Mobile Money – Page 4

Financial services demonstrate the most proven sustainable business models within ICT4D

The following is a guest post we’re pleased to share by Hystra Consulting and Ashoka.

A recent study reveals how Information and Communication Technology (ICT) can viably provide access to education, healthcare, agro-services and financial services to the Base of the Pyramid (BoP). The study reviewed more than 280 initiatives set up by various types of actors (corporations, Citizen Sector Organizations, social entrepreneurs…) in Asia, Latin America and Africa which are using ICTs to provide services to the BoP. Hystra, a French consulting firm and its partner Ashoka evaluated the projects based on their ability to solve a problem, their scalability and their financial sustainability. The report presents 15 of the most ground breaking market-based business models, which have reached a significant level of scale and have improved the living standards of the BoP using ICTs.

Financial sustainability varies across sectors, financial services being the most mature of the four areas studied.

3 of the projects featured as financial services case studies in the report serve profitably more than 5 million customers each via different business models: M-PESA in Kenya with mobile money, Bradesco in Brazil with branchless banking via post offices and small retail shops, and FINO in India with a suite of POS-powered financial services available to over 40 million clients via door-to-door agents.[1]

Why are financial services the most developed area in terms of business model sustainability? One of the reasons cited is the willingness of clients to pay upfront for the service, because it offers them immediate savings compared to previous practices (such as cheaper money transfers). Moreover ICT-based financial services often go well beyond previous offerings, creating new practices for unbanked populations such as savings or insurance schemes that lower their vulnerability to adverse events. For example, some MNOs have developed innovative loyalty-based life insurance covers. These types of products help reduce churn and attract new customers for MNOs while providing a new valuable service to customers.

Establishing trust in the service is a key factor of success for ICT-based financial services, as they deal directly with people’s money. These services require robust and secured platforms, in addition to trusted agents who are able to sell the service, manage liquidity and provide a direct interface between the technology platform and end-users. Leveraging existing trusted networks such as Safaricom’s airtime resellers (in the case of M-PESA) or post office agents (in the case of Bradesco) appears as an effective way to create trust in these services.

The business models studied in the report tap into multiple revenue sources, getting commissions from governments for g2p payments, banks and insurance companies for the opening of new accounts, end-users for the transactions they perform, and MNOs which benefit from customer retention and higher end-users fees. Governments can actually play a large role in promoting such services: using them for their G2P payments, they can be a sufficiently large first client of ICT-based financial services to justify the initial investment in the technology that new companies entering this space need to make – one of the first services offered by FINO was G2P payments and state health insurance, for example. Many actors have tried – with mitigated success – to replicate M-PESA. However, the study points out to a wider range of models which can be just as effective in providing financial services using ICT. The key is to find which business model is suitable in each local context.

The study was sponsored by AFD, Ericsson, France Telecom-Orange, ICCO and TNO and conducted by Hystra and Ashoka. The full report is available for download in the MMU library.

[1] The number of FINO clients stood at “only” 28 million when the case study was done in February 2011, but FINO grows by over a million customers each month!

January 25, 2012/by actualize

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

Credit Agricole Egypt moves closer to mobile banking

Egyptian bank Credit Agricole Egypt launched has announced on Tuesday it had launched new banking that would allow both customers and non-customers to pay bills without a CAE debit or credit card. Analysts believe this is one step closer to full-on mobile banking in the country.

Analysts believe this is one step closer to full-on mobile banking in the country (image: stock.xchng)

The move is seen as a step toward making banking easier for customers in Egypt, long fraught with difficulties and red tape.

“It’s a wonderful endeavour that will hopefully push the country into the realm of great possibilities and personally, I am getting to use it already because I want to try it out and see if it will be successful,” securities and trade expert for CI Capital Mohamed Naguib said.

The move is in cooperation with Fawry and makes CAE the first such bank in the country to off the service to both customers and non-customers, which allows people to pay bills using cash or other bank cards.

“I see it as a move toward better technology within the banking sector and could be a jumping point for other IT related banking initiatives in the country,” added Naguib.

Customers can now pay at their leisure and has launched a new website to enable customers to do so online.

