Archive for the ‘Alternative currency’ Category

How the African movable assets bill can unleash innovation opportunities for the rural economy

Somewhere in Kenya, 4th June 2012 (Photo: Niti Bhan)

As Kenya joins Zambia and Zimbabwe in ratifying a Movable Property Security Rights Act, there’s a sense that the floodgates to innovation in access to finance might be taking place in rural Africa, south of the Sahara and north of South Africa.

Kenya’s law also goes beyond the cows and goats and allows a borrower to collateralise future receivables arising from contractual relationships.

How it ends up being implemented will set the stage for the next big disruption in financial inclusion. In the meantime, let’s take a closer look at the opportunity space for innovation in the informal and rural economy that dominates these operating environments.

 

1. A whole new bank, designed to meet the needs of rural Africa

Last night, a tweet by Charles Onyango-Obbo struck me forcibly, and reminded me of our Banking the Unbanked proposal crafted for ICICI back in January of 2007.

The very fact that contemporary thoughtleaders in the Kenyan banking industry are unable to take the concept of livestock as collateral for loans seriously, taken together with the deeply embedded assumptions of the formal economy’s financial structure leaves the door wide open to disruption.

It would not be too difficult to conceptualize a rural, co-operative bank custom designed for the local operating environment. In Kenya, where the mobile platform provides clear evidence of the viability, feasibility, and desirability of innovative financial tools and services that work for irregular income streams and provide the flexibility, reciprocity, and negotiability inherent in the cooperative local economies, such a bank could change the social and economic development landscape overnight.

In fact, one could conceivably foresee this “bank for rural Africa” scaling far beyond Kenya’s borders.

 

2. Insurance sector must respond to banking disruption

The domino effect of disruption in the banking sector should kickstart the stagnant insurance industry that has been ineffectually attempting to scale outside of the formal economy’s neatly defined boundaries. Bankers willing to take livestock as collateral for loans will therefore require insurance on their movable asset as a surety against the risk of disease, or drought.

Current products tend to emerge from the international aid industry, seeking to insure smallholder farmers against the shock of losing their livestock to climate related disasters such as prolonged drought, or an epidemic of illness. There is a dearth of relevant and appropriately designed insurance products from the private sector targeting the needs of the rural economy. For all the talk of African urbanization, even the most optimistic projections show that East Africa’s rural population will continue to dominate.

Thus, this an opportunity ripe for the plucking, given the right mix of product, pricing, and promotional messaging.

 

3. Disrupting assumptions of Poverty and Purchasing Power

Whether it is Kenya’s significant non profit sector or the nascent consumer oriented markets, the redrawn lines defining assets, collateral, and the floodgates of access to finance will require a complete overhaul in the way the population is segmented and measured.

Once these hundreds of movable assets have been valued, insured, and registered officially, even the most reluctant banker must now count the pastoralist among his wealthiest local clientele, able to draw a line of credit against his true wealth to the tune of thousands of dollars without feeling the pinch.

 

4. Triggering a rural investment and consumption boom

From mabati for a new roof and simti for the backyard wall, to the latest model smartphone or pickup truck, the concurrent boom in investments and consumption provides an ample playing ground for new products and services tailored for the contextual needs upcountry. Finally, Farmer Joe can install that solar powered irrigation pump for his orange groves in time to reap the next big harvest. And Mama Mercy can think of building up a nest egg of investments faster from the income provided by her farmyard animals.

Kagio Produce Market, Kenya, April 2013 (photo: Niti Bhan)

This might turn out to mean upgrading to a breed of high yield milch cows or being able to provide them with better quality feeds and medicines, but the financial bridge that a well designed strategy leveraging this movable assets bill and it’s timely implementation could mean the difference between the brass ring or treading water.

 

5. Trade and Commerce will open new markets

Given that the Kenyan Movable Property Security Rights Act 2017 goes beyond livestock to include other stores of wealth and value creation, there will be an undeniable impact on regional and cross border trade. No trader will give up the opportunity to leverage their existing inventory if it qualifies for additional credit that can be plowed back into the business.

On the road to Bungoma, Western Kenya, February 2016 (Photo: Niti Bhan)

Trader’s mindset and the documented biashara growth strategies already in evidence point clearly to the productive economic use of this access to finance rather than passive consumption alone. As their business grows, they will require a whole slew of tools and services tailored to their needs. This could be as simple as a basic book keeping app or as complex as customized commodity (assets, livestock, non perishable foodstuffs, grains and cereals) exchange platforms that integrate the disruptive new services percolating through the entire ecosystem.

 

In conclusion

These few steps outlined above are only the beginning of laying the foundation for disrupting the current social and economic development trajectory of small town and rural Kenya. I see immense potential for both direct to consumer as well as business to business segments for forward looking organizations seeking a foothold in the burgeoning East African markets.

We, at Emerging Futures Lab, would be pleased to offer you customized white papers on the opportunities for new products, services, and even business models, based on this emerging financial environment recently signed into law by President Kenyatta. Contact us for an exploratory conversation on the scope and scale of your particular industry’s needs. Our experienced team can help you maximize these opportunities from concept design and prototyping all the way through to path to market strategies.

Livestock as movable assets and financial collateral: Collected insights

Mama Mercy’s farm, Nyeri, Kenya (Photo: Niti Bhan, April 2013)

Following in the footsteps of Zimbabwe, Kenya has just passed a law on the use of movable assets as collateral for loans.

President Uhuru Kenyatta has signed into law a Bill allowing borrowers to use household goods, crops, live animals and even intellectual property to secure commercial loans in a move aimed at boosting access to credit.

This is an important move, because unlike Zimbabwe, the “Kenyan Movable Property Security Rights Act 2017 paves the way for the formation of a centralised electronic registry for mobile assets that financial institutions can use to verify the security offered.”

The implications for the rural economy, entrepreneurial smallscale farmers, and the informal trade sector are enormous, and I will take a deeper look and analyze the implications in subsequent posts. First, I will begin by collating the past decade’s writing on the role of livestock in household financial management, clustered broadly by theme:

 

 

On The Role of Livestock
The multifunctionality of livestock in rural Kenya ~ literature review
“households will treat livestock similarly to a savings account or stock portfolio and typically (and perhaps reluctantly) only sell livestock to cover cash shortfalls when certain necessary expenditures arise”
The Role of Livestock Data in Rural Africa: The Tanzanian Case Study
Only provides evidence of the importance of investing in same
The role of the cow as an investment vehicle in India: Insights on Return on Investment

 

 

Emerging Futures Lab Original Primary Research
The Prepaid Economy project 2009: Original research on rural economic behaviour (IDRC & iBoP Asia) – Part 1
Observations & analysis of rural household financial behaviour – Part 2
Synthesis & Insights on rural economic behaviour – Part 3
Visual documentation from Philippines, India, and Malawi – Part 4
Rural Bottom/Base of the Pyramid and their cash economy

 

 

Application of insights for innovation in Kenya
Component parts of the rural, social economy
Seasonality as a factor in livestock export trade finance
Rural Kenya’s livestock and produce markets are a complex, economic ecosystem
Affordability, pricing strategy, and business models
Livestock’s role in path to upward mobility
From the individual to the community: the rural economic ecosystem (Dec 2013)
Importance and value of the informal food market
Creative ways to financial inclusion, by Michael Kimani

 

 

To Read More: Use this tag “movable assets” for all forthcoming analyses, and you can find a decade’s worth of my original research on informal economy, prepaid business models, literature reviews and ethnography here. The entire subject can be found under the category “Biashara Economics“.

