Financial inclusion requires bringing the entire financial sector to serve low income and rural households. The most promising development in decades is the innovative use of mobile phones and other branchless banking technology as a means to do so. Unfortunately, the benefits of digital financial services are not reaching the poor in most of the least developed countries (LDCs). UNCDF estimates that 40% of adults in LDCs have access to mobile telephony, growing at a rate of 20% per year. In contrast, access to financial services by those same adults is approximately 14% and stagnant.
MM4P is designed to focus intently on some of the poorer countries where the commercial business case for digital financial services (DFS) is marginal, but the needs of the population are great. To reach MM4P is working intently with banks, mobile network operators, regulators and users of these services in challenging markets to help them reach to millions of additional customers who are currently unbanked. In doing so, UNCDF hopes to prove that these services can be offered sustainably by the private sector in LDCs.
MM4P activities in each country where it is active, are designed to support the country specific needs and can include:
- Getting service providers the technical support they need on-site;
- Supporting the development better products that are based on customers’ needs and demands;
- Building a stronger, more extensive network of financial service agents;
- Assisting central banks and other policy makers to build an enabling environment;
Theory of change
MM4P uses a theory of change approach to DFS development, which focuses on making shifts between stages of market development, moving from Inception to Start-up to Expansion and eventually a mature market known as the Consolidation phase. Through each stage, MM4P uses interventions that contribute to the development of a sustainable DFS ecosystem.
The United Nations Capital Development Fund (UNCDF) programme Mobile Money for the Poor (MM4P) uses a theory of change approach to DFS development, which focuses on making shifts between phases of market development, moving from Inception to Start-Up to Expansion and eventually to a mature market known as Consolidation. Through each phase, MM4P takes into account the entire DFS ecosystem. This means MM4P plans activities at the levels of Policy & Regulation, Infrastructure, Providers, Distribution, High Volume and Customers to improve market conditions and facilitate shifts. Benin has just moved from the Inception phase and is currently in the Start-Up phase of DFS market development.