Faced with poor reading outcomes on national literacy assessments, Cambodia’s Ministry of Education, Youth, and Sport (MoEYS) shifted to a phonics-based approach to teaching reading in 2011 and recently rolled out new reading textbooks for grades one through three. The newness of the curriculum means that many teachers are unfamiliar with it. World Education, Inc. (WEI) is playing a valuable role in helping schools successfully adjust to the new curriculum and promoting early grade reading through their Total Reading Approach for Children (TRAC) project. Made possible through the generous support of an All Children Reading [1] grant, WEI is working closely with local partner Kampuchean Action for Primary Education (KAPE), as well as collaborating with MoEYS to implement TRAC in three provinces in order to improve early grade reading among Cambodian children.

While many reading projects only focus on one area of a child’s reading environment (such as materials or teachers, etc.), TRAC is an innovative approach that addresses reading both at school and at home. TRAC has collaborated with MoEYS to develop short interval reading benchmarks in order to regularly assess students’ progress in acquiring reading skills. The project has also identified and trained literacy coaches for each target school who will work with teachers to assess the children and determine the skill areas in which they need more practice to achieve mastery. The coaches then act as a liaison between the schools and the parents to provide students with the learning support they need by administering TRAC’s Rapid Response System (RRS). The RRS includes garnering parental engagement and support; a Reading Toolkit that includes games, books, and other materials and is linked directly to the MoEYS reading textbooks and benchmarks; and a Khmer language mLearning application for mobile devices that is also directly linked to the MoEYS textbook and benchmarks.

The smartphone market in Cambodia is surging, with 26% of mobile devices subscriptions being for smartphones. Smartphone penetration is expected to increase substantially over the next few years, which will allow TRAC’s mLearning application to reach a significant number of children.

The mLearning application is not only an important component of TRAC, but it will also be the first Khmer language education app for the primary grades. To create this app, WEI has partnered with education software developer Smart4Kids LLC. WEI has divided the grade 1 and 2 curricula into 31 units that are aligned with the assessment benchmarks that TRAC has created as described above. For each unit WEI and MoEYS have identified and provided the appropriate educational content to include in the stories and games on the app (e.g., phonics, sight words, supporting visuals, audio), and then Media One, a local NGO and partner of the TRAC project, provides the illustrations and audio. This material is passed on to Smart4Kids, who integrates it into the app to create engaging learning games and stories.

The open-source app runs on the Android platform. A web-based version of the app has been completed, and a group of students recently tested it out and provided useful feedback. An Android version will be finished for testing in the next quarter, and the final version is expected to be completed by August: Just in time to be downloaded on to the tablets and smartphones that TRAC provides to each target school and on to families’ personal smartphones before the next school year begins.

Photos: Courtesy of the author.

Mobile health (mHealth) deployments have grown dramatically in recent years, particularly in emerging markets, where base-of-the pyramid populations often lack access to basic health services, but possess a mobile phone. However, despite the proliferation of mHealth platforms, many remain limited in scale and are poorly integrated into existing healthcare systems. Introducing mobile financial services (MFS) within these platforms may offer a way to drive reduced costs and enhanced efficiency – resulting in more affordable, inclusive healthcare systems.

The Emergent mHealth Sector

According to the GSMA mHealth Tracker, there are currently over 900 planned or deployed mHealth products and services globally, with the majority concentrated in Africa and over 100 in East Africa alone. Over the next few years, the global mHealth market is expected to exceed USD $30 billion, according to a recent GSMA mHealth report, as stakeholders look to reduce costs, add value and enhance the reach of health services.

However, despite projections of dramatic growth in the mHealth sector, particularly in low and middle-income countries, current offerings face many challenges. The GSMA report, for instance, suggests that many mHealth services remain limited in scale and lack commercial viability. According to Patricia Mechael, Executive Director of the mHealth Alliance, in a recent interview: “This inability to scale-up is often due to a lack of alignment with national health priorities,” and the lack of clarity within a range of areas, including: responsibility for financing, technology standards and policies to protect patient privacy.

