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.
