Posts Tagged ‘mobile money’

Are You Really Getting Your Share? Revenue Protection in Mobile Money

September 13, 2012

Ali Ndiwalana is Research Lead for Grameen Foundation’s AppLab Money Incubator and Lee-Anne Pitcaithly is Program Director for Grameen Foundation’s Mobile Financial Services Accelerator initiative. Both are based in our Uganda office. This blog post originally appeared on the CGAP Technology Blog. We’ve included an excerpt here with a link to the full post below.

Mobile money has had bad press lately for fraud-related cases. Most of the reported cases were either the result of internal employees misusing the system to cause operator losses or fraudsters trying to scam unsuspecting users. There is another angle that rarely gets any press—when users or agents abuse the platform and use it in rogue ways that it was never intended.

Across East Africa, most mobile money transactions are primarily between registered users. Registered users get free cash-in (convert cash into mobile money, steps 1), pay fees to make transfers to other registered users (step 2) and registered recipients pay fees to cash-out (convert mobile money into cash, step 3). Most transactions are single loop (from sender to receiver and then converted into cash) and the operator automatically deducts and shares fees with agents as summarized in the standard scenario.

Agents are critical for success of any mobile money platform, but they may also offer its weakest link. Let us consider a few examples. Agents may charge additional fees to customers, they may bypass the platform for withdrawals, they may perform over the counter transfers for customers to other agents if they have ability for P2P amongst agents or they may split transactions to take advantage of the pricing model. I am sure others can easily add to this list.

Continue reading the full post >>

Things Move More Slowly in Africa

June 27, 2012

Shannon Maynard is Director of Bankers without Borders® (BwB), Grameen Foundation’s skilled-volunteer initiative. Maynard has more than 15 years of experience in nonprofit management and volunteer mobilization. Before joining Grameen Foundation, she served as Executive Director of the President’s Council on Service and Civic Participation, and managed strategic initiatives for the Corporation for National and Community Service, a federal agency. This post is the third in a four-part series; you can read her first post here, and her second post here.

“Things move more slowly in Africa” – this is a common refrain for many of us at Grameen Foundation when we find ourselves experiencing hurdles with our work in places like Nigeria and Ethiopia. In fact, African countries and the organizations we work with do often lack the infrastructure – particularly the Internet connectivity – that contributes to the fast-paced, rapid-response world that those of us based in the United States have grown so accustomed to. Slower is also a word I’d use to describe Bankers without Borders’ own presence in Sub-Saharan Africa.

Joining Grameen Foundation after primarily working with US-based NGOs, I remember my own first experiences arranging a call with a microfinance institution (MFI) leader in Sub-Saharan Africa – fumbling around with Skype to enter the correct phone number, then getting a voicemail message in a language I couldn’t understand. It might take a few weeks of trying to connect at a time convenient for us both. In those early days, Grameen Foundation did not have local offices or staff in places like Nairobi, Accra or Kampala. Cultivating relationships and managing projects is difficult to do from a different continent, which is why I am amazed we were actually able to do any work in places like Ghana and Nigeria in those first few years of BwB.

Over the past year, however, BwB has been able to gain some traction in the region, thanks to the regional leadership of Erin Conner and Steve Wardle, and BwB Regional Program Officer Martin Gitari, all based in Nairobi.

David Washer (right) spent a week meeting clients and lending his skills in finance to Eshet, an Ethiopian microfinance institution, as part of Bankers without Borders' FiDavid Washer (right) spent a week meeting clients and lending his skills in finance to Eshet, an Ethiopian microfinance institution, as part of BwB's Financial Modeling Reserve Corps.nancial Modeling Reserve Corps.

David Washer (right) spent a week meeting clients and lending his skills in finance to Eshet, an Ethiopian microfinance institution, as part of BwB’s Financial Modeling Reserve Corps.