Another key challenge to developing sustainable mHealth programs in emerging markets, according to Mechael, is establishing reliable financial systems with which to pay for the services. While healthcare spending consumes an average of 10 percent of GDP in OECD countries, low-income countries only devote around 5 percent of their GDP to health. Accordingly, health systems in low and middle income countries are often “overburdened and underfunded,” said Mechael, with broken supply chains, under-trained health workers and unequal access to basic life-saving information and transportation.

Harnessing Mobile Financial Services to Improve Health Systems

In the emerging market context, integration of MFS into healthcare offerings can play an important role, contributing to the development of more sustainable business models (among for-profit healthcare providers), higher quality of care and greater access to care, according to Menekse Gencer, founder of mPay Connect, in a recent interview. From governments to private health service providers, harnessing mobile money technology can benefit a range of healthcare stakeholders.

For instance, healthcare providers – both public and private sector – can use mobile money as a means to better control financial flows and shift towards more transparent payments for health worker salaries. According to a recent mHealth Alliance report, of which Gencer was the lead author, current cash or check payment systems can be cumbersome and insecure, creating unnecessary costs for both workers and the provider. Disbursing salaries into mobile money accounts can reduce costs and enable providers to devote more resources towards serving patients.

Mobile financial services can further be used as a tool to incentivize improved performance among community healthcare workers, enhancing the impact of health services. In Pakistan, for instance, the non-profit Indus Hospital, “Pakistan’s First Paperless Hospital,” used mobile money to disburse financial rewards to health workers who screened for tuberculosis (TB) in their communities. The initiative led to a dramatic increase in reported TB cases, which more than doubled during the six months following its launch.

Tapping into expansive agent networks and mobile network infrastructure, integrating MFS may also enable healthcare providers to reach more patients. For example, mHealth providers can leverage MFS agent networks to accomplish shared or redundant tasks, such as signing up users, checking ID and registering phone numbers, according to the mHealth Alliance report.

Private sector stakeholders, such as for-profit healthcare providers, mobile operators or financial institutions, can also benefit from the integration of MFS into the health ecosystem. According to Gencer, leveraging MFS can support more sustainable business models for mHealth providers – boosting revenue through new value chain participants, and lowering costs incurred as a result of cash management, fraud, and settlement of remote payments for diagnostics and other services. Mobile operators looking to bolster revenues, further, may find value in offering health-focused mobile money products (such as the mobile health insurance product offered in partnership with Safaricom in Kenya).

Enhancing Health Access through MFS

Integrating MFS into healthcare systems in emerging markets further holds broad benefits from low-income, mobile phone-toting patients. According to Mechael, “Mobile money can provide a secure, easy way to pay for health services in developing countries, where most healthcare spending comes out-of-pocket.”

Additionally, providing low-income populations with alternative mobile financial services, such as savings, insurance or loans, can better enable them to afford health services, according to Gencer. In Part II of this blog series to be published next week, we profile a few companies that leverage the M-Pesa infrastructure to offer these alternative financial resources.

Resistance to Change

Integrating new technology into established systems is not always easy, and existing players may be resistant to changing the status quo. Barriers to adoption may include issues of privacy, security of clinical data and limited evidence or research regarding how integrating technology (such as MFS) can improve health outcomes, according to a Vodafone mHealth report. Government healthcare providers, specifically, with their layers of bureaucracy, may be slow to transition from paper-based to mobile payment systems, despite the promise of a long-term pay-off.

Further, while mobile money is growing at a rapid pace, “it is still not ubiquitous,” said Gencer. Accordingly, she suggested: “any decision to use MFS for health must be accompanied by a full understanding of the extent of the MFS infrastructure in that market.” According to an mHealth Alliance report published in March 2012, leveraging MFS for health initiatives can have prohibitive set-up costs, due to the cross sectoral and highly fragmented nature of the mobile money industry.

Mobile financial services hold tremendous promise for transforming existing healthcare systems in emerging markets, benefiting all stakeholders, including patients. However, limited scalability among existing mobile health offerings suggests that this potential has yet to be fully capitalized upon. Achieving effective platforms will require key healthcare players to proactively research and adopt these new technologies. Further, innovators will need to continue developing user-friendly, interoperable services that reach those who need them most.

