Posts Tagged ‘mobile money’

The importance of the agent/customer relationship for successful financial inclusion

The role of agent networks in East Africa’s mobile money and mobile banking roll-outs is widely documented; as an intermediary, a kiosk exchange point – accepting deposits for e-money/ withdrawals for cash and usajili (registration).

“. . .as the first point of contact, human agents help bridge the gap between a high-tech service and low-literacy clients.” – CGAP

But, most research falls short of exploring the subject in its entirety, specifically, the relationship between customers and human agents  – a recent example is the just released Agent Network Accelerator Survey – Kenya Country Report 2014 by Helix Institute of Digital Finance. To sum it up, I would say it was a numbers driven top-down approach to the subject (most likely focusing on what is best for the service provider), that failed to explore the human touch-points that make mobile money relatable.

“A lot these findings, I’m noticing, do indeed do all the research, but leave their underlying assumptions on people unquestioned [. . .] researchers go in & see behaviour – the What & How – but assume a lot on the Why”@prepaid africa

As I see it, there is a subtly rich layer to the mobile money agent and client relationship that is readily observable in close knit communities; frequent micro-transactions lead to conversations beyond basic transactions, off-the-cuff inquiries, and thus reinforce continued trust. For people not well acquainted with the intricacies of mobile money, or tech for that matter, these human intermediaries – the agents, most of whom happen to be women – are your trusted guides to the technology and face of the service providers.

Which is why, this assumption in a post by Mondato, hit a nerve.

“In the long run, as more fully developed digital payments ecosystems develop, there will be less need for agents . . .”

When talking about Africa’s markets, in mobile financial services or whatever context, research reports which disregard the qualitative nuance of local, social and communal interaction, lead easily to such assumptions. The  Helix report for example, grouped agents into 2 categories: rural and urban. On the ground however, these are polar extremes on a scale. If we go by strict definitions, this frame of reference doesn’t translate on the ground ; more common is a mix of both, or peri-urban or even rural folk who commute to their place of work in peri-urban. Perhaps a measure of cash intensity or ‘unbanked-ness’ in immediate contexts makes for a better framing?

My point is, the agent – customer relationship on Moi Avenue in Nairobi’s CBD, is markedly different from Githurai’s packed informal market place despite both located in Nairobi. In this cash intensive ecosystem, in the thick of all the chaos characteristic of informal micro-economies, human agents sit right next to mama biashara and boda boda guys. Here is where, you are likely to find the unbanked, underbanked and lower income segments.

I can’t help but think there is a larger role for mobile money agents in financial inclusion; one that resonates with commonly observed themes in this segment – social groups, local, face to face, trust. Like Monica, a cyber cafe attendant in Maai Mahiu whose role in the local community extends beyond simply offering internet browsing services. Jan Chipchase aptly describes this as symbiotic : customers, agents and service provider.

“The careful use of real world analytics combined with contextual qualitative understanding has the opportunity to reveal not only what people are doing, but also the nuances of how and why . . . this in turn will lead to the next round of service innovation insights”

‘Mpesa si pesa’ – mobile money’s collision with informal sector’s cash culture

Ever since mobile money (MM) came along, ‘cashless’ is all the rage in East Africa. Money experts have a sack-full of reasons why mobile money is good for the economy. The truth is, however, making a case for MM is easy – no doubt, but, one perspective that is often left out in almost all the headlines is how people interact with it (MM). In particular, those living or working in rural/peri-urban “informal sector” micro-economies – matatu drivers, Mama mboga, boda boda guys.

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Karantina, Kenya [Photo Credit: Niti Bhan]

This segment is important for several reasons

  • It makes up 55 per cent of Sub-Saharan Africa’s GDP and 80 per cent of the labour force according to Afdb’s Recognizing Africa’s Informal Sector
  • Sub Saharan markets are mostly dual economies – a mix of formal and informal markets
  • 90% of all transactions in informal markets are conducted in cash money.
  • The unbanked and underbanked are more likely to be found here

Valuable insights, unlikely to come up in the comfort of an office, have sprung out of my regular interactions with this segment.

