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Better Prepared Better Prepared And Ready to Help
Financial market componentsFinancial market componentsBy MicroSave
Emergency Preparedness Mission Nepal February 2011
Better Prepared MethodologyBetter Prepared And Ready to Help
MethodologyThe methodology of the survey into financial services was multifaceted. Itincluded:
Key informantsLiterature reviewFinAccess 2006 and 2009 dataFinAccess 2006 and 2009 dataQualitative research
Emergency Preparedness Mission Nepal February 2011
Better Prepared Participants
Better Prepared And Ready to Help
Emergency Preparedness Mission Nepal February 2011
Better Prepared Payments OverviewBetter Prepared And Ready to Help
Payments Overview
Overall developmenti h h i l fPayment systems in Kenya operate through two main platforms
Mobile phone based paymentsBank accounts supported though bank agencies
Over the last five years>18 million Kenyans access mobile payments mainly through M-PESA>45,000 mobile payment agents
Emergency Preparedness Mission Nepal February 2011
>12,000 bank agentsDTMs have been enabled to conduct agency business
Better Prepared Evolving Financial ServicesBetter Prepared And Ready to Help
Evolving Financial ServicesThe payment revolution has been slow to penetrate Arid areas, until 2012
Significant increase in signal coverage in 2012g g g
Phone ownership and agents have increased significantly
Banking systems have also evolved rapidly
Establishment of banking agencies largely KCB and Equity
Likelihood of further developments in the banking system in Arid areas is very high due to:
Emergency Preparedness Mission Nepal February 2011
very high due to:
New administrative units at county level with county budgets
Growing understanding of value chains operating in the Arid region
Infrastructure developments associated with South Sudan and Infrastructure developments associated with South Sudan and Ethiopia, mineral extraction and power generation.
Increased potential for using payment systems to support cash transfer programming in the Arid regionprogramming in the Arid region.
Better Prepared Road Infrastructure in the Arid AreaBetter Prepared And Ready to Help
Road Infrastructure in the Arid Area
Emergency Preparedness Mission Nepal February 2011
Better Prepared Evolving Payment Mechanisms 1Better Prepared And Ready to Help
Evolving Payment Mechanisms 1
The Postal Corporation of Kenya Model
i ib dk Distributed to payment points (Post Offices in rural &
Government
PCK Bank account (Accompanied by hard copy of the payrolls) in rural &
urban poor slum areas)
of Kenya •World Bank •DFID •UNICEF
the payrolls)
Emergency Preparedness Mission Nepal February 2011 Reconciliation
is done for id d
Identification of the b fi i ipaid and
unpaid transactions and the refund is forwarded
beneficiaries with the program & National ID’s for paymentis forwarded
to the institution
for payment
Better Prepared Evolving Payment Mechanisms 2Better Prepared And Ready to Help
Evolving Payment Mechanisms 2
Emergency Preparedness Mission Nepal February 2011
Better Prepared Payment Mechanisms Moving ForwardBetter Prepared And Ready to Help
Payment Mechanisms Moving Forward
• Move towards online real time transactions which are mandated by the Move towards online real time transactions which are mandated by the CBK guidelines being introduced. KYC focus on the National Identity Card.
• Moves towards greater harmonisation of government social payment th h ti l i l t ti li (P l )programmes through a national social protection policy (Pulver 2012)
• The Orphans and Vulnerable Children Programme• The Urban Food Subsidy Programme• The Older People’s Cash Transfer Programme
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p g• The Persons with Severe Disability Programme • The Hunger Safety Net Programme
• Greater stress on targeting beneficiary registration payments and • Greater stress on targeting, beneficiary registration, payments and monitoring.
• Focus on interoperable systems.
Better Prepared Creating a Payments Eco System in Arid AreasBetter Prepared And Ready to Help
Creating a Payments Eco System in Arid Areas
….cash is limited in the North of Kenya, and moving cash is expensive:….cash is limited in the North of Kenya, and moving cash is expensive:
“The issue should not be to move more cash to the North, but rather to move as much value electronically as possible. If people need to make transactions, th th t k i t f ilit t l t i t ti ibl d then the task is to facilitate as many electronic transactions as possible, and
to keep these transactions electronic.”
Stephen Mwaura, Head of Payments, Central Bank of Kenya
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p , f y , f y
Implication Explore options for clients to pay for their supplies Implication - Explore options for clients to pay for their supplies electronically and for merchants to restock electronically.
Better Prepared Appropriate Delivery MechanismsBetter Prepared And Ready to Help
Appropriate Delivery Mechanisms
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Better Prepared Moving Towards ‘cash lite’Better Prepared And Ready to Help
Moving Towards cash liteIncrease local recirculation of cash
Increase prevalence of e-payments to decrease use of cash in total
Agencies bring cash in for cash transfer programmes from banks, with
Expansion in bank agencies M-PESAIncrease in trade payments to reduce challenges of insecurity and infrastructure,
appropriate transportAgencies also need to bring cash to support payments through M PESA
g yIncreased use of e-payments for school fees and to support children in schoolTransfer of e-value from bank accounts to M PESA
Emergency Preparedness Mission Nepal February 2011
through M-PESA. M-PESAPayment of advances for food from agent/merchants
Challenge - In the Arid zone most transactions are for small daily food or airtime purchases. p
Better Prepared Better Prepared And Ready to Help
Emergency Preparedness Mission