Smallholders form the majority of farmers in most of the developing world (over 60% in Africa); and smallholder agriculture is increasingly important, both to boost national productivity and rural incomes. Smallholders therefore need adequate support to adjust to the changes, produce efficiently and participate in an increasingly globalised agricultural market for improved livelihoods.

For many farmers in sub-Saharan Africa, access to timely and relevant information regarding production, technology, production standards, input and agricultural finance remains a major challenge. Governments over the years have been unable to adequately support producers to access information. In reality, farmer extension ratios in most countries are getting worse than they were some two decades ago.

The emerging experience in the financial sector in using mobile technology such as M-PESA to reach the unbanked is providing some vital lessons that can be adopted in other sectors of the economy including agriculture. Indeed, mobile technology can play a key role in agricultural development and; it is gradually emerging as a major tool for helping nations support farmers to produce efficiently and to meet growing food standards. If properly adopted, mobile technology can increase access to relevant information for smallholders on production, technology, finance and marketing of farm produce. In countries like India, services such as m-Kisan are already reaching hundreds of thousands of farmers in rural areas through mobile technology. Countries such as Kenya and Nigeria are equally engaging mobile technology to either distribute input, subsidies or weather information to farmers. In my view, employment of mobile technology in the sector will improve support for farmers, improve compliance with sector standards, increase access to high value markets and in the long run revolutionise the sector.

However, deriving the full benefits of mobile technology in agriculture will depend on factors such as the effectiveness of public-private sector collaboration in agriculture extension services, effective analysis of farmer needs and proper focusing of mobile agriculture services to meet identified needs. Content for mobile agriculture services must be fit for purpose – timely, localised and of high quality to be relevant for farmers.

An area of growing debate with regards to mobile agriculture services, and one which is likely to affect public-private sector collaboration in delivering extension services, is the design of mobile agriculture services. Will mobile agriculture services be designed to benefit the majority of smallholder farmers? And will the focus on smallholders generate the necessary economic benefits for Mobile Network Operators (MNOs) to continue to offer their infrastructure for extension services? In addition, the issue of competitive versus complementary approaches to agricultural information provision is generating reasonable debate in agricultural extension circles. My question is – will state extension systems see mobile agriculture services and products (operated mainly by MNOs) as a threat or opportunity to be leveraged to reach the majority of smallholders?

The next posting of this blog will take on some of these debates and explore ways to overcome emerging constraints and maximise mobile technologies to improve agricultural productivity and rural incomes.

When PayPal launched in 1998, it enjoyed tremendous growth in the early days though a strategic focus of on-boarding customers and driving network effects as quickly as possible.  Yet initially, the incidences of fraud seemed to grow as fast as their commercial success.  Within the first month PayPal had cyber-attacks and KYC issues originating from around the globe and hitting the system in numbers the team didn’t initially anticipate.  At the peak, fraud costs reached 2.4% of volume transacted.  Quickly, it became clear that the success of PayPal depended on a robust and effective risk management strategy.

What started as a way to mitigate the risks in ecommerce developed into a philosophy that changed how PayPal would run the business.  Matt Bannick, the former president of PayPal, describes how the company began to conceptualize managing the balancing act of risk and growth.   “We thought of risk as a “dial” that we could turn up or down to generate either reduced fraud or increased payment volume.  If we tightened our models we would reduce fraud but payment volume would also decline.  If we loosened the fraud models, then fraud would go up, as would volume.  The place where we set the dial was the subject of on-going conversation.  The role of the fraud modelling team was to stay head of the fraudsters and develop new, more effective models that would yield a “win/win” by reducing fraud while facilitating greater volume.”

This concept of a co-ordinated approach to managing risk may not be new to the world of risk management, but how PayPal implemented it was.  In many industries, risk managers may only work with the commercial team during the annual audit or only when the commercial team wants to make a change to the operations.  The subtle difference is that at PayPal, the risk managers did not just review new service proposals, but rather they were a key part of the process for designing the commercial strategy.   Equally, rather than being a remote team who periodically conducts audits, the risk management team had weekly, sometimes daily, interactions with the commercial side.  Both teams were responsible for considering and examining market needs and customer feedback in order penetrate or grow the market.  So instead of two teams with a different agenda, they became two sides of the same coin.