Listening to the people

Consider Gichage for instance, a fruit vendor in Nairobi who says

Mpesa si pesa” swahili for ‘Mpesa is NOT money’,

right after I ask to pay for my 3 mangoes via mobile money. Or, the same look I get whenever I ask to make low value payments for boda boda flights or lunch at mama mboga’s (less than 200 KES/ $ 3).

“Hauna cash?” – Don’t you have cash?

“Utatuma na ya kutoa?” – Will you send with additional fees to cover withdrawal charges?

Almost always, a quick withdrawal into cash at the local MM agent (at a cost of time and money)  becomes necessary to settle my bills. The rest of the time, I oblige and pay dearly to have them accept my money.

Gleaning insights from the ground

Here, it seems I am a foreigner because, unlike the fancy malls where I pay with card/cash/mobile money – cash (and social capital) are the norm. What’s more, it is not just within this interaction space, but on the fringes as well where, the infomal crosses path with formal and semi-formal sectors & actors. My electronic money – MM and debit cards – is no good here – arguably, “si pesa”

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http://ethnographymatters.net/blog/2014/02/20/a-shift-in-the-business-environment-that-ethnographers-cant-ignore/

Are attempts at replacing cash with digital money, deep down, really about taking on ecosystems? – systems comprising of actors who interact and transact mostly in cash, social capital based debt instruments, community currencies or what have you.

If it is anything like the image above, where cash relationships are a complex web of bubble collisions, then, replacing cash is a greater challenge than we think.

 

This post is a guest blog by Michael Kimani (@pesa_africa) founder of the African Digital Currency Association

Connecting the Continent: Mobile Money across Africa

With much less fanfare than banking and accounts, a quieter revolution has been taking place on the electronic pathways connecting people in African regions. Historically competitive telcos are shaking hands and joining forces on mobile money. Interoperability has long been a dream and it is only now that we see things starting to take shape. Since the news has been dribbling out in bits and bobs over time, lets take a comprehensive look at the landscape of the operating environment and the connections being made across the continent.

social-media-listening-dashboard-5-638Safaricom, the progenitors of MPesa, the grandfather of all mobile money payment systems, isn’t actually a major telco on the continent. Its monopoly on mobile services is only in Kenya. However, when it comes to active mobile money users, its in the lead.

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http://www.gsma.com/mobilefordevelopment/annual-reports-show-mobile-money-remains-a-strategic-priority-for-mno-groups

This is the current state of the art of mobile money across the continent

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And here are some of the connections being made, with the most recent, first.

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crossborderremitEACYou’ll note the significant leap that MPesa has made by going beyond its original agreement with Tanzania’s Vodacom – a Vodafone group company – by joining hands with MTN. Using the same colour coding for the graphic below, we see the flows in West Africa:

crossborderremitWaemuIn addition to these mapped intra African operator alliances, here are a few intra-operator mobile money alliances to note:

  • Three of Tanzania’s four mobile networks, Tigo, Airtel and Zantel  announced Africa’s first agreement to allow their customers in the country to send money to each other whether using Tigo Pesa, Airtel Money or EzyPesa on their mobile handsets.
  • M-Pesa Tanzania and Tigo Pesa Tanzania interoperable
  • Airtel subscribers could also begin cross border remittances of money on its platform sending and receiving money amongst other users in Rwanda, Democratic Republic of Congo (DRC) and Zambia.
  • The other countries that will be offering the Airtel Money service soon include Uganda, Kenya, Tanzania, Ghana, Burkina Faso, Niger, Nigeria.

That last is interesting, because the Zambians are asking the $64,000 question even as all eyes are on the media hoopla.

Our concern is that the other 2 countries, DRC and Rwanda, are not exactly the first options for trade by Zambia, but are some of the markets Airtel is in. If countries like Nigeria and Tanzania were the first to get access, we’d see so many transfers from here.

For now, we predict the transfers made will be more personal, to family/friends, than for trade purposes. If not, we would gladly appreciate any statistics on this from Airtel itself.

I don’t think the telcoms are even thinking about trade. The GSMA cross border report focuses on the remittance aspect, with the broadly unquestioned assumption that its all to family and friends.

Mapping it all

I’d love it if someone could capture all of this into one map and infographic – not only the cross border transactional ability but also the cross border interoperability as well as in country interoperability. Like the Zambians, I think the potentials for business, trade, e-commerce and biashara are far more than anyone has even considered. Top down reportage on banking and interoperability seems to focus only on the customer’s individual needs, and overlooks their agency as entrepreneurs, traders and business people.

Mobile Money Is Driving Africa’s Cashless Future

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This article was written for HBR a few months ago. Here are some key snippets:

Three distinct factors are driving this transformation. First and foremost is the desire for financial inclusion. Africa’s unbanked majority needs access to affordable tools for savings, loans, and credit. The second is the need to lower the costs and risk of retail and trade based primarily on cash transactions. The third is the introduction of cashless policies from regulators in countries like Nigeria, Kenya, and Ghana. Low consumer confidence in traditional financial institutions also makes this an opportune moment for new players to enter the solution space. And cellular technology is leading the way.

[…]

But the possibilities for ecommerce and consumer marketing are enormous. Nigeria’s ecommerce market alone generates $2 million worth of transactions per week, and online transactions are expected to cross $6 billion by the end of 2014. Interestingly, the fears regarding Ebola and Boko Haram are driving more people to shop online (and stay at home). E-tail could help consumer goods companies leapfrog the need for extensive distribution infrastructure, something consumer product companies are already exploring.

The pros and cons of Kenya’s role as technology pioneer and East African frontier market

Rural Kenyan schoolhouse, somewhere near Kisii, March 2012

Only two years have passed since the publication of the Emerging Africa series of articles for Dirk Knemeyer’s GoInvo blog starting in February 2011. Since then I’ve had a much closer look at Kenya’s current state of the art when it comes to internet diffusion, renewable energy and of course, the mobile platform technology. I spent most of the time from September 2011 to August 2012 in Kenya, immersing myself at the cutting edge of what tomorrow would bring for some of us.

The emerging global middle classes, that the OECD described as being very different from the middle class as understood in Europe, can however be said to be exemplified by the aspiring, ambitious Kenyan. Where everyone seeks to be the next president, and why not, they dream, after all, it was within one of Kenya’s grandsons.

Just a quick *ahem* Google search on technology and Kenya brings to light such delicacies as Eric Schmidt, Google’s own CEO, proclaiming Nairobi to be the next global tech hub (though I do wonder what it means that the visit is to Kenya after North Korea or are the trips alphabetically planned? ;p) and the groundbreaking ceremony for Konza high tech city on the outskirts of Nairobi. The scent of rain in the air that Will Mutua once sensed as he wrote A Quiet Storm is brewing on Afrinnovator’s About pages only 3 or so years ago has become the sounds of a torrential thundershower.

Very quickly, Kenya has become the bellweather of tech innovation for Sub Saharan Africa. Though now I’d like to discuss the challenges acting as market forces upon the East African region.  If we take Kenya as the path where technology will trend towards in 1-2 years time for East Africa, followed by 3 or more for the rest of Sub Sahara, what is the downside of this framework?

The only danger that I can see would be that the other countries in the region do not ape Kenya’s model without assessing which aspects and factors fit within their own cultures and which need adaptation for local needs and relevance.

Airtel Africa has already faced this problem after Bharti bought out Zain in 16 or 17 Sub Saharan countries. Not only does the Indian model not port over directly but each country really needs its own market creation strategy.

