This blog post is the first of two parts on Lesson #2: Using Mobile Money to Promote Financial Inclusion: Strategic Partnerships are Key and is part of a series covering the 10 Lessons Learned about Using Mobile Money to Promote Financial Inclusion. The idea for this series of blog articles came during the recent 6th Mobile Commerce Summit Asia. During the conference, it was good to see the growing consensus around strategic partnerships and alliances. In the past, these types of conferences focused too much attention on the debate between bank-led vs mobile network operator-led mobile money services. Fortunately, there is a growing consensus now away from this issue with a shift toward the importance and role of strategic partnerships for the deployment of mobile money services.
Building strategic partnerships is key to promote financial inclusion. Mobile money alone, without a significant value proposition from multiple partners, will hold limited value for customers and will not provide true financial inclusion. Partnerships to support the use of mobile money to support financial inclusion need to include a range of players such as international donors, governments, payment providers, and other companies that provide or sell products and/or services to small businesses and households.
The Role of International Donors
International donor projects can actually be one way for mobile money operators to better work with partners that can promote their services in ways that provide real win-win situations for greater financial inclusion. With the announcement last year of a consortium of public and private sector institutions under the Better Than Cash Alliance, a range of large and influential players are now providing support for a shift to electronic payments that can facilitate the use of mobile money for greater financial inclusion. The founding donor members of the alliance include USAID, UNCDF, and private donors such as the Bill and Melinda Gates Foundation and Omidyar Network. In addition, the role and importance of support provided by the UK’s Department for International Development (DfID) to help Vodafone to set up M-PESA is just the type of example of a successful mobile money partnership that many donor organizations are looking at to leverage their resources to promote greater financial inclusion.
In a number of countries, donors such as USAID provide hundreds of millions of dollars in foreign aid assistance and leverage billions in combined public-private partnerships. Many of these projects have had long histories supporting and working with large networks of private sector players that reach millions of people at the base of the economic pyramid. Several of these projects are looking for ways to improve efficiency and outreach, especially when it comes to payments, and this is where mobile money services can play a role.
The article entitled “The Role of Partnerships and Strategic Alliances to Promote Mobile Phone Banking at the Bottom of the Pyramid“, shares the role and importance of partnerships and alliances to utilize mobile money platforms and promote financial inclusion. This article highlighted successful examples such as the USAID/Philippines Microenterprise Access to Banking Services (MABS) program that was working alongside the Rural Bankers Association of the Philippines (RBAP). RBAP’s membership included over 500 banks with some 2,700 branches and other banking offices that provided outreach to over 6 million Filipinos. By leveraging the long history and experience working with the rural banking sector, USAID’s project was able to successfully facilitate a partnership between Globe Telecom’s G-Xhange Inc (GXI) and RBAP that helped to accredit over 1,100 rural bank agent locations and facilitated more than $400 million in mobile money-related banking transactions.
Recently, I came back from visits to Bangladesh and Nigeria where donors including USAID, the UN, and DfID all have a fairly major presence. With both USAID and the UN being part of the Better Than Cash Alliance and the history and experience of DfID with M-PESA in Kenya, all three of these donor organizations understand the role that mobile money can play in deepening financial inclusion. These donors also have long established histories working with private sector networks that reach tens of millions of low-income households and have the potential to make use of mobile money to increase financial inclusion.
In Bangladesh, USAID is supporting several innovative projects such as the Poverty Reduction by Increasing the Competitiveness of Enterprises (PRICE) project which helps tens of thousands of SMEs with almost a million workers to facilitate transactions across various business value chains. The Mission has also successfully worked with other projects including the Smiling Sun health clinics that provide services for more than 10 million Bangladeshis. With active and rising mobile money deployments in Bangladesh such as bKash and Dutch-Bangla Bank Ltd. looking for partners, and USAID, the UN and DfID projects looking to improve efficiency and productivity, forming partnerships between these players can facilitate greater financial inclusion.
In Nigeria, USAID’s very successful MARKETS project (highlighted in this video) works with over 1 million Nigerian small farmers, businesses, suppliers, buyers and traders across multiple agricultural value chains. This project has a long history with key players and farmer organizations across the country. Leveraging this network in partnership with new mobile money operators, brings together a potential win-win situation for both the operators and small farmers across the country.
USAID/Afghanistan’s Financial Access for Investing in the Development of Afghanistan (FAIDA) project has been providing extensive support to help develop the mobile money market in the country. This has included development of an association of mobile money operators and support for a variety of mobile payment ecosystems including payroll services and utility bill payments. In addition, USAID has been supporting customer education and the use of mobile money services in a number of other countries, especially in Haiti, the Philippines and Indonesia.
The Role of Governments
As noted by the World Bank study on payments, governments are the biggest generators of payments globally. With only 25% of developing countries using electronic funds transfers and the other countries interested in looking at ways to improve efficiency, transparency, and a safer way to provide government transfers, mobile money can provide a means to reaching clients via Government-to-Person (G2P) transfers. As I noted during the 2012 conference entitled “Leveraging Mobile Money to Increase Financial Inclusion in the Philippines“, disbursing G2P transfers via mobile money, especially if linked to a bank account, can dramatically increase the number of people with access to true financial services.
The Better Than Cash Alliance continues to provide governments with policy, technical and financial assistance to promote electronic transfers including the use of mobile money. Making mobile money platforms more user-friendly for governments and businesses wishing to disburse payments is key. This includes better online systems that make bulk payments via mobile money easier to use. Globe’s GCASH mobile money service was able to assist the Government of the Philippines to disburse over $ 100 million in conditional cash transfers via their online GCASH Remit platform.
Tomorrow’s second part of Lesson #2 will include the importance and role of payment networks and businesses to support the use of mobile money to promote greater financial inclusion.
Photo Credit: USAID/Philippines MABS program