How can this apply to mobile money?

Mobile money is a growth industry with many operators showing levels of growth that look like PayPal’s early days.  However, growth needs to be sustainable and well-managed.  PayPal decided that a “cut and paste” risk management strategy would not work for their retail focused business.  It was critical that they reacted quickly to the needs and behaviours of their customers, while ensuring their customers and their revenues were protected.   It’s no different in a mobile money deployment.   Using a co-ordinated approach to risk management allows for operators to efficiently leverage commercial innovation and drive with practical and relevant risk management.

Open Health Initiative

In November 2012, the Heads of State of the East African Community (EAC) Partner States approved the implementation of the Open Health Initiative (OHI) to leverage the collective market size of experience and knowledge of the five countries to reach their goals for women’s and children’s health. The objectives of the OHI are to promote innovative interventions, enhance access to data and information for better results, and provide stronger oversight of results and resources for women’s and children’s health within the EAC through three thematic areas: Accountability for Results and Resources, Results-Based Financing, and Innovation for Improved Health Outcomes.

Innovation is defined broadly in the OHI as the use of technologies or approaches that can help accelerate the achievement of a result, make more efficient use of limited staff time and resources, or support interventions made possible with new tools and technologies. mHealth is therefore a key component. Currently in the region, technological innovations are seldom widespread, often small scale, and not coordinated or integrated within the broader health system. The lack of scale and evidence for projects often leads to inefficiencies and duplications of successful- and unsuccessful- pilots. By addressing innovation as a regional theme, the OHI can leverage successes and accelerate scale-up, with a focus on technological innovations such as mHealth.

A Regional Approach

mHealth has enormous potential to make an impact on reproductive, maternal, newborn, and child health (RMNCH), but will require strong coordinating and knowledge sharing mechanisms to reach its full potential. While the five Partner States are at dramatically different stages of development within the technology space, East Africa has one of the largest concentrations of mHealth pilots and programs in the developing world, which both stresses the incredible opportunity the region has to be a leader in this area, as well as the importance of sharing information across the region to avoid repetitive programs that do not make it beyond the pilot stage.

During the development of the OHI, the EAC hosted a regional ICT conference with representatives from e-health to share experience, evidence, and strategic plans. Following this collaboration of experts within Ministries of Health, the OHI developed a formalized mechanism to encourage knowledge sharing. The OHI will be supporting Technical Exchanges of ministry officials to learn through hands-on experience how a neighboring country is successfully addressing aspects of women’s and children’s health and creating a strong foundation for mHealth activities. These exchanges will be one ministry to another when there is an identified need, thereby reducing the duplication of efforts. With leadership coming from the highest levels of government and a huge amount of success coming from experts in the field, this approach will help encourage a decrease in pilots and an increase in adaptation and scale-up of successful innovations across borders.

With implementation beginning this year, the OHI will empower government experts to share best practices- not to stifle innovation but to encourage efficiency- and empower ministry officials to utilize data and evidence to identify where the greatest need for mHealth programs exist thereby maximizing the ability to reach and aid as many people as possible.

Liquidity is a cornerstone of successful mobile money services. Getting cash into and out of a mobile money service is the obvious first step to start using the service. This applies to both mobile money agents and customers.

Many of the more successful services have multiple ways of ensuring that agents remain liquid; the use of super-agents, master-agents and various tools such as online bank account access or agent-to-agent transfer are common.

In turn these agents then ensure (or not) that customers can access cash or eMoney.

A common complaint from customers, who have not become regular mobile money users and also some frustrated active customers, is that the agent was not liquid and so their adoption of the service stalled. These customers are unlikely to retry the service if their first experience was negative.

Some technology vendors are exploring ways in which to ease this consistent issue.

Problem

Many mobile money services use ATMs to provide a cash-out facility for their customers. This is a clear method to convert eMoney into cash. Not all ATMs however, provide the facility to customers of converting cash into eMoney.

Likewise for agents, apart from a trip to a super-agent or via master-agent intervention, there is not always a solution for an agent to purchase eMoney.

For either customers or agents, the opportunity to do this is not generally available 24/7, since banks and mobile money agents observe business hours.