Grameen Foundation’s own programs, particularly our MOTECH work in Ghana and Community Knowledge Worker (CKW) program in Uganda, are BwB’s biggest clients. In our early days, we had a hard time convincing Grameen Foundation’s own technology teams of the services we could provide, because Grameen Foundation’s own employees assumed BwB was only focused on connecting bankers with microfinance institutions (a fair assumption, given our name). Thanks to some education on our part and the willingness of these programs’ leaders to give us a try, we’ve been able to place volunteers such as Chris Smith and Gillian Evans (a husband-and-wife team) with CKW and Roche employee Lynda Barton with MOTECH, in year-long placements. We’ve worked with CKW to establish a local collaboration with Makere University to provide interns to our Uganda office each semester. And we’ve just finalized arrangements to engage a Glaxo Smith Kline employee with the CKW team on a six-month assignment, starting this month.

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Panel Explores the Power of the Mobile Phone in Fighting Poverty

May 14, 2012

Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.

I first met Isobel Coleman, Senior Fellow for U.S. Foreign Policy and Director of the Civil Society, Markets and Democracy Initiative at the Council on Foreign Relations, through one of our greatest Grameen Foundation Board members, Lucy Billingsley.  When Isobel and I were introduced to each other, she was running a small program at the Council focused on women’s issues.  She has since grown it into a flagship initiative of this prestigious institution, and her reputation as a researcher and thought-leader has naturally grown along the way.

I was therefore very pleased when she invited me to speak as part of her Women and Technology series last week, alongside Ann Mei Chang, senior adviser for women and technology, Office of Global Women’s Issues at the U.S. Department of State (and formerly with Google), and Scott Ratzen, Vice President for Global Health at Johnson & Johnson.  The title of the session was “mDevelopment: Harnessing Mobile Technology for Global Economic Growth.”  We had a planning call with Isobel, Scott and Ann Mei the week before and I realized I was joining some extremely knowledgeable and articulate people.  To prepare, I read up on all of Grameen Foundation’s many programs that work to alleviate poverty by leveraging the mobile phone revolution, as well as some related research on inclusive business models.

Alex Counts makes a point while (from left) Isobel Coleman of the Council for Foreign Relations, Ann Mei Chang of the U.S. State Department and Scott Ratzan of Johnson & Johnson listen.

Alex Counts makes a point while (from left) Isobel Coleman of the Council for Foreign Relations, Ann Mei Chang of the U.S. State Department and Scott Ratzan of Johnson & Johnson listen.

The event was kicked off with remarks by Suzanne McCarren of ExxonMobil, which sponsors this speaker series.  Suzanne, whom I sat next to during lunch, explained why women’s economic development is a high priority for their company’s foundation, which has made more than $50 million in grants so far, according to my notes.  Then Cherie Blair, the former first lady of the United Kingdom and the founder of a foundation that bears her name, spoke.  She announced the release of an important new report titled, “Mobile Value-Added Services: A Business Opportunity for Women Entrepreneurs.”  I had met Cherie several times through Meera Gandhi, whose book Giving Back features the Cherie Blair Foundation for Women, as well as Grameen Foundation.

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Last-Mile Mobile Money Agents Bridging the Gap

April 20, 2012

Ali Ndiwalana is Research Lead for Grameen Foundation’s AppLab Money Incubator. Below is an excerpt from our AppLab blog, followed by a link to the full post.

Agents are critical for the success of a mobile money (MM) ecosystem; they provide an avenue for cash-in (converting cash into “e-value”) and cash-out transactions. Grameen Foundation’s AppLab Money team has been to many rural villages in our quest to better understand the needs of users, and have often encountered mobile money users, but no agents in the vicinity. When users told us they made regular transactions, we asked how they managed to do this. In many cases, it was via unofficial agents or “last-mile agents,” as we refer to them. So we started looking out for last-mile agents.

We did not have to wait long. Our next research assignment took us to Luweero, to interview individual users and learn more about their financial flows and sources of income. As luck would have it, we encountered two registered mobile money users who were also operating as last-mile agents – providing mobile money services to people in their village as a side business.