“Bill payment represents a more efficient, fast and reliable method of payment by allowing consumers to instantly pay their bills anytime at their convenience through Crédit Agricole Egypt’s nationwide network of ATMs,” the company said in a statement.

Currently, the new bill payment service is offered to all mobile subscribers, as well as Egypt Telecom, TE Data, Linkdotnet, Air Arabia, the Food Bank and CIL insurance payments, the statement said.

“Crédit Agricole Egypt is the first bank to offer the cardless ATM bill payment option. This new service does not require the possession of a CAE debit card. Thus, with our bill payment service, no one will have to worry about unpaid bills no matter where they are,” said Jean-Francois Drion, managing director, Crédit Agricole Egypt, in the same statement.

Desmond Shephard

January 18, 2012/by actualize

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

Mobile Money: the preferred channel for Haiti 2 years after the quake!

Photo Credit: USAID Impact blog

A new finding by Dalberg Global Development Advisors reveals that mobile money (MM) channel has emerged as the preferred alternative out of four major ICT solutions used in Haiti within the past two years after the 2010 earthquake.

The report “Plugging into Mobile Money Platforms: Early Experiences of NGOs in the Field” indicates that four electronic cash distribution solutions have emerged globally as alternative channels to physical delivery of cash to humanitarian victims. These are mobile money, electronic vouchers, prepaid cards, and smart cards.

The finding attests to the fact that the success of any of these four mechanisms of money transfer will often depend on the supporting environment. For example money transfers through pre-paid and smart cards work better when there exist a strong banking infrastructure and credit card networks. In the absence of this infrastructure such as the case in Haiti after the quake, the only two remaining options are physical cash delivery and mobile-based solutions.

The report continues that in Haiti, MM has emerged as the preferred alternative to physical delivery because of the rapid development of mobile telephony and the successful launch of MM. Haiti has completed more MM cash transfer programs than any other country, and to date, just under US $6 million in transfers has been disbursed to more than 24,000 beneficiaries via the MM channels of six NGO programs, the report said.

It will be recalled that Haiti was hit by a catastrophic magnitude 7.0 M_w earthquake, with the epicenter near the town of Léogâne, approximately 25 km (16 miles) west of Port-au-Prince, Haiti’s capital on Tuesday January 12 2010. The aftermath of this earthquake led to a massive relief and recovery efforts by non-governmental organizations (NGOs) with global support from individuals, governments, foundations, international organizations and the United Nations.

In June 2010, the Bill and Melinda Gates Foundation and the USAID-funded project in Haiti, Integrated Finance for Value Chains and Enterprises (HIFIVE) announced the launch of the Haiti Mobile Money Initiative (HMMI) to stimulate the development of mobile money services in Haiti.

For the detailed report, visit here.

January 13, 2012/by actualize

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

Nigeria’s Central Bank to issue more mobile money licenses

Nigeria’s Central Bank announced it would issue more mobile money licenses in an effort to streamline the process and deliver more options to Nigerians.

Nigeria’s Central Bank announced it would issue more mobile money license (image: BBC)

The Deputy Director of Domestic Payment Division of the Central Bank of Nigeria Emmanual Obaigbona, said that the move is to assist banks in their ability to move the program forward, which officially began on 1 January.

Obaigbona added in a statement that the aim is to broaden the overall participation in mobile money system, in general, and the cash-less policy in particular.

He added that “the apex bank has already licensed 11 mobile operators who successfully passed the pilot studies conducted for them last year.

“The 11 licensed operators are not the end of the list. The CBN intends to license more operators to meet the set standards for operating mobile money services in the country,” Obaigbona said.

He continued to say that the apex bank’s decision to issue the mobile money license “was to reduce the unbanked population to the barest minimum and subsequently develop the economy.”

Still the move has many analysts worried that it could create too many restrictions in the country, especially after the central bank barred telecom operators from promoting any specific mobile money product.

“I am a bit concerned that this will open the market up too wide and destroy companies and peoples’ ability to understand what they are participating in right now,” said Asamoa Hiran, a telecom and banking specialist in Lagos.