Solution

Technology can be used to provide a solution and Sicap have a development which meets the needs of both agents and customers, not to mention the mobile money service provider. The Sicap Kiosk has both a cash-in and a cash-out facility. The Kiosk can be extended with further functionalities such as managing international remittance, airtime top-ups and bill payment. This solution is always available 24/7 and is easily technically scalable.

While not designed to replace the human-face of an agent network the Kiosk can easily exist alongside and complement the existing agent network. An important benefit of this for agents (or other retailers) is that the Kiosk can work as a cash recycler where the agent loads in cash at the end of the business day and receives the corresponding value in eMoney. This innovation has helped ensure security and liquidity of agents themselves. Following on from this is the fact that agents or customers can then cash-out using the money that was cashed-in, more easily and frequently.

There is real-time tracking of the cash status in each kiosk and agent and master-agents will be notified when cash levels get low. For a network of kiosks in a geographical area, a refilling or maintenance route can be created in the software, allowing field engineers to attend the network in a prioritised fashion

Results

As mentioned above, the majority of unsuccessful mobile money withdrawals are due to lack of liquidity, with M-Pesa reporting this as the chief reason for 69% of withdrawal failures in 2010. (1) Orange Money in the Ivory Coast was among the first services to adopt the Sicap Kiosk as an additional liquidity channel. Since its integration, 100% of users (agents and customers alike) who tried the kiosk have returned for further transactions, showing that users have built confidence in the system. In addition, Orange Money Ivory Coast report that long waiting times to access an agent have been dramatically reduced thanks to the kiosks, from two hours in some cases to a matter of minutes.

Orange Money Ivory Coast has chosen to use technology alongside the human face of their agent network and the roll-out of kiosks will continue in the first half of 2013. The use of technology to aid mobile money service liquidity and stability in this fashion is to be encouraged.

(1)    http://www.mit.edu/~tavneet/M-PESA.pdf

As more people get involved in this exciting area and test new ways that mobile can bring benefits to the agriculture sector, there are more and more important lessons that we need to share with each other. The GSMA mAgri Programme does this via our blog and by creating toolkits and guidelines that include the lessons we’re learning along the way and some of what we see as best practice in the industry.

Below is an overview of some of the tools we’ve recently developed for people who are designing or rolling out a service that delivers information to farmers via their mobile. These are “working documents” and are being continuously updated as we learn more. Please get in touch if you’d like us to send any of these to you via email and if you have other resources that would be useful for the industry, we’d love to hear about them.

If you’re new to Agricultural Value Added Services (Agri VAS), we recommend you read the GSMA Agri VAS Market Entry Toolkit first.

Guidelines for Creating Agri VAS Content

This document is a guide for Agri VAS providers in creating valuable and impactful agricultural content suitable for delivery through mobile channels. Smallholder farmers are the priority customer for these types of information services. This document sets out to guide the reader to first understand the scale and scope of different agricultural content requirements and then lays out a step by step process to deliver on the requirements.

Agri VAS Usability Testing Guidelines

This document provides an introduction to Usability Testing and guidelines on conducting a user test for Agri VAS. It begins with an explanation of different approaches to user testing and the reasons why it is important. Step by step guidelines are provided on conducting Explorative Usability Testing and a Usability Evaluation and a sample script for a user test is also included.

Agri VAS Budget Calculation Toolkit

The purpose of this toolkit is to assist Agri VAS operators in understanding the financial requirements and implications of planning and launching an Agri VAS.  The excel document contains template worksheets with line items for Planning, Content, Technical, Helpline & Marketing costs.

Functional Requirements & Best Practice: SMS & IVR

The purpose of this document is to outline the different types of services that can be delivered by an Agri VAS provider using SMS and IVR channels. This will aid Agri VAS providers in identifying the types of services to include and how to plan for different scenarios that arise. The document also contains best practices for both SMS and IVR services

Agri VAS Technical Implementation Project Plan

This document outlines core technical activities to run a VAS/Agri VAS project from conception to launch. This document will be particularly helpful for those who are going to recruit technical suppliers/vendor to deliver services.