The first individual – for privacy’s sake, let’s call him John – was serving a community of unregistered users by sending and receiving money using his mobile money account. The bulk of his customers were villagers receiving money sent by relatives working far away. Because his customers dealt in low-value transactions, he made a profit by aggregating multiple small transactions into one large transaction, while charging for each separately. For example, if three villagers received money via his MM account and he had no cash on hand to clear them, he would aggregate all their money and just make one single withdrawal from his MM account.

Read the full blog post at the AppLab Blog.

Mobile Money Savings Systems: What Do Users Think?

March 23, 2012

Grameen Foundation’s Lisa Kienzle, Olga Morawczynski and Ali Ndiwalana recently co-authored a blog post with Ignacio Mas on the blog Mobile Active. Here they  introduce and user-test one concept of savings: deferred payments over mobile money. Below is an excerpt, followed by a link to the full post.

Grameen Foundation’s AppLab Money believes that mobile money is essentially a liquidity-management platform. Put differently, it could be described as LiFi: Connecting people to an electronic payment system via their mobile phones that provides Liquidity with Fidelity. What does it take to turn mobile money systems into a full-fledged savings platform? A full savings proposition would address these additional key elements:

  • Mechanisms to help people link their savings vehicles to particular savings purposes or spending goals
  • Incentives and discipline mechanisms to help customers set money aside into their savings vehicle(s), or “discipline in”
  • Incentive and discipline mechanisms to help people keep money in their savings vehicle(s) once it is saved, or “discipline out.”

The challenge is how to optimize the mobile money environment by adding these sorts of features without making mobile money so complex and unwieldy that it is difficult or impossible to manage on simple mobile phones.

Read the full post on the MobileActive blog >>

Turning Insights into Products: Gambling on Applab Money

March 19, 2012

Our Applab Money initative focuses on researching, prototyping and testing innovative financial products to reach poor people who don’t typically have access to these resources. Project Manager Olga Morawczynski and Operations and Strategy Manager Lisa Kienzle recently wrote on the CGAP blog about the need to develop creative products that focus on existing customer desires, use patterns, and needs. One example: using the idea of gaming and gambling to create a helpful product for poor people.

Arthur plays a popular board game called Ludo.

What follows is one example of an interesting insight that emerged on a recent field visit that could be translated into a product that poor customers could find exciting: on our trip, we noticed that everyone loves gambling.

While visiting a village in East Africa, we met a farmer named Arthur who enjoyed gambling in his spare time. We watched him spend $2 as an entrance fee to join three other players in a popular board game called Ludo (see photo). Arthur lost this round, and the entire pot of $8 was handed over to his neighbor. When asked why he played if there was a risk of loss, Arthur explained that the potential returns were very high – in fact, it would take him one week of intensive labor (such as digging on his neighbor’s farm) to earn what he could win from one round of Ludo. If he won the pot, he would set aside half as an “emergency fund” for his family to protect against shocks – such as an unexpected illness – and reinvest the rest into the game.

Imagine, they said, what would happen if Arthur had access to a formal financial product that provided a safeguard against emergencies, but the sensation of a game.

Read the full post on the CGAP blog.

Lessons Learned From Mobile Money in Tanzania

November 28, 2011

While researching mobile financial services (MFS) best practices, Grameen Foundation had an opportunity in August to visit Tujijenge Microfinance, a microfinance institution (MFI) in Tanzania. At the time of the visit, it was the only MFI in the country that had implemented MFS, and used it for more than two years, reaching one-third of their clients (5,000 people) with noted impact in institutional growth. It has used MFS for collection, both savings and loans.

Debora is a client of Tujijenge and serves as treasurer for her loan group. She sends repayments for the group using M-Pesa on her mobile phone.

