On 15 July, ahead of the GSMA’s Mobile 360 – Africa event in Kigali, the Mobile for Development (M4D) Utilities programme hosted a roundtable with over 20 participants representing 10 organisations, including mobile operators and utility providers of energy, water and sanitation. This was followed by presentations from a number of our past and present grantees at the main event – Mobile 360 – Africa.
The roundtable offered a common platform to African mobile operators and utility service providers to discuss the value drivers for each in different partnership models, with a focus on mobile money adoption. The group also shared best practices and operational experiences of jointly working toward digitised, on and off-grid utility services.
Successful partnerships: Cracking the code
Building a strong, mutually beneficial partnership regardless of sector, is difficult. Understanding this challenge, the M4D Utilities programme often draws from a “Needs and Haves” framework developed by the GSMA’s Ecosystem Accelerator team. This tool is for both start-ups and mobile operators, to recognise and leverage one another’s assets to build synergies.
Building on this framework, the participants discussed some of the challenges faced by utility providers while entering into a partnership with a mobile operator and shared a few tips to overcome them.
1. Identifying the right person: The first and often most difficult step in developing a partnership is identifying the right person, or at the very least the right department within the mobile operator’s structure, which could, for example, be within the Innovation or Strategy unit. The participants unanimously agreed that having a connection with someone within a mobile operator certainly helped in steering their partnership proposal to the key person/department.
2. Speaking the language of impact: The next step is tailoring ‘the pitch’ to explain how the service will help mobile operators achieve their short to medium term objectives. The objectives could be increasing mobile money penetration, reducing churn or sometimes simply matching the services offered by their competitors. It is also important to understand that new utility solutions may initially offer relatively small opportunities for revenue generation for a mobile operator. Therefore, it is important to clearly articulate the potential future value and impact of these services for the mobile operators in the pitch, and not limiting this to just revenue generation but also things like brand loyalty and creating social and economic impact within local communities.
3. Partnerships evolve: Reflecting the point above, some mobile operators acknowledged that the mobile industry’s expectation of revenue growth from the very beginning of a partnership, might not be realistic. However, partnerships can evolve over time. What could start as indirect revenue impact in the form of increased customer loyalty, enhanced brand recognition, and shared distribution etc. might transition to more revenue generating opportunities as the services develop a stronger foothold in the market.
The M4D Utilities programme seeks to support mobile operators and utility service providers in navigating through the above challenges. Through our support to the industry since 2013, we’ve built relationships across industries in Asia and Africa and it’s our objective to facilitate these partnerships. We can advise on communication approaches and speaking the right language. Please get in touch if we can help your organisation with this!
Stimulating mobile money usage for utility payments: The pros and cons of fee restructuring and agent sharing
Part of the roundtable discussion focused on exploring answers to two important questions that confront utility service providers and mobile operators in Sub-Saharan Africa and beyond.
Question 1: Is fee restructuring an effective way of increasing mobile money usage/transactions?
The dominant concern expressed amongst the mobile operators in the room was that fee restructuring as an incentive to drive mobile money usage among end users lowers the commissions earned by mobile money agents who might then lose interest in the business and therefore, in serving end users. The mobile operators discussed many examples of how they are tackling this challenge. In markets where mobile money penetration is nascent, mobile operators sometimes absorb the transaction fee, to alleviate the burden to end users and stimulate frequent mobile money usage.
In other cases, some mobile operators offer schemes that waive transaction fees for customers for a certain amount of time, for transactions under a certain fee threshold, or for specific transactions or use cases, such as payments for government services. As customers get accustomed to using mobile money for bill payments, the mobile operators can decide to introduce a transaction fee or not depending on the affordability of the users to pay for it. For instance, even in a mature mobile money market, such as Kenya, Safaricom launched M-Pesa Kadogo eliminating transaction fees for person-to-person (P2P) and merchant payments that fall below 100 Kenya Shillings ($0.95). Two years since launching, this incentive is still active (and popular) in the market.
On the other hand, some mobile operators argued that there are markets where it is possible for transaction fees to be absorbed by service providers themselves while still maintaining profitability. The cost savings provided by digital payments compared to the cost of cash payment collection through sales agents or pay points are enough for service providers to maintain a margin. Of course, some operators felt that the default approach should be for customers to pay for fees to avoid getting into a situation where operators have limited flexibility on the future cost of transactions.
Question 2: Is using service provider agents as mobile money agents a win-win for both mobile operators and utility service providers?
In practice, often the agents working for utility service providers double up as mobile money agents too. Some of our participants that had experimented with this explained that it is not an ideal scenario for either party, although initially it may have seemed like a good idea. This is because agent sharing and therefore widespread agent coverage, does not always change the overall performance for a service provider or for the mobile operator if basic access to a service, such as GSM coverage service, is still limited.
Moreover, agents often prioritise the service that offers the most lucrative commission structure and this means that it is hard to get their equal attention for both the services.
The decision of sharing agents, of course, depends on the market maturity from both the mobile money and service provider standpoint. In a nascent mobile money market, for example, it could be useful, at least in the initial term, and in specific regions, to adopt agents servicing both mobile operators and service providers to increase presence, customer reach and activity on the ground.
M4D Utilities grantees showcase at Mobile 360 – Africa
Over the three days at Mobile 360 – Africa our current and past M4D Utilities grantees presented their work on both the main stage and through demonstration stands. With over 1000 people from 59 countries in attendance this year, we were happy to be able to showcase their great work in the energy, water and sanitation space.
Andrew Denu from SunCulture, a solar powered irrigation pump provider in Kenya, spoke about the role mobile and IoT technology is playing in helping farmers produce better yields through their irrigation systems.
Charles Yeboah from Safe Water Network (SWN) spoke on the mainstage on the topic of, ‘A FinTech Revolution: Power to the People’, about using mobile money and Machine 2 Machine (M2M) technology for water ATMs and prepaid household meters in peri-urban communities in Ghana. Charles also showcased how SWN is using mobile data collection to improve both the monitoring of water points and the response to maintenance issues.
Léonce Korahire (pictured above) from Orange Burkina Faso, demonstrated prepaid smart metering systems being trialled on mini-grids and the role a mobile operator can play in providing accuracy and transparency in energy payments.
Eunice Namirembe from Kampala Capital City Authority (KCCA) participated in a panel entitled, ‘Do Citizens Need a Digital City?’. She explained the role mobile technology has played in digitising the process of emptying pit latrines from municipalities across Kampala, through KCCA’s GIS mobile tracking app and dashboard, used to map pit emptiers in informal settlements in Kampala.
William Makubalo from Vitalite showcased a PAYG smartphone and platform. The smartphones will be sold to Vitalite solar home system customers in Zambia on a pay-as-you-go basis.
Our next event, the Mobile 360 – Asia Pacific series, will be taking place in Kuala Lumpur on 24 September 2019. Please do reach out if you are interested in attending!
Feel free to email us at email@example.com for any support we can provide in facilitating utility service provider and mobile operator partnerships.
The GSMA Mobile for Development (M4D) Utilities programme is funded by the UK Department for International Development (DFID), USAID as part of its commitment to Scaling Off-Grid Energy Grand Challenge for Development and supported by the GSMA and its members.