We welcome your feedback on all our resources and suggestions on what other tools would be useful. We’ll be developing more resources in the coming months so it’s helpful to understand what is needed by the industry. Get in touch to share your thoughts- mAgri@gsma.com.

It’s rare in business that you find a combo of “do something good for the world” and “make some serious dough.” But with an increasing number of the world’s poorest people owning mobile phones, this combo is not only possible, it’s easy to achieve and costs nothing.

Mobile operators in emerging economies are in a unique position to promote education and literacy while at the same time attracting loyal customers who will use more and more data as they upgrade to better phones and become more literate.

Allow me to illustrate:  Mbwana, his wife and three children live in rural Kenya. Mbwana occupies what is commonly referred to in development as ‘Bottom of the Pyramid,’ or BoP, which indicates that Mbwana earns less than $2.50 per day.  What is surprising to most people is that despite their low income, a surprising 60 percent (RIA, 2012) of BoP in Kenya own mobile phones.

Mbwana discovers on his mobile a free application called biNu, that makes his feature phone act like a smart phone; he can surf the Web faster and data is much cheaper. So his 50 cents data top-up can go ten times farther, which is important, because Mbwana is very price sensitive.  More than four million people like Mbwana have discovered biNu and that number is growing every day.

Why would lower data consumption be good for operators? Because if data were ten times more costly, Mbwana would not use his phone for data at all.  Now he can afford to be ‘connected’ – and as we all know, once you are connected, there is no going back.

Through the biNu platform, Mbwana then discovers a free reading application called Worldreader Mobile, and because Mbwana does not own any books, nor does he have access to a library, he enjoys reading the local free stories in Kiswahili on his phone.  Mbwana has just joined the more than 533,000 people reading each month on Worldreader Mobile.

When Mbwana discovers all the children’s books and stories on Worldreader Mobile – in English and in Kiswahili — he starts letting his older children read on his phone after school. He allows his wife to use the phone to read to their youngest child. The phone is shared more and more, and for the first time the whole family has access to books.

When Mbwana sees the science and math textbooks from CK12 Foundation, he shows his brother, who is a teacher in a local secondary school where there is a shortage of textbooks.  Mbwana’s brother doesn’t usually use his phone for data, although it is connectable. But when he sees the free educational tools that are on Mbwana’s phone, he immediately starts using his phone to search for more books and reading materials. He loves the Caine Prize winning short stories, and is thrilled to discover so many stories from Kenya! He shows his students and begins making mobile reading assignments.  His students show their parents, friends and siblings.

One student, a secondary school girl named Afaafa, has questions about HIV, but is too embarrassed to ask her parents.  Afaafa uses Worldreader Mobile to find books and information from reliable health sources like the World Health Organization and Global Strategies for HIV Prevention.  Afaafa is now empowered with the information she needs, and she then shares this information with her little sister, Jamila.

You see where this is going. Billions of people around the globe are becoming more literate and more addicted, like the rest of the world, to reading and to instant access to information.

Mobile operators can promote reading and literacy –  while securing income streams in perpetuity — simply by offering Worldreader Mobile to their customers, for free!

Photo: Courtesy of author.

Mobile money operators should want to see agents as enablers rather than enforcers, as allies in the fight against fraud rather than as accessories to petty fraudsters, as respected VIP customers rather than as subordinate entities. Of course, there will always be a supervisory function over agents, but that should be limited as much as possible to branding and liquidity issues which are fundamental to the health of the service, and to ensuring proper KYC.

Let me offer a system, rather than policy, solution to the direct deposit problem. It does introduce more complexity in the customer experience, but in the end mobile money is primarily about systematizing processes as much as possible.

The solution is to require customers to initiate deposit transactions at the agent, just like they do for withdrawals. Instead of treating a deposit transaction as an agent push, treat it in effect as a customer pull. It would be analogous to the deposit slip banks ask us to fill and sign at a branch, only you’d do it electronically from your mobile phone.

So: if a customer wants to do a deposit at an authorized agent location, he/she selects the (new!) deposit function on the mobile money menu in my phone, and is asked to fill in the agent number, the amount and my PIN. Here the PIN is only for customer authentication, not transaction authorization, since the electronic money offsetting the cash handed over by the customer is coming out of the agent’s account. The agent still needs to authorize the transaction with his/her own PIN.

