MobileActive.org

We examine the growth of mobile phone technology over the past decade and consider its potential impacts upon quality of life in low-income countries, with a particular focus on sub-Saharan Africa. We first provide an overview of the patterns and determinants of mobile phone coverage in sub-Saharan Africa before describing the characteristics of primary and secondary mobile phone adopters on the continent.

We then discuss the channels through which mobile phone technology can impact development outcomes, both as a positive externality of the communication sector and as part of mobile phone-based development projects, and analyze existing evidence.

While current research suggests that mobile phone coverage and adoption have had positive impacts on agricultural and labor market efficiency and welfare in certain countries, empirical evidence is still somewhat limited. In addition, mobile phone technology cannot serve as the “silver bullet” for development in sub-Saharan Africa. Careful impact evaluations of mobile phone development projects are required to better understand their impacts upon economic and social outcomes, and mobile phone technology must work in partnership with other public good provision and investment.

In this comprehensive analysis, CGAP assessed whether branchless banking or mobile money services are more cost effective or cheaper for low income people than formal banking. The authors, McKay and Pickens, compared pricing of 16 leading branchless banking services across eight ways that customers use branchless banking. They subsequently compared the pricing of these services against 10 formal banks and other informal money transfers options.

The eight use cases refer to: 1) sending money transfer, 2) receiving money transfer, 3)short-term safekeeping, 4) medium term savings, 5) bill payments, 6) high usage, 7) m-PESA customer, and 8) kenya bank customer.

The results say that branchless banking is 19% cheaper than banks, and have a lower transaction value. Additionally, branchless banking is 54% cheaper than informal options formoney transfer.They also discuss in detail how pricing influences customer usage.

The electronic delivery of cash can be achieved through a variety of mechanisms - debit card, smart card or cellphone, using a range of financial infrastructure -banks, automated teller machines (ATMs) and point-of-sale (POS) devices. This brief outlines recent experiences from across Africa, with a focus on Kenya, Malawi, Namibia and Swaziland.

The benefits of electronic delivery systems to both governments and recipients are well known in terms of improved cost efficiency and flexibility of access, so this brief emphasises issues that are relevant to private sector partners, who are vital to the introduction of such systems.

The rapid penetration of cellphones in Africa, including both signal coverage and handset ownership, makes distribution of cash transfers by cellphone an increasingly viable proposition, as shown in Kenya through the M-PESA mechanism. Additionally the availability of cellphone signal has been instrumental in facilitating use of ofline smart cards for electronic delivery of cash transfers in Malawi and Namibia.

The growth of financial infrastructure and opportunity for banks to increase their market share has increased the favourability with which banks view potential participation in government-to-person cash transfers.

Evidence from Malawi and Swaziland shows that cash transfer recipients who are provided with bank accounts to receive their cash transfers tend to then use them to save money and to receive person-to-person transfers (e.g. remittances) – thus making further use of financial infrastructure and services.
In terms of scalability of electronic delivery systems, the time- and cost-intensive nature of the payment mechanism setup relative to the operating costs means that the incentive for private sector partners to engage is much greater for long-term programmes than short-term pilots.

Undertaking cash transfer programme registration formalities concurrently with private sector partner registration procedures (in terms of opening bank accounts or distributing SIM cards or smart cards) thus makes sense, wherever possible. It is also imperative that contractual obligations for the government implementer and private sector partner be agreed upfront, smart cards) thus makes sense, wherever possible. It is also imperative that contractual obligations for the government implementer and private sector partner be agreed upfront, desmart cards) thus makes sense, wherever possible. It is also imperative that contractual obligations for the government implementer and private sector partner be agreed upfront, defining respective roles and responsibilities, together with a grievance procedure in case of non-compliance.

As well as the growing base of evidence from projects and programmes in Kenya, Malawi, Namibia and Swaziland, other countries that have expressed interest in the use of electronic delivery systems include Ghana, Lesotho and Mozambique.

The Health Impact Fund (HIF) is a proposal designed to incentivize pharmaceutical innovation by rewarding the development of new medicines in proportion to their health impact. The health care sector is plagued by wastage and poor governance, especially in developing countries. The MHIF system is a mobile payment and data collection system designed to enhance transparency and accountability, whilst improving the quality of data available for impact assessment. It also provides a platform for reporting misuse and abuse. The system is designed to mitigate some of the deployment challenges of the HIF and to act as a springboard for further expansion into broader mobile health (MHealth) solutions.

M‐PESA is a small‐value electronic payment and store of value system that is accessible from ordinary mobile phones. It has seen exceptional growth since its introduction by mobile phone operator Safaricom in Kenya in March 2007: it has already been adopted by 9 million customers (corresponding to 40% of Kenya’s adult population) and processes more transactions domestically than Western Union does globally. M‐PESA’s market success can be interpreted as the interplay of three sets of factors: (i) pre‐existing country conditions that made Kenya a conducive environment for a successful mobile money deployment; (ii) a clever service design that facilitated rapid adoption and early capturing of network effects; and (iii) a business execution strategy that helped M‐PESA rapidly reach a critical mass of customers, thereby avoiding the adverse chicken‐and‐egg (two‐sided market) problems that afflict new payment systems.

M-PESA an agent-assisted, mobile phone-based, person-to-person payment and money transfer system, was launched in Kenya on March 6, 2007. This study is the first of its kind to explore the economic effects of M-PESA in Kenya at the community level.

The findings from the first stage of the study indicate that M-PESA affects the economic outcomes of community members, both users and non-users of M-PESA, through direct and externality effects, and identify 11 economic effects within the broad categories of local economic expansion, security, capital accumulation and business environment after 2.5 years of M-PESA’s use in these communities. The research also shows that effects were not visible in all the study communities and among all the population segments within the communities; they tended to be influenced by gender and geographic location of the communities.

Also, the effects were not always perceived as mutually exclusive, but as interwoven with each other to produce overall community effects.

Governments make regular payments to at least 170 million poor people worldwide—far more
than the 99 million or so who have active microloans. In this Focus Note, we look at government-to-person (G2P) payments, which include social transfers as well as wage and pension payments. With appropriate experimentation, these payments have the potential to become a vehicle for extending financial inclusion and improving the welfare of poor people. Yet in most countries, far fewer than one-quarter of G2P payments to the poor land in a financially inclusive account—i.e., one that enables recipients to store G2P payments and other funds until they wish to access them and make or receive payments from other people in the financial system, and one that is accessible, in terms of cost and distance.

The first section of this Focus Note reviews the state of G2P payments today, including how we arrived at a figure of at least 170 million poor G2P recipients and a country example (Colombia) showing that several types of G2P payments reach the poor. The second section looks at the early experience with providing financial services to poor G2P recipients. We find that 45 percent of G2P programs launched in the past 10 years use an electronic payment mechanism that creates a foundation on which a financially inclusive account can be offered. Examples where this is already being done (Brazil, India, and South Africa) are discussed. The third section deals with five common concerns of policy makers and social development program managers. Recommendations to government, the financial industry, and donors are
summarized in the conclusion.