Although MFS has been successful in Tujijenge, there are key lessons to be learned from this implementation. What was evident from the study was that customer awareness and training is key. Tujijenge did invest a lot of time training clients, conducting training at each group meeting, and creating informational pamphlets with simple language. Literacy levels in Tanzania are quite low, leaving a question over the success of the training and pamphlets, and whether clients had to struggle to understand the product, which would affect how easily and quickly they trusted the system.

The MFI’s staff are happy with the initiative. However, they are challenged by the down-times by the Mobile Network Operators’ system and the low literacy levels of most of their clients, which means they must spend a lot of time helping clients send their repayment. This close assistance can lead to fraud, as a loan officer may send money to his or her own phone account or to a wrong account, intentionally or accidentally. One way of mitigating this risk involves proper client training and awareness.

Another challenge involves the country’s financial regulator, the Central Bank of Tanzania, which regulates the amount that the e-wallet can hold per day. Each SIM card can only send a fixed amount of e-money per day and the transaction cost for loan disbursement is fixed at 1% of the value disbursed to the client. Due to these limitations, Tujijenge is not actively using mobile for disbursement.

Additionally, we have learned is that it is important to peg an MFI’s key performance indicators to any incentive scheme for staff, to motivate staff to enroll more clients into using the system when an MFI is rolling out MFS.

We’ve seen that market research is key to implementing mobile. MFIs interested in implementing such a program should always visit other regions where MFS is working, and do their own research, to familiarize themselves and contextualize how MFS works. “Copy and paste” never works! Remember that a different environment will always offer its own unique circumstances.

Finally, manage your expectations when rolling out an MFS solution. Tujijenge expected that many clients would be interested, but discovered many pitfalls after the pilot because it did not conduct enough market research prior to implementation, and so lacked information.

Story from the Field: Fortune Lost to Rats

October 26, 2010

Julius Matovu and Olga Morawczynski work on Grameen Foundation’s financial literacy initiative in Uganda.

Muhereza holds bag filled with money shredded by rats


Muhereza Kabaramagi lives in Katooke village, Kyenjojo district in Western Uganda; where she is a second-hand-clothes trader in the weekly mobile markets that take place around Kyenjojo district. She has been doing this work for the last 15 years.

She doesn’t have a bank account for two reasons: She lacks familiarity with how a bank operates, and the nearest bank to her village is 30 km away. The cost to travel from Katooke to Kyenjojo, where the bank is located, is 8,000 Ugx (US$4), which is more than she afford, given that she sometimes earns less than that in a week. So Muhereza decided to save her money in a secret place — a small handbag at home. She has been keeping money like this for the last 15 years.

Two months ago, business was not doing well for Muhereza. It was low season for the farmers who buy most the second-hand clothes that she sells. She decided to dip into her savings, which had accumulated to about 350,000 Ugx (US $150). But after digging out the handbag from a secret place in her bedroom, Muhereza made a startling discovery — her fortune had been shredded to tiny pieces by rats!

Muhereza was devastated but continued to save cash at home, keeping it in an impenetrable box. This was the best option for her, she explained to us, because the bank was too far from her village and the transport costs would quickly wipe out her small savings. But when we told her that there was a Mobile Money agent about 100 meters away from her home, Muhereza signed up as a customer to send and receive money.

Grameen Foundation’s Mobile Money program, which connects the poor to traditional financial services through mobile-phone technology, has a vital place in any solution that aims to mobilize the savings of the poor. There are already five times more mobile money agents than bank branches in rural areas of Uganda. Many of these are located in places where banks find it expensive to operate. Mobile Money is well-positioned to capture the billions of shillings that are stored in purses, under mattresses, and in impenetrable boxes. It is also well-positioned to link the poor to the formal financial sector by enabling these people to transfer money electronically to faraway bank branches affordably. This would radically reduce the transaction costs associated with banking and enable individuals to put away cash more frequently.

It is vitally important that solutions like this become more widespread in the developing world. Good savings practices can help the poor deal with unexpected financial difficulties (healthcare challenges, fluctuations in income, etc.), and such practices can best be enhanced when the poor have easy access to affordable financial services.