The transaction could then be completed in one of two ways. One way is to implement a real pull transaction procedure: after the customer requests a deposit, the system automatically initiates a transaction session onto the agent’s phone showing the details of the requested transaction and prompting the agent to confirm it by entering his/her PIN.

Alternatively, upon requesting a deposit (which he/she might do while still in line waiting to be served), the customer receives a one-time code on the phone (valid perhaps for 5 minutes). The customer then shows or reads out the code to the agent across the counter, and then the agent sends money to that code rather than to the customer’s phone number.

In this fashion, depositors would be identified electronically: no direct deposits, full depositor KYC. Customers no longer need to show their ID to an agent, once they have registered [ed. note: Regulation permitting!].

This procedure would have three further advantages. It speeds up the process for agents, who no longer need to check IDs and ask for, type and confirm transaction details. It minimizes the scope for agent error, since the transaction details are entered by customers. It’s not only about shifting responsibility: it is easier to deal with money sent in error to the wrong agent number than to a wrong customer phone number. Finally, it allows the deposit function to feature in the mobile money menu alongside withdrawals and all the rest. Depositing is now the invisible function of mobile money, and that surely must confuse new customers.

Would Ignacio’s system solution work in practice? Or would the usability trade-offs – including customer confusion about the process and increased technical failure rates from adding one more system transaction – be too great to justify the reduction in direct deposits? Luckily, we do have an example from the field. CEO of WING, Anthony Perkins, describes a positive experience in implementing a similar system in Cambodia:

WING still tackles [the direct deposit] problem by insisting on two prerequisites: 1. The customer present their WING ATM card for all agent transactions, including cash in, 2. The customer has to enter their PIN to confirm the transaction. The combination of these, plus the two crucial steps also mentioned of identifying transgression and enforcing strict disciplinary action has made this much harder for direct deposits to occur.

Regarding the question on how much hassle this process is, the answer is simply no hassle at all. Both agent and customer are used to the reverse process for cash-out and this one additional step of including the customer PIN on cash-in also gives the customer the chance to review the entire transaction before committing.

I won’t lie that some unscrupulous agents have indeed stolen customer PINs and transacted thereafter, but these are easily identified through system logs; agent accounts involved, usually still holding balance to service other customers, can be suspended and complete recovery to the customer possible.

The key to success of mobile money, not just this issue, is almost entirely the integrity of the agent network, not the technology or process. Strict discipline of agents from launch is crucial to build trust – the foundation of any financial system. WING has zero tolerance for fraud, even for one cent; agents are terminated immediately and put on a blacklist never to return; one dishonest agent’s loss is an honest agent’s gain. As a mobile money service becomes well known, you’ll have new agents falling over themselves to join, culling bad ones is not an issue.

Our system is not perfect by any means and can still be played if a customer gives their card to a friend/relative along with their PIN.

Thanks Anthony and Ignacio for raising this alternative. If anyone has experience (positive or negative) implementing a similar system solution for direct deposits, please let us know in the comments.

Two weeks ago The Nation asked a CBN official why the CBN bet on the bank-led Mobile Money Payment (MMP) model against a growing body of evidence that shows the effective role that mobile network operators (MNOs) have proven themselves the most capable entities of launching and scaling mobile money services and to lead the partnership with banks that in most cases is needed to fulfil regulatory requirements and commercial efficiency. Reportedly, the CBN official answered: “If you want me to tell you the truth, there are two ways to answer that question. I can tell you the truth and I can tell you the politically correct answer. The politically correct answer is that they do not need to get involved in MMP, but the truth is that the telcos have close to 90 million customers, banks only have 15 million. If you give them the power to do this, then you must have inadvertently given them the national economy.”