He told IT News Africa that there is “too much confusion right now to really understand what is going on, so we are all waiting to see what the future will hold.”

The launch of mobile money banking hopes to move Nigeria, which has the largest population not using banks, into the financial system.

David Eto

January 12, 2012/by actualize

Agriculture, Extension Service, Mobile Money, Originally posted on the GBI Portal

Rural Youth in Kenya, and the Impact of ICTs

We would be missing the full significance of ICTs if we do not see them as an integral part in the efforts to improve the everyday life of rural folk in Kenya. Mobile technology being the key mode of communication in the country has contributed greatly to local youth livelihoods. Using mobile phones, the youth have able to access knowledge and information which are vital aspects for improving agricultural development by increasing agricultural yields and marketing.

With accessibility of mobile phone networks throughout the country, services such as Safaricom’s mobile money transfer (M-Pesa), mobile money banking (M Kesho) and information on agricultural produce markets have created job opportunities for the youth as the number of agents increase.

Kamau a young Kenyan in his late twenties from a farming community in Nakuru who approached Equity Bank in 2007 for a loan to set up an M-Pesa shop is an example. As well as farmers and traders were enabled to deposit or withdraw money using their mobile phones, Kamau was able to pay back his start-up loan in just six instalments. “This is to bring financial services to a place where people lack them” he explains.

By simplifying money access, members of the community have more money at their disposal and therefore are more likely to spend it locally. The service has also enabled farmers and traders to purchase inputs and make orders with their suppliers without having to travel into town. The savings made on transport costs enable them to acquire more stock, which means that the entire community benefits from more goods being available locally.

Kamau’s business has also benefitted from transactions made by the farm owners residing in a nearby Nakuru town, who do not have to commute to the village to pay their casual labourers. These farm owners are also able to pay their faming supervisors for land preparation and purchase of fertilisers and seeds.

In 2008, the entire region of Nakuru experienced a severe drought, which led to widespread crop failure, and Kamau noticed an increased flow of money through his business due to remittances from relatives in urban areas. “This service has strengthened friendships and social interactions in the community,” Kamau says. “Moreover, this has greatly contributed to the success of my business. This means that the entire community benefits from the goods available.”

With the revenue generated by his M-Pesa business, Kamau has diversified into farming, now leasing 20 acres of land. He also receives information about husbandry practices from the Organic Farmer e-bulletin, published by the International Centre for Insects, Pests and Ecology (ICIPE), through his data-enabled mobile phone, helping him to grow maize, beans and potatoes.

The subscribed SMS-based ‘411 Get It’ alerts service, a joint venture between Safaricom and the Kenya Agricultural Commodity Exchange (KACE), also provides Kamau with information on agricultural produce and market prices, enabling him to identify favourable markets and cut out middle men. With the profits from his farm, Kamau opened an M-Kesho business, allowing community members to make deposits from their M-Pesa accounts into an Equity Bank account where they earn interest. “This is an incentive for rural youths to engage in farming,” Kamau adds.

During the planting and weeding season, Kamau’s operating capital is reduced as his customers increase their M-Pesa withdrawals. To counter this problem, Kamau took out another loan from Equity Bank to purchase a motorcycle so that he could travel to Nakuru town quickly to top up his M-Pesa account. As a result, he has a steady flow of cash in order to facilitate local business transactions.

Regardless of an increasing range of information services available through the internet, literacy remains a stumbling block for many people because these services are only supplied in official languages. The technologies therefore need to be adapted in such a way as to be accessible in a variety of local dialects to help farmers have easy access to modern farming information and technologies, especially to battle hunger despite dry spells. Access to ICT services would also help to foster local skill building and knowledge sharing between rural communities.

Kamau’s experiences and business understanding clearly show the important linkages and synergies that exist between the development of ICTs and information sharing that can support the livelihoods of a large cross-section of youth and other members of communities for agricultural and rural development.

By Chris Mwangi – I am affiliated to Agriculture, Rural and Youth in the Information society (CTA-ARDYIS Project). Its function is to raise youth awareness and capacity on agricultural and rural development issues in ACP countries through ICTs

August 12, 2011/by actualize

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