1.6 Voices from the Field: Case Studies in

Engagement

Hugh Haworth, USAID/E3/MPEP (Moderator)

Heath Cosgrove, USAID/Lebanon

Joseph Lessard, USAID/Macedonia

Elizabeth Feary, USAID/Yemen

Steven Rynecki, USAID/Afghanistan

Mobile Money in Afghanistan

2013

Leveraging the Mobile Network to Transform Afghanistan’s Financial Sector

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Leveraging the Mobile Network

Using the Mobile Network to Bridge the Infrastructure, Security and literacy Gaps • 70% (18 million) Afghans use mobile phones • 85% of Afghans live in areas covered by the four mobile operators • Interactive Voice Messaging technology bridges the literacy gap

Areas shaded in red reflect populations covered by existing mobile networks. The circles represent key urban centers.

• Mobile money has the power to revolutionize the banking sector in Afghanistan, enabling micro-lending, commercial transactions, salary payments, and money transfers, reducing transaction costs and corruption, and catalyzing new products and services

VALUE PROPOSITION

RESEARCH • Do you homework. It helps to have experts assess your

programs and see if mobile money is feasible COST-BENEFIT • If you see a fit, it’s time to perform a simple cost-benefit analysis

to ensure what you invest has a higher return for your program beneficiaries

DECISION • If you believe mobile money has merit, start the activity planning

process with the Mobile Money Adviser

Should I apply mobile money to my program?

Members of Afghanistan’s Mobile Money Operators Assn

Members of Afghanistan’s Mobile Money Operators Assn

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Consumer Issues

• Low consumer literacy • Low consumer trust • Lack of awareness

Provider Issues

• Products not often designed for low-income people

• Limited agent networks

Market Issues

• Interoperability • Liquidity

Mobile Innovations Key Challenges

Teacher Salaries

Utility Collections

What we did so far: Provided technical assistance to regulators Grants for pilots targeting large payment streams (e.g. GIRoA salaries, utility payments)

Mobile Innovations Current Pilots

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How does mobile money work?

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Bank

Clie

nt

Agent bank account linked to Mobile Money Service Provider for cash and commission transfer

Cash out from agent to client

Electronic value sent to client’s mobile wallet (salary, family) Ag

ent

1

2

3

- Agent account debited

Client account credited + 4

Client opens mobile money account via agent

Mobile Money Service Provider Bank Accounts (Pooled funds from all clients in at least four banks to diversify risk)

Key Findings of the Sector Financial Model

Public awareness and adequate resources devoted to training is critical to acceptance and uptake

Competition will increase awareness and acceptance and put downward pressure on prices

Expanded salary and other forms of government payments is the fastest way to inject funds into the ecosystem and will have the greatest impact on future use case adoption

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An extensive agent network is the key to the ecosystem, the largest cost for the MNO, and the most important element for the end user. Key factors include:

• Convenient locations • Liquidity management

(enough money in the till) • Consumer protection • Anti-Money Laundering,

Anti-Terrorist Financing and Know Your Customer

• Mobile money is ultimately a volume driven business

• Speed of expansion is critical to generate sustained momentum

• Wide coverage (anytime, anyplace availability) is also critical

• Interoperability is key to scale

Lessons Learned

Proposed Way Forward

Three concurrent tracks: 1. Build on CSTC-A’s ANP salary payment expansion

by adding as many Afghan Government and USG-funded payments within the 24 unbanked districts as possible such as teachers and district officials.

2. Maximize mobile payments usage in the first tranche of Transition municipalities and provinces in collaboration with MNOs and banks. Prospective payment flows include:

a. Utility payments (750,000 electricity users) b. Internal remittances (i.e. from Kabul to Balkh) c. Microfinance and agricultural loan repayments d. Government and commercial salary payments

3. Sector-wide investments to ensure stable, secure and sustainable roll-out

a. Strengthen the supervisory capacity of Da Afghanistan Bank

b. Supply ID cards required for customer registration -- only 30% of Afghans have IDs.

c. As needed, invest in agent network, telecom infrastructure and interoperability.

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Steven Rynecki Mobile Money Adviser srynecki@usaid.gov

Mobile: 0702 626 235

THANK YOU