In a number of countries (Nigeria, but also Colombia, Ghana, Guatemala, India, and South-Africa, among others) financial regulators have been reluctant to grant MNOs mobile money licenses because they are

• afraid that the MNOs could scale very quickly and dominate the formal financial sector, leaving regulators unable to control such  growth and unable to use that potential to deepen access to finance.
• nervous about allowing MNOs to offer mobile money services, given they believe that only banks can adequately safeguard customer money. But in many other markets, the regulator has been able to design prudential regulation and market conduct frameworks which help to make non-bank e-money providers sound and effective. Such regulations are described in MMU’s recent regulatory paper:

Some regulators have also argued that given the goal of financial inclusion, the bank-led model must be preferred because in that way providers will offer customers a broader range of financial services. Unfortunately there is no evidence that bank-led models lead to earlier adoption of a broad range of financial services. Instead, the there is a growing body of evidence that non-bank providers, particularly MNOs, are needed to develop sound mobile payments and transfers services (and storage of value) which then can be used by a range of financial providers to offer more complex financial services that benefit customers, such as credit, savings, insurance, etc. This is because MNOs have assets, expertize, and incentives that banks don’t have. Also, as David Porteus wrote recently “Evidence from places like Kenya, which has seen rapid increases in formal financial inclusion as the result of the application of mobile technology, suggests that mobile payments have not so far led to much greater use of other formal financial services, but they have made a profound difference in people’s their lives through enabling, supporting, and resourcing familial and other social networks.”

Also, in Ghana, India, and Nigeria, three market where regulators have adopted regulatory approaches that are slowing the development of the mobile money industry we see that MTN and Airtel, two MNO groups, have taken the lead in the implementation of those mobile money deployments that are growing more rapidly (even though their partner bank holds the licence). Formally they comply with the regulation, while showing the contradictions of its rationale.

What the CBN official is reporting in the quoted interview is an inconvenient truth that rarely is openly debated: Despite the evidence that exists around how mobile network operators can contribute to financial inclusion via mobile money, some regulators are still highly resistant. So what can we do to help create an enabling regulatory environment for mobile money?

In cases where the regulator is moving slowly, or not at all, to improve the policy climate for mobile money and remove regulatory barriers, in my opinion the priorities for MNOs are:

1. Educate the regulator: We shall share with the regulator positive examples of enabling approaches that result in market development, provide them with more opportunities to learn from the most progressive peers, and share with them more information about the operational aspects of mobile money, as well as the risk mitigation measures put in place by the providers.
2. Show the negative impact that conservative policies have on people life and economic growth, and the positive impact of enabling policies: I believe the most effective way to tackle the political motivations mentioned above is to hold the regulators responsible for the harm that is being done to consumers in the status quo. This is possible only if the negative impact of those decisions is quantitatively appraised and compared with the likely impact of different approaches. The pressure of the donor community, peer networks, and the press could do the rest to advocate for reforms.
3. Be a responsible industry: MNOs should lead the development of a mobile money industry that embraces key principles of responsibility toward customers (e.g., the transparency of fees) and take seriously compliance with important rules such as those aimed to protect the integrity of the financial system against the risk of money laundering and financial terrorism.
4. Broadly engage with constituents beyond the financial regulator: Mobile payments are a key asset to enable the development of provision of other services in areas such as health, agriculture, welfare, etc. Influencers can be found in different ministries and regulatory authorities because they need mobile money to be developed in order to support the achievement of other important public goals such as women empowerment and the digitalization of government to people (G2P) transfers.
5. Build more alliances within the private sector: MNOs need to do a better job not just of coordinating their advocacy efforts with each other, but also aligning with other private sector players who also stand to benefit from the reform of financial sector regulation that would enable mobile money, such as merchants, utilities providers, and financial service providers (e.g. MFI’s and banks).

The other stakeholders (donor agencies, development partners, etc.) can contribute in many ways to achieve some of the above. Furthermore, they can certainly support policy makers introducing the culture of “better regulation”: There are ways to maximise public policy benefits whilst minimising the costs regulation may impose on the economy. “Better regulation” is a framework that can be adapted to different countries and sectors to prepare, follow-up and implement regulation, reinforcing the constructive dialogue between all public authorities as well as with stakeholders. The five principles of better regulation are: a) transparency, b) accountability, c) consistency, d) proportionality, and e) being targeted. These principles are translated into a range of regulatory instruments (from enhanced consultations and impact assessment to specific implementation monitoring) that would greatly improve the quality of regulation.

P.S.: These tools are not only limited to circumstances such as those in Nigeria. All markets and all MNO’s should be doing similar things.