MobileActive.org

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.

Poor farmers often lack credit to purchase agricultural inputs, and rely on their buyers to provide it. This paper considers the effects of mobile phones on traders of perishable foodstuffs operating between Tanzania’s Southern Highlands and Dar es Salaam’s wholesale market, with a particular focus on the importance of credit in the relationship between potato and tomato farmers and their wholesale buyers.

It argues that the ability to communicate using these new information and communication technologies (ICTs) does not significantly alter the trust relationship between the two groups. It also suggests that farmers, in effect, often have to accept the price they are told their crops are sold for – irrespective of the method of communication used to convey this message – because their buyers are also their creditors. In this situation, many farmers are unable to exploit new mobile phone-based services to seek information on market prices, and potential buyers in other markets. Doing so runs the risk of breaking a long-term relationship with a buyer who is willing to supply credit because of their established business interaction.

It is suggested that, under a more open system than currently exists in Tanzania, mobile-payment (‘m-payment’) applications should target these creditor-buyers as key agents in connecting farmers to the credit they so often require.

Across developing countries, millions of people rely on informal economic activity and local level networks to earn their living. Most of these populations are from bottom of pyramid and they don’t have access to basic financial services/banks as access to them is costly and very limited. However, the outstanding growth of mobile sector worldwide has created a unique opportunity to provide social and financial services over the mobile network. With over 4 billion mobile cellular subscriptions worldwide, mobile network has the ability to immediately offer mobile banking to 61% of the world population. A study states the biggest share of mobile payment users will be in the Asia/Pacific region by 2012 (Gartner, 2008). In the context of being the most promising ICT market and the largest inbound remittance receiver, this region is expected to be the hub of m-banking transactions. 

The paper starts with an overview of existing models of m-banking and then examines the m-banking regulations in some South Asian countries and of the countries where (e.g. the Philippines, Kenya, South Africa) m-baking/payment systems are already in practice or a success. The concerns of financial regulators and policy measures taken so far are discussed.

The key questions this paper aims to answer:

⇒ What are the practiced models of m-banking/payment systems? 

⇒ What concerns are generally raised by financial regulators?  

⇒ Which m-banking/payment models have drafted or enacted in South Asia?  

⇒ Which m-banking/payment models have are enacted in the countries where it is a success?

⇒ What constitutes a proportionate regulatory approach?  

The answers to the above questions helps to identify a way forward which can expedite adoption of m-banking/ payments service in South Asia successfully and quickly.  

Kenya was one of the first countries to use mobile phones for cash transfers; through a service called M‐PESA, developed by Safaricom Limited. Concern Worldwide has pioneered the use of M‐PESA for emergency cash transfers in Kenya. This paper highlights Concern’s experience, which shows that despite initial software and logistical challenges, mobile phone technology offers a unique and empowering approach to efficiently deliver assistance to the most vulnerable people living in insecure and remote rural areas.

Experience also shows that cash transfers are a better option than food distributions in areas where adequate supplies of food are locally available. In addition, the partnership between Concern and Safaricom demonstrates that the private sector has significant and unique abilities to enhance the effectiveness of emergency response, and more importantly they can do so while maintaining their core business principles. The case study also demonstrates how technology can empower poor, marginalised and vulnerable people.

There was a time when the adoption of mobile phones was expected to be limited to the wealthy and early mobile phone designs included a number of features that supported shared use on the assumption that few people would be able to afford one of their own. 4 billion plus cellular subscribers later and it’s the mobile phone owning residents of Accra or Cairo that are more likely to use multiple devices than the residents of London or Tokyo.

The first billion mobile phones were sold in about twenty years, the second billion took four years, and the third billion were sold in just two. That the mobile phone has had a positive qualitative and quantitative impact on many of the world’s poor is no longer an issue for debate, and the simple fact that many invest in a few months salary to purchasing one suggests that it continues to meet a broad spectrum of base user needs from directly creating revenue generating opportunities to indirectly supporting survival. As a personally carried, connected device the mobile phone is in a prime position to bring mobile money services to the world’s unbanked, and today there is much activity, debate and not a little hype on its potential (Ramussen, 2009).

This paper discusses the factors that will affect whether recently established mobile money services such as M-PESA can also achieve success in other markets, and whether new services and business models will fly or fail? What can we learn from previous research into mobile phone behaviours and practices?

The ‘dual system’ thesis has been used to describe the continuing commitment of urban migrants to the village in various African countries. According to literature, urban workers maintain strong ties with the rural area, even after spending a substantial amount of time in the city. One way in which these ties are maintained is through urban‐to‐rural remittances.

In March of 2007, an m‐banking application called M‐PESA was introduced into the Kenyan market. This application allows for person‐to‐person (P2P) transfers of e-money via mobile phone, and facilitates urban‐to‐rural remittances.  This study will use ethnographic data collected in a Kenyan slum to show that M‐PESA is becoming a tool for the maintenance of urban-rural relations. It will further assert that because it is helping migrants to maintain such relations, it is facilitating survival in the ‘dual system’.

This paper puts forward explanations and backgrounds to the remarkable difference in user uptake of the m-banking service M-PESA in Tanzania compared to the same service in Kenya. Data gathered from user and industry interviews, conducted during a field study in Tanzania between March-May 2009 is together with literature from Kenya used to compare the m-banking environment in the two countries.

M-PESA is provided by mobile network operators (MNOs), Safaricom in Kenya and Vodacom in Tanzania. Both are the leading MNO in their respective country although Vodacom has a substantially lower market share and turnover compared to Safaricom. This simple fact resonates in many areas affecting M-PESA, such as: size of marketing budget, M-PESA's priority within the organization and the company's ability to quickly sign up agents and attract initial customers. Differences in the general economic situation, the geography and political history are also put forward. Kenya has a stronger economy, a higher GDP and a more developed banking system. This has contributed to the financial literacy in the country which is an important factor when communicating a service like M-PESA.

Among the differences between the two implementations, we suggest that the three most influential factors to the user uptake have been the two companies ability to transform their airtime distribution into an agent network, the marketing strategy which needed to be adopted to the specific settings in each country, and the geographical and demographic conditions.

The number of mobile subscribers globally is estimated to have reached four billion in 2008 (ITU, 2008), with mobile penetration reaching 61%. Around 58% of subscribers are in developing countries, and subscriber growth in Africa – more than 50% per year – is the highest in the world. Studies have shown that this rapid increase in mobile penetration has contributed significantly to economic growth. Fuss, Meschi and Waverman (2005) looked at 92 countries, both developed and developing, to estimate the impact of mobile phones on economic growth for the period 1980 to 2003. They found that a 10% difference in mobile penetration levels over the entire sample period implies a 0.6% difference in growth rates between otherwise identical developing nations. The effect of mobiles was twice as large in developing countries as in developed ones (Waverman, 2005).

Mobile phones have brought three kinds of benefits (id21, 2007). First, incremental benefits, improving what people already do – offering them faster and cheaper communication, often substituting for costly and risky journeys. Fishermen in India, for example, can earn more money and waste less fish by phoning coastal markets to see which market has a shortage of supply. Second, transformational benefits that offer something new. Innovative applications, such as m-banking and m-commerce, are bringing banking services to millions for the first time, and enabling people to use mobile phones to pay for goods and services. Third, production benefits that result from the creation of new livelihoods, not only through professional telecommunications jobs but also through activities like re-selling air-time or phone cards. Since the liberalisation of Nigeria’s telecommunications sector in 2000, the industry has become a key source of new jobs in the economy, employing about 5,500 professionals, and responsible, indirectly, for another 450,000 jobs.

The paper gives an overview of the players in mobile payment schemes and their respective roles in advancing mobile payment and banking in developing countries.