India: Dragging the reluctant elephant into a digital, cashless future

IMG_6947

Final processing for India’s digital identity platform Aadhaar, New Delhi on 3 March 2017 (Photo Credit: Niti Bhan)

My recent immersion in Delhi a mere four months after demonetization (or, notebandi as it’s locally known) was a bit of a letdown. Oh sure, there were numerous, visible changes in the 2 years since my last trip – mostly very clear indicators of India’s socio-economic development – but none of the sense of chaos that I was expecting, having relied primarily on third party news sources, that too, in English, in the weeks leading up to my departure.

The headlines would have it that people were dropping like flies on the streets. A grand total of 187* people died visibly due to notebandi, or so I heard. The two most common responses were either sympathy – people should not have had to die for something like this and it was a sad thing to happen; or pragmatism – “people die everyday, who knows why, maybe his time had come and he was standing in line.”

The overall atmosphere was one of energy – there’s less of a sense of lackadaisical chaos that used to characterise the neighbourhood market and it’s sleepy vendors waiting for the evening strollers. There’s a sense of purpose in the hustle, as though there was money to be made. Digital money.

IMG_6950The combination of a digital identity platform and the disruption of demonetization could indeed be said to describe ideal conditions for triggering cashless India. Cards are accepted far more easily than before. “Paytm” – a local payments app – is visible everywhere, from on demand cars (Ola, Uber, Meru, etc), small kiosks, through to shiny upmarket shops. As a taxi driver told me with a smirk, everyone’s using Paytm now, even the beggars.

Rural India is said to have suffered far more, according to the reports I’d read prior to my trip. This might be unevenly distributed according to geography and growing season – a factoryworker returning from his home village in Bihar said he’d attended a wedding with hundreds of people and surely someone would have had a sob story to share.

Instead, he’d heard it was the intermediaries in the farm to fork supply chain who purchase from myriads of small farms in order to aggregate in bulk prior to selling onwards towards the cities who’d been hit harder by the sudden lack of liquidity. They were caught in the middle of the cash based chain of transactions and had to carry the burden of wastage if they weren’t able to move produce fast enough. Anecdotes included them distributing potatoes freely to farmers to use as seed for the next harvest, and tomato prices crashing.

Articles in the news state that the economy was hit harder than people would admit to but none, as yet, have complimented the common man for his endurance under conditions of scarcity and hardship, nor praised the hardworking women who kept their families fed through their social networks of give and take.

All the papers – domestic and foreign – only go on about India’s GDP, the economy, the vast business sectors, and the politics. If at all the average Indian is mentioned it is through the lens of pity – “oh, the poor farmer is suffering” or some such heartrending sob story from the “informal sector” – there’s never any mention of their ingenuity in keeping things going without cash; or the way it was all held together under conditions of adversity and scarcity.

IMG_7319That, perhaps was my biggest takeaway from my open ended conversations with a wide range of people from different socio-economic strata, professions, backgrounds, and age groups.

Their palpable pride in themselves in having come through upheaval relatively unscathed, or having the wherewithal to manage.  All the rest of it, the Aadhaar digital ID, the use of technology for transparency and accountability, the mobile platform and its ubiquity, all of these and more, I believe, will sort themselves out in time.

I’m minded to end this with a quote from Rositta J. Valiyamattam writing, ironically, on the topic of Indian fiction (page xii):

“Their novels testify to the amazing resilience of the masses in a nation wherein the commoner is rendered helpless by an often corrupt mighty polity. What stands out is the assertion of the individual will over uncontrolled powers and unfavourable circumstances. They salute the heroic struggles of ordinary Indians in times of extraordinary transformation.”

 

 

*Word of mouth number, every report has a different total, so whatever. All photographs not captioned were taken in Delhi by Niti Bhan during March 2017.

Bridging East Africa’ formal – informal financial services divide

Kenya’s formal inclusion looks pretty, the financial inclusion industry has been has been great at talking up its achievements over the past 10 years. Here, 75.3% of Kenyans are now formally included, a 50.3% increase from 19 years ago. Official statistics on mobile phone penetration is up to 80.5% of the population and there is general consensus, the mobile phone has been central to expanding formal financial services to the – unbanked and under banked. The numbers are pretty awesome.

In February, FSD Kenya’s chart of the week featured an interesting pattern.

 

source: http://fsdkenya.org/data-visualization/chart-of-the-week-credit-in-kenya-how-big-are-loans-on-average/

source: http://fsdkenya.org/data-visualization/chart-of-the-week-credit-in-kenya-how-big-are-loans-on-average/

 

The red line marks the axis between the formal (prudential) and informal financial services alternatives. The largest source of credit for the bottom 40% populate the informal segment – SACCOs ,MFIs, Peer to peer, community groups. Dotting the top in blue are the banks and mobile banking lending products Mshwari.

So, there is more going on besides what the numbers say about formal financial inclusion.

 

Appreciating the informal sector’s financing alternatives

I got a sense of this gap between what the reports say and what was on the ground in 2015/2016 as part of 2 immersive fieldwork projects – Nyeri Mama’s Financial Diaries and later same year as part of Borderland Biashara: Mapping the cross border, national and regional trade in the East African informal economy project. I got to meet and spend time with biashara people, mama biashara, informal traders at the borderlands, boda boda guys, brokers and 65 year old Wangari – all in their natural setting – the mostly rural and cash intensive informal economies at the borderlands.

I found out that 90% of them had a basket of alternative credit, investment, insurance and savings informal financial products at their disposal – up to 8 different volatility management groups. The flavor of these alternatives ranged from extreme formal prudential to extreme informal.

Wangari, from Nyeri, for example, did not have a bank account but, was part of

  • 1 Micro-finance bank,
  • 2 Cooperatives
  • 1 ROSCA (Rotating Savings and Credit Association
  • 1 Chama (savings group)
  • a Catholic church group and
  • a modest Nokia mobile phone with Mobile wallet (Mpesa) and mobile wallet bank (Mshwari)

At the borderlands of Busia and Malaba between Kenya and Uganda, close to 96% of 100 biashara interviewees were part of at least 3 savings groups, besides their mobile phone. There was almost always one savings group that was part of their trade or craft networks.

 

Bridging the Gap

system-monster

When we look at the under banked strictly through the lenses of a bank, we miss out on the rich diversity of community bank-like products at their disposal. When their options are labelled informal, the tone becomes one of expanding the larger banking formal system, at the expense of our dear Chamas.

My suggestion for the present day efforts to push towards financial formalization, is to instead transform into a pull towards formality. Is there a middle ground? Where we can have the rich of the Chamas and savings group together with the formal financial system? Or where we can have a blend of the rich of the savings groups with technology?

Yes, we can, and there are examples from East Africa’s Kenya and West Africa’s Chad

  • Equity bank directly engages registered savings groups at the Busia Malaba border, a trader’s Chama.  A credit officer from a local branch attends weekly meetings with the group, and liaises between Equity Bank and the Chama. The bank facilitates loans guaranteed by the group as a unit. 

“Muranga county seeks to ease unemployment with cow loans”Daily Nation

  • Ng’ombe loan, by Muramati and Unaitas SACCO, was an unconventional loan product much closer to the realities of a rural Muranga. Youth in this county received high-yielding, pregnant dairy cows on credit, and were to repay the loan through milk deliveries to processors. An expectant cow as the loan principal, with repayments priced in daily milk deliveries. How cool!

“TigoPaare – People’s Banks for Communities across Africa”Balancing Act Africa

  • In Chad, Paare are the equivalent of Chama group savings plans in East Africa. TigoPaare is a group wallet that adds a ‘group layer’ on top of standard mobile money, to deal with common funds, trust and other group initiatives. The wallet helps informal cattle trades look after their income from cattle sales, with the functionality to make loans to members. The pilot attracted 19,000 users, including community mutual funds, cotton producers cooperatives, churches, market sellers and women’s groups.

 

 

Insights on the psychology of cash money – Demonetization vs Financial Inclusion

moneyThe flurry of commentary on the Great Indian Demonetization of November 2016 has thrown up some nuggets of insight worth considering more deeply.

Santosh Desai explores the psychology of cash money in the Times of India blog, linking the need for tangible evidence of income to physical labour, as opposed to those of us with the contextual knowledge to understand the virtual concept i.e. digital currency.

“…there is another aspect of this situation that needs more reflection- the nature of the relationship we enjoy with cash. Cash is not merely a symbolic representation of value. Cash is the idea of value captured and owned. It is the product of labour that is an entity by itself and becomes much more than what it can buy. Sitting on a pile of cash gives pleasure both metaphorical and real.”

“…there is some value that is placed on the device of currency notes over and above the value that it signifies.”

This aspect has not been looked at deeply enough, imho, when financial inclusion is talked about, particularly in the context of digital solutions. I suspect that therein will lie behavioural insights that could conceivably drive design changes that lower the barriers to adoption in the strategies to introduce digital currencies and mobile monies to hitherto unbanked populations.

Earning money needs to be signified concretely. Those whose life’s earnings are in the form of a few high value currency notes, do not decode demonetization in quite the same way as those used to money in its conceptual form. The idea that it is possible to de-legitimise their life’s labour is to shake the foundations on which one’s life is constructed. What if some money is not exchanged? What if some paperwork, that bane of those living on the margins, is incomplete?

What if the mobile phone’s battery dies? Do my hard earned monies disappear like other unsaved data?

Trust in technology is a function of our contextual knowledge – our immersion in an environment saturated with electronic communication and screens of all types and purposes provides us with conceptual frameworks that are entirely different from someone whose daily labour is on the farm, or at a mechanic’s garage.

While those who are financially excluded might not face demonetization i.e. the de-legitimization of their labour, as Desai mentions above, the current attempts to convert their cash intensive habits into digital form via various “cashless” initiatives overlook the psychology of cash. Regardless of locale, those at the margins (the excluded) have high levels of mistrust in the system, through their experiences with institutions and the system, over time and history.

The talk of ‘cashless’ is easy, but it ignores that there is a cultural dimension to the physicality of cash. Digital wallets operate on a transfer of intention, where a promise to pay gets converted into an intention to buy. For this to work at scale, one needs to have become comfortable with the idea of surplus and develop the confidence that money will come without having to struggle or having to think about it all the time. One needs to develop trust in institutions, in a context where the evidence around is overwhelmingly to the contrary.

I suspect that if this subject was explored further, we would discover that where mobile money has succeeded, such as in East Africa, the institution that was trusted was the telco – the mobile service operator, and that the early stages of adoption have a different narrative from that being used currently in entirely new markets where mobile money still struggles to penetrate. India and South Africa are two such places where the unbanked and the financially excluded have reasons of history to develop high mistrust of the systems of the privileged.

To convert one’s worth into worthlessness, even if for a small period is to make everyone nervous. Psychologically, money works on a convention of mutual deception. We agree to call something money, and that is good enough. But to have the thinness of this convention exposed in such a way is to cause great anxiety.

The transition to a cashless future can be made gentler and more accommodating to their fears and concerns, generating a sense of security and commitment, with some empathy for an entirely different world-view and life experience.

An economy of trust

_92445052_02Cash on credit is the caption given to this cartoon by the BBC. Neighbourhood groceries are offering their regular customers cash advances in addition to bread and milk.

While the media is filled with a plethora of stories of heartbreak, my own suspicion is that we’ll discover the resilience of the cash intensive informal sector lies in the relationships between people, once the hubbub has died down.

