1.6 Voices from the Field: Case Studies in Engagement

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1 Hugh Haworth, USAID/E3/MPEP (Moderator) Heath Cosgrove, USAID/Lebanon Joseph Lessard, USAID/Macedonia Elizabeth Feary, USAID/Yemen Steven Rynecki, USAID/Afghanistan 1.6 Voices from the Field: Case Studies in Engagement

2 Mobile Money in Afghanistan Leveraging the Mobile Network to Transform Afghanistan s Financial Sector 2013

3 Leveraging the Mobile Network Areas shaded in red reflect populations covered by existing mobile networks. The circles represent key urban centers. Using the Mobile Network to Bridge the Infrastructure, Security and literacy Gaps 70% (18 million) Afghans use mobile phones 85% of Afghans live in areas covered by the four mobile operators Interactive Voice Messaging technology bridges the literacy gap 3

4 VALUE PROPOSITION Mobile money has the power to revolutionize the banking sector in Afghanistan, enabling micro-lending, commercial transactions, salary payments, and money transfers, reducing transaction costs and corruption, and catalyzing new products and services

5 Should I apply mobile money to my program? RESEARCH Do you homework. It helps to have experts assess your programs and see if mobile money is feasible COST-BENEFIT If you see a fit, it s time to perform a simple cost-benefit analysis to ensure what you invest has a higher return for your program beneficiaries DECISION If you believe mobile money has merit, start the activity planning process with the Mobile Money Adviser

6 Members of Afghanistan s Mobile Money Operators Assn

7 Members of Afghanistan s Mobile Money Operators Assn

8 Mobile Innovations Key Challenges Consumer Issues Low consumer literacy Low consumer trust Lack of awareness Provider Issues Products not often designed for lowincome people Limited agent networks Market Issues Interoperability Liquidity 8

9 Mobile Innovations Current Pilots What we did so far: Provided technical assistance to regulators Grants for pilots targeting large payment streams (e.g. GIRoA salaries, utility payments) Utility Collections Teacher Salaries 9

10 How does mobile money work? Agent bank account linked to Mobile Money Service Provider for cash and commission transfer Bank Mobile Money Service Provider Bank Accounts (Pooled funds from all clients in at least four banks to diversify risk) - Agent account debited 4 + Client account credited 1 Client opens mobile money account via agent Agent 2 Electronic value sent to client s mobile wallet (salary, family) Client 3 Cash out from agent to client 10

11 Key Findings of the Sector Financial Model Public awareness and adequate resources devoted to training is critical to acceptance and uptake Competition will increase awareness and acceptance and put downward pressure on prices Expanded salary and other forms of government payments is the fastest way to inject funds into the ecosystem and will have the greatest impact on future use case adoption An extensive agent network is the key to the ecosystem, the largest cost for the MNO, and the most important element for the end user. Key factors include: Convenient locations Liquidity management (enough money in the till) Consumer protection Anti-Money Laundering, Anti-Terrorist Financing and Know Your Customer 11

12 Lessons Learned Mobile money is ultimately a volume driven business Speed of expansion is critical to generate sustained momentum Wide coverage (anytime, anyplace availability) is also critical Interoperability is key to scale

13 Proposed Way Forward Three concurrent tracks: 1. Build on CSTC-A s ANP salary payment expansion by adding as many Afghan Government and USGfunded payments within the 24 unbanked districts as possible such as teachers and district officials. 2. Maximize mobile payments usage in the first tranche of Transition municipalities and provinces in collaboration with MNOs and banks. Prospective payment flows include: a. Utility payments (750,000 electricity users) b. Internal remittances (i.e. from Kabul to Balkh) c. Microfinance and agricultural loan repayments d. Government and commercial salary payments 3. Sector-wide investments to ensure stable, secure and sustainable roll-out a. Strengthen the supervisory capacity of Da Afghanistan Bank b. Supply ID cards required for customer registration -- only 30% of Afghans have IDs. c. As needed, invest in agent network, telecom infrastructure and interoperability. 13

14 THANK YOU Steven Rynecki Mobile Money Adviser Mobile: