Team. 

Images #2 and #3: Clients at Zoona and Airtel's agent points. Photos credit: 17 Triggers.

Lusaka, ZAMBIA - 

Looking back at 2016

I have had the privilege of working with UNCDF for more than a year as the Regional Technical Specialist for one of its seminal programmes, MM4P.

In Zambia, UNCDF MM4P has joined hands with Financial Sector Deepening Zambia to launch a programme that is focused on accelerating the uptake and usage of digital financial services (DFS). When it launched in May 2015 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. By the end of 2015 we had seen those numbers grow to about 4% of the adult Zambian population using DFS and a total of 3,225 active agents. As we look back to 2016, we are happy to report that 18% of the adult Zambian population are active registered DFS users and there are a total of 11,025 active agents.

People ask me what is so special about working in Zambia – there are many reasons, but if I had to name one, I would say it is the Zambian openness to new ideas and innovation. I have observed a real openness on the part of the regulators, providers and customers. In my previous incarnations, I’ve worked in many other markets – across Asia, Africa and Eastern Europe. But what I love about working in Zambia is the openness of the people here—they are open to having real conversations, not just about the challenges, but about the opportunities that exist. Not just about the problems, but how to solve them. I am inspired by our regulator colleagues at the Bank of Zambia and the Zambia Information and Communication Technology Authority. Every day, I smile thinking about the insights, dynamism, force and positivity that emanate from our DFS providers – Airtel, MTN, Zoona, and others. Working in this market is probably the most fun I’ve ever had in my professional career.

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 has a diverse group of providers catering to the digital financial needs of the Zambian population. Zambia may be small, but it is mighty when it comes to DFS. The potential for growth in this market is one of the most remarkable things I have witnessed in my career in the sector. When I asked our current DFS Expert, Zerubabel Kwebiiha why he wanted to come work for us – he said “from everything I hear – and I’ve asked many people – Zambia is at a tipping point – and I want to be part of that”.

One trait that sets Zambia apart is the level of innovation and the speed at which it is willing to embrace DFS. For example, in just a couple of weeks the Bank of Zambia responded positively to providers requesting authorization to use Refugee IDs or Alien IDs as part of the Know Your Customer requirements for mobile money accounts. Both the speed of the request from the private sector and the speed of the response by the Bank of Zambia are a great sign and hope for the 57,000 persons of concern in the country. This first success is part of a new initiative UNCDF launched in partnership with UNHCR and with the support of the government through the Office of the Commissioner for Refugees. The objective is to digitize cash based interventions for persons of concern and vulnerable populations including refugees, former refugees and asylum seekers, coming mostly from the DRC, Angola and Somalia.

Facing the challenges head on

While we are driven by optimism and positive energy, the DFS ecosystem in Zambia faces many challenges as it works towards greater heights. As UNCDF MM4P takes on the role of the honest and neutral broker, we realize that it takes time to develop the trust that is required to get the relevant stakeholders to share their needs. As a reflection of exhaustive analysis of research, data, and interviews with stakeholders, our work is centered around the key challenges to the growth of DFS, described in our learning agenda below:

·      Enabling Customer Acquisition & Active Wallet use. First and foremost – a constant drumbeat from providers and regulators is the “meaningful awareness problem”. Zambians don’t know what DFS services are, what they can do for them, and how to sign up for them. We are working with providers to address this issue and ensure that products are created and marketed with the Zambian customer at the center. What strategies can DFS providers take to more effectively drive the adoption and usage of wallets?

·      Fixing the Agent Profitability Problem. Despite being on par with East African countries on transaction volumes, research and interviews consistently show Zambia to have the lowest agent revenue and profitability, which has resulted in the slow growth of agent networks. We are working with providers on trying to answer their question -- Why are agent profits so low in Zambia and what changes can operators make to improve profit levels?

·      Fixing the Agent Liquidity & Cash Availability Problem. Like most markets, 43% of agents “bounce” customers because they don’t have enough cash or e-float at the right time. This is related to the issue of agent profitability, but also one that is systemic and the responsibility of the provider. Most providers struggle with this issue and we are trying to help them answer the question -- How do we improve agent liquidity and cash availability that serves the needs of the client as well as the agent in a sustainable manner?

·      Modeling Sustainable High Volume Payments. Driving demand for digital finance is a very important “other side of the coin”. If there isn’t enough demand for DFS, they cannot be sustainable. We are working with UNHCR to digitize Cash Based Intervention to Refugees and private sector to develop bulk payment strategies. We’ve also helped the GRZ, of the largest payers and payees in the country, understand how much of their payments are in cash and digital – the first step to digitizing payments. Through these activities we hope to gain insights to help us answer the question -- How can high volume payments be digitized in a way that meets the needs of payer and payee?   

·      Enabling Wallets through the OTC bridge. Over-the-Counter (OTC) products are very popular in Zambia – but doesn’t provide a larger suite of services to the customer. Our work with Zoona to help launch the Sunga product helps to answer the questions-- Why do some customers prefer OTC over digital wallet usage? What profile of users are least and most likely to transition from OTC to wallet usage?

Looking to the future: MM4P’s strategy for this year

In 2017 UNCDF MM4P’s key priorities will reflect the key challenges facing the Zambian DFS market. We are working with DFS providers to devise strategies that effectively drive the adoption and usage of wallets. We are also looking at how high-volume payments e.g. government-to-person payments such as social cash transfers and salaries can be digitized in a way that meets the needs of the payer and the payee. MM4P Zambia is working with DFS providers to test innovative models that address the issues of agent profitability and agent liquidity,

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. 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. 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.

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
Additional Information
Nandini Harihareswara
Regional Technical Specialist, Digital Finance

Payment Flow Diagnostic for Government Payments in Zambia

Zambia

Wed, 03/22/2017 - 15:21 -- anna.ferracuti

The process for this diagnostic was carried out by the Mobile Money for the Poor programme, in collaboration with the Zambian Ministry of Finance, in order to map the landscape of payments by the Government of the Republic of Zambia and to identify which payments are made in cash and what proportion is digitized. The diagnostic used a methodology designed for the Better Than Cash Alliance that has been used in five other countries.

Government Payments Flow Diagnostic - Zambia

Zambia

Tue, 03/21/2017 - 11:25 -- anna.ferracuti

This diagnostic was carried out by the MM4P, in collaboration with the Zambian Ministry of Finance, in order to map the landscape of payments of the Government of the Republic of Zambia and to identify which payments are made in cash and what proportion is digitized. The diagnostic used a methodology designed for the Better Than Cash Alliance that has been used in five other countries.

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