Mobile Money in South Africa: The nature of the beast by Flo Mosoane

pexels-photo-3The 2015 State Of The Industry Report (SOTIR) for Mobile Money published by GSMA, reveals a picture of a service that continues to change the landscape of financial inclusion in developing and poor countries across the globe. In December of 2015, the industry processed transactions in excess of a billion, most of which were in Sub Sahara Africa.

It seems however, that the continued success of Mobile Money eludes South Africa. What with the untimely death of Vodacom Mpesa after millions of Rands of reinvestment. Only 4 months after which MTN South Africa also announced that they are ceasing new registrations, marking the end of (Mobile Network Operator) MNO-lead Mobile Money deployments here.

Despite the large bang that MTN Mobile Money launched with, managing to sign over 2 million subscribers; at the end, Vodacom Mpesa only had just over 75 000 users, and MTN Mobile Money only about 140 000 or so users. A performance that neither of these well-established, successful, multinational MNO’s can be proud of.

We lament the apparent failure of Mobile Money in South Africa. It is well established that it has made a significant contribution to financial inclusion for underserved populations, and still presents significant opportunity to serve unbanked and underbanked communities.

This is a very special contribution by Flo Mosoane, writing from first hand experience on the ground on this subject. Do read the whole article.

Read On…

Design of Digital Financial Services for Inclusion Needs More Respect and Humility to Succeed

CpgubTsXgAQ78GS

Source: https://twitter.com/SharonKith

In the past week alone, I’ve seen three glaring cases of unquestioned assumptions around the design and implementation of Digital Financial Service (DFS) particularly for financial inclusion, but also otherwise. This gives rise to the question whether the industry is prepared to undertake the mission they have set for themselves.

The first is that their technology, in whatever form – the app, the device, the USSD service – will and should (unquestioned, remember) disrupt people’s behaviour completely. While it is true that using a mobile phone to make a payment instead of cash is a change in behaviour, or rather, habit, it is not the same as type of change as transforming the entire culture to become more individualistic as opposed to communal; or less relationship oriented and more contractually transactional. I am finding the words clumsy to use and hope that one of you reading this has the expert knowledge at their fingertips to better articulate what I am attempting to describe. Hofstede had a clue.

There is a fundamental arrogance in framing the need for human intermediaries in the digital financial service transaction model as a “necessary evil” – sounds like a toddler’s bad habit that they need to be weaned off in order to become adults. The bulk of those who are financially excluded live in cultures where human contact and social relationships within the community are more important than faceless, meaningless transactions by the individual isolated with their techno-utopian device. To expect this to change to conform to your pretty little use case diagram is rather presumptuous, if not downright offensive.

The second is more generalized. Its a blithe disregard for any differences in context and operating environment between the more formal economies and those where the informal sector is the majority. Nobody pauses to question whether there are differences that need to be considered. Its like landing on Mars expecting the same atmosphere. This report on the global emergence of a cashless economy ends with offering 3 implications of 4 megatrends.

If indeed two of these implications are the outcome of the single factor of increasing financial inclusion, then how can they be lumped together with the third implication which is clearly one meant for more advanced consumer markets? The interpretation on transaction volume and pricing behaviour is thus rendered inaccurate as it does not distinguish between the digital payment ecosystem currently prevalent in emerging markets from that existing in advanced markets.

When your fundamental premise has no foundation, your extrapolations and projections will not only be in error, but the unquestioned starting assumptions will snowball along the strategy and product development chain leading to a vast gaping void between your original intent and the actions taken, much less the outcomes aimed at.

Lastly, when it comes to fintech in the African context, there’s a pattern of analysis that is either too basic in its assumptions – mobile phones are good for digital financial services and nobody has actually noticed this fact because we never did; or, too ready to read the worst in a chart or the data. This leads to policy recommendations in 2016, ten years after Mpesa was introduced in Kenya, that offer up such insightful suggestions as “Africa must promote the use of mobiles to include the excluded financially.”

mobilebrkgs

This is rather disheartening for the rest of us who have been watching the African digital financial economy move forward in leaps and bounds, in many ways far ahead of the rest of the world. It also takes the current conversation back to kindergarten level rather than the post graduate courses we could be discussing. Given the advancements already actively engaged with across the continent, isn’t it time that policy researchers took the trouble to come up to speed?

And given the importance of financial inclusion, isn’t it time that the stakeholders actively working on digital financial services took their target audience seriously, with some respect, and wee bit more humility? They might discover their efforts move forward much faster.

 

 

Uber’s app lowers barriers to formalization for unorganized taxi industry in Kenya

IMG_3811

Nairobi Taxi stand, Kenya. February 2016 (photo: Niti Bhan)

This interesting article in the Kenyan news made me think about the role that an app like Uber could play in markets where there’s a high proportion of informal & unregulated business activity.

As with much technological advancement, resistance comes with change. Mpesa and the internet were once thought to be passing fads and have later changed industries. Uber’s disruptive strategy strayed from the normal operations in the local taxi industry. However, its benefits cannot be slighted. The app organizes the industry while creating a registry of taxi operators complete with their personal details and revenue earnings.

[…]

Deal with the local taxi organization or the app. Under the current laissez-faire model, the taxi associations are unregulated with the government unable to protect the consumers. Uber has stepped in to shape an unstructured industry into a formal operation.

What’s really interesting here is that same elements of the sharing economy that disrupt the more structured, formal markets in the industrialized world, are those that could provide structure and organization to the chaos of the cash based, informal sector in the developing world.

In effect, the gap between teh formal and the informal required something that could provide flexible, negotiable business models and organization structures in order to bridge effectively. Prepaid business models are one that work for the informal sector’s cash flows but they don’t provide any facility for an industry to organize – here, taking the necessary elements of flexiblity, negotiability, and reciprocity one step further into an app, the Uber solution offers information neatly captured and accessible at your fingertips.

Mobile Money’s next challenge: Enabling the development of a cashless ecosystem

equitel

Equitel billboard, Nairobi Kenya (Photo: Niti Bhan Jan 2016)

The latest GSMA State of the Industry report on Mobile Money is out this month and the numbers look great in the developing world.
developing mmtThe report frames the industry’s next challenge as the need to grow the platform beyond the basics of airtime purchase and person to person transfer.
use case 1Here are my concerns, starting with the very first sentence – “to convince customers to actively diversify their usage patterns.”

This is where there is a critical need for MNOs to segment their userbase prior to designing fresh approaches to increase adoption and build an ecosystem. According to the report, only a few MNOs have data on urban vs rural, much less on gender.

use case 2The report’s fashioning of the data available into the form of an “average user” will hinder the progress more than it will help. Look at the geographic spread across widely varying economies, there’s no such thing as an average user when it comes to a tool closely related to one’s patterns of cash flow and income sources. Usage patterns reflect cash flows – why else would the prepaid business model be dominant in these same locations?

The hard work of disaggregating the information into region specific customer profiles must be done if solutions are to work effectively beyond teh basics of P2P transfer and airtime purchase – mobile money’s equivalent of a phone call and an sms.

Many of the reasons why its important to segment by rural/urban, and the proportion of users in the informal sector and on prepaid subscriptions are covered in my old posts on Google’s BebaPay fiasco – a smartphone app enabled NFC solution for cashless public transport payments introduced in Kenya a few years ago.

Economic ecosystems, particularly those with a heavy dose of the informal sector, and closer links to rural hinterlands, such as those common in sub Sahara, will need to be mapped out and understood before interventions can be designed to lower barriers to adoption. These use cases may not be plug and play components or readymade low hanging fruit, as imagined by the writers of this report. They need grounding in the context of the existing operating environment – formal or informal, urban or rural – and, the characteristics of the informal and rural economies, depending on the segment.