Segmentation of the vast and undifferentiated “next billion” is critical if we are to refine and improve our business models and market entry strategies. Unlike India and China where their “next billion” markets are in their own backyards, thus not entirely unfamiliar, Sub Saharan Africa’s vast emerging middle classes are unique creatures in their own right, but for some similarities in household financial management. After all, its not fluke that 96% of all the mobile subscriptions across the entire continent is pay as you go or prepaid. And where better than Kenya, home of critical mass MPesa, that allows for testing innovation at enterprise and social levels, but with the caveat that results are not really generalizable.

That’s the unpredictable aspect for multi-country plans based on just a local sampling here and there, unless they are in a unique situation like mobile phone manufacturers. Even for something as basic to the household as a solar lantern, business models themselves had to adapt to the local operating environment.

Kenya is easily the most competitive market in the region with a legion of savvy, informed and heavily networked afripolitans ready to voice their opinion on the world stage. Erik Hersman once wrote that if it works in Africa, it will work anywhere. The mobile operators of the EU are yet to figure this out but the one that does will create a whole new market.

Intel has taken the decision to launch their first smartphone called Yolo through an alliance with Safaricom while HCL Infosystems has brought in a range of Android tablets in the 10,000 Ksh price band. Will the Yolo do better than the IDEOS? Only time (duration of the battery ;p) will tell.

The underlying principle of flexibility

The Economist writes about the proliferation of mobile money across the African continent, high lighting some aspects of its rapid adoption by the local population – 96% of whom are on prepaid or pay as you go mobile subscriptions.  A new survey of global financial habits by the Gates Foundation, the World Bank and Gallup World Poll found, among other things, that:

Most mobile-phone transactions are tiny. Market traders, for example, use mobile phones to pay peasant farmers for a single bag of cassava or maize-meal. One of the most successful mobile-phone products in Kenya is a SIM card costing just a few cents—but that is all people need for the occasional transaction.

In the informal economy, where the need to control one’s time (duration, frequency and periodicity) and money (cash or kind) was paramount, and where already the vast majority of mobile phone users are on prepaid accounts, these mobile money transfer systems offer the flexibility that those on irregular income streams need, in order to manage their finances effectively.  No credit checks or payslips or reams of banking paperwork involved.

I saw this informality in the social measurements used in the market – rough approximations of quantity and estimates of weight. I wondered in a different post what this willingness to be flexible might imply – where neither the buyer nor the seller were concerned about exact weights and measures, allowing a communal decision on fair price to emerge instead. Now it strikes me that the underlying principle of flexibility is what makes all of these models work.

Pondering a new prepaid research focus

Ever since I completed the first Prepaid Economy study which looked at how those on irregular income streams managed their household finances – focusing on rural Philippines and India – I’ve been curious about rural Kenya. I’ve long wanted to delve into the impact, if any, of the mobile money systems that have rapidly gained popularity in the country.

My thinking goes that if I were to ask the same set of questions as I did in Philippines and India (and as John Lumbe did for me remotely in Malawi) without any prompting, then if services like MPESA et al had indeed made any signficant social or economic impact in the ways people deal with and manage emergencies, loans and planning for large future expenses, it would emerge spontaneously in the answers given.

Now it looks as though I may just get my chance to follow through with this dream in at least two rural locations, early in the new year. Lets keep our fingers crossed.

Looking Forward: Where Next Generation Innovation is Coming From.

Mobile PhoneAs the mobile phone increasingly becomes the world’s primary source of information, thought leaders in design and development of online services and applications are looking at refining and changing design principles required for effective outcomes on this platform as compared to the World Wide Web. Their focus has primarily been the usage patterns and customer behaviors in the developed world such as the United States. But what’s happening in Africa should not be overlooked as these systems and processes for best practice evolve. Unlike the internet which first emerged in the US and spread throughout the world, the mobile platform, in many ways is far more advanced and essential a tool in the developing world. Without the legacy of technology infrastructure, the mobile has leapfrogged the need, in many ways, for larger more complex computer systems for many applications.

Read On…