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E-Payments Deliver 15% Greater Cost Efficiency in Kenya
Is This the Future of Food Aid?
March 19, 2014
Dr. Ruth Goodwin-Groen Managing Director,Better Than Cash Alliance
Introducing Our Speakers
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Jamie ZimmermanSenior Associate, Bankable Frontier Associates, lead author of study
Cheryl HarrisonHead of Innovations, World Food Programme (WFP) Kenya
Marc Van PuyveldeContactless Payment Solutions, MasterCard Worldwide
Join the discussion on Twitter: Use #BTCAwebinar and @BetterThan_Cash
Session Agenda• Introduction to the Better Than Cash Alliance• Methodology• Key Findings • WFP “Cash for Assets” Journey• Lessons for Stakeholders • Next Steps• Q&A
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Poll #1: Which category does your organization align with most?
• Government• Private sector (financial service provider, MNO, etc.)• Development partners (UN, NGO, foundation, etc.)• Academic institution• Other
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The Better Than Cash Alliance
Governments, private sector and development organizations
committed to a global movement from cash to electronic
payments.
• Advocates for organizations to commit to transition their
distribution of government benefits, humanitarian aid assistance,
payroll and supplier payments from cash to electronic
• Provides the policy, technical and financial assistance needed to
identify and implement the most effective approach for local
market conditions
• Develops cutting-edge research products, good practices and
case studies in order to achieve scale globally
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The case study is part of a cross-country comparative study of government-to-person (G2P) and donor-to-person (D2P) payments.
Data was gathered in 2013 to understand how WFP moved from in-kind distribution to e-payments through interviews with:
• WFP • National Drought Management
Authority • Equity Bank in Kenya• Recipients
Methodology
6
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Key Findings
1. E-payments were 15% more cost efficient than in-kind distribution
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Key Findings
1. E-payments were 15% more cost efficient than in-kind distribution
2. E-payments scaled up from 5,000 to 81,000 households (i.e., 485,000 beneficiaries) during the 2011 drought
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Key Findings
1. E-payments were 15% more cost efficient than in-kind distribution
2. E-payments scaled up from 5,000 to 81,000 households (i.e., 485,000 beneficiaries) during the 2011 drought
3. Beneficiaries prefer e-payments over food aid and maintained the same food consumption levels
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Poll #2: In which phase of the shift to electronic payments is your organization?
• Have not started (either in-kind or cash envelope)• Beginning to shift to e-payments • Increasing use of e-payments • Almost all payments are electronic• N/A
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WFP tested different delivery models, including mobile money and card-based payment systems:
• Mobile money was faster to start up and can offer advantages for an emergency response, but
• A debit card linked to bank account comes with more benefits for both donor and recipient and is the preferred model for longer-term resilience programs
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Key Elements of the Pilot: Choosing an Effective Payment System
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• WFP overcame challenges with recipients’ lack of ID and tough registration conditions
• WFP-trained staff used to delivering in-kind food aid to collect e-transfers data
• WFP developed a secure centralized system to store beneficiaries’ personal data and manage transfers
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Key Elements of the Pilot: Collecting and Managing Personal Data
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13
Results
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• Stronger controls on aid delivery• Higher level of accountability among distribution partners• Economic empowerment of the beneficiaries• Increased financial inclusion for the “unbanked”• Growth of the local economy
The shift to e-payments allowed the program to operate more efficiently and contributed to societal benefits:
Poll #3: What is the most important reason to shift to electronic payments for your organization?
• Cost saving• Better security and increased transparency• Speed and scale• Beneficiaries’ economic empowerment• Stimulating local economies
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Key Lessons for Stakeholders
1 Ensure a strong delivery value chain
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Key Lessons for Stakeholders
1 Ensure a strong delivery value chain 2 Invest in partnerships to
amplify efficiency
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Key Lessons for Stakeholders
1 Ensure a strong delivery value chain
3 Ensure a predictable flow of funds before committing to scaling up a program
2 Invest in partnerships to amplify efficiency
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Key Lessons for Stakeholders
1 Ensure a strong delivery value chain
3 Ensure a predictable flow of funds before committing to scaling up a program
2 Invest in partnerships to amplify efficiency
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4 Consider adjusting payment frequency for reduced cost and increased timeliness
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5 Create two-way communication channels with the beneficiaries
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Key Lessons for Stakeholders
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5 6Create two-way communication channels with the beneficiaries
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Key Lessons for Stakeholders
Test, learn, iterate
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Objectives of the Merti pilot:• Examine if the model is technically
achievable and commercially sustainable at scale in remote and economically marginalized areas
• Identify its benefits for WFP, providers and recipients in terms of value, growth and costs
Next Steps: Exploring an end-to-end electronic model
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Next Steps: Results
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For Recipients• More convenient• Better security• More choices• Lower costs for
withdrawal• Increased access
to financial services
For Merchants• New business
opportunity• Reduced cash
handling
For WFP• Cost efficiencies• Increased
transparency and accountability
• Ability to scale and become sustainable in a commercial environment
Poll #4: What is the payment system your organization is using/considering?
• Cash• Mobile money• Prepaid card without a bank account• Debit card with a bank account• Other, including voucher
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Design aclient-centricpayment system
Key Recommendations
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1 Leverage transparent and regulated business models
2 Include financial inclusion in your design
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Dr. Ruth Goodwin-Groen (Moderator)Managing Director,Better Than Cash Alliance
Discussion
Jamie ZimmermanSenior Associate, Bankable Frontier Associates, lead author of study
Cheryl HarrisonHead of Innovations, World Food Programme (WFP) Kenya
Join the discussion on Twitter: Use #BTCAwebinar and @BetterThan_Cash
Marc Van PuyveldeContactless Payment Solutions, MasterCard Worldwide
Thank [email protected] | @BetterThan_Cash