For the first time in Uganda, mobile network operators (MNOs) are offering their mobile money bulk payment services to NGOs for the delivery of humanitarian cash transfers (HCT) to refugees. Our latest report explores how humanitarian organisations are collaborating with mobile network operators and shares insights about the business models, modalities and operations involved in two mobile money HCT projects in Bidi Bidi refugee settlement. Both projects are based on partnerships; the first between Airtel and Mercy Corps, and the second between MTN and the International Rescue Committee.
Bidi Bidi: the largest refugee settlement in the world
Uganda is the largest recipient of fleeing migrants in Africa, with the total daily new arrivals of refugees averaging nearly 3,000 in March 2017. In less than a year, the refugee population in Uganda doubled to over 1.3 million. As a result of the deteriorating situation in South Sudan – since the escalation of civil war in July 2016 and the declaration of famine in February 2017 – a large proportion of refugees fled to the north of Uganda. Bidi Bidi refugee settlement in Yumbe is now the largest refugee settlement in the world, hosting over 280,000 refugees.
Collaboration between the mobile industry and humanitarian sector to deliver humanitarian assistance
The scale of refugee flows into Uganda is stretching the country to its limit, placing excessive
pressure on state and host community resources. In northern Uganda, the mobile industry and humanitarian sector have collaborated to deliver humanitarian assistance to refugees via mobile money. Such partnerships are a first for MNOs in Uganda who are rapidly developing their mobile money services to meet the needs of their humanitarian partners. Leveraging mobile money for HCTs can reduce logistical costs, whilst also giving refugees greater dignity and choice and offering the potential for financial inclusion.
Time and monetary resource requirements for HCTs where mobile money is in its infancy
Ugandan MNOs have dedicated substantial resources to expand and upgrade their infrastructure in Bidi Bidi refugee settlement to provide reliable connectivity, and to achieve the enabling environment necessary (robust agent networks, sufficient liquidity, training and customer service provisions) for successful HCT projects. Additionally, NGOs in Uganda have committed time to navigating fast-moving regulatory environments and iterating projects along the way. Furthermore, development agencies, such as the United Nations Capital Development Fund (UNCDF) have provided financial, operational and technical support to mobile money providers seeking to expand their businesses into more challenging locations.
Success factors and challenges
MNOs and NGOs involved in HCT projects in Bidi Bidi experienced similar success factors and challenges, which can be shared across sectors to inform future HCT projects:
Success factors include:
- Frequent communication amongst stakeholders to build trusting relationships
- Flexibility, agility, and willingness to make projects succeed
- A focus on building out the mobile money ecosystem to foster wider financial inclusion
- Investments in connectivity infrastructure, agent network and liquidity management
- Organisational capacity, notably sufficient technical knowledge of mobile technology within humanitarian organisations, for projects to succeed
- Significant investment in training and sensitisation of beneficiaries on how to use mobile money to receive payments
- Fast-changing Know Your Customer (KYC) regulations for electronic money transfers, which have had a particularly negative impact on the ability of non-Ugandan HCT beneficiaries to access mobile money services
- Strict and/or unclear guidelines on due diligence of partner organisations
- Low phone penetration amongst beneficiaries, many of whom are selected precisely because of their heightened vulnerability and are therefore unlikely to already own a mobile handset
- Agent liquidity management, including ensuring agents have the correct denominations of physical cash to be able to perform cash-outs
The way forward
For HCTs to be profitable for MNOs, particularly in areas where mobile money is nascent, MNOs must scale both mobile money transactions and GSM revenue. Delivering HCTs to a beneficiary’s mobile money account, rather than as a voucher, will accelerate this process. Using mobile money as the digital modality of choice can connect refugees to a range of financial and other mobile-enabled services, increasing the potential for financial inclusion, whilst increasing transparency, safety, cost saving and efficiency for donors and humanitarian organisations. The key to meeting these common objectives will be for national financial regulators to consider refugees as a distinct set of individuals, with unique needs and circumstances, thereby ensuring that KYC requirement is proportional. Improving handset ownership rates and digital literacy will also be essential.
Whilst this research captures the lessons learned in operationalising HCT projects in Bidi Bidi, further research is needed to understand and measure the socio-economic impact for beneficiaries. We will continue to identify the key considerations that humanitarian organisations and the mobile industry must take into account to achieve efficient implementation of HCT projects, whilst also focusing on the benefits and challenges to the beneficiaries receiving cash digitally and using financial services in their day-to-day lives.
If you’re working on humanitarian cash transfer projects we’d love to hear from you – please share your experiences with us by emailing firstname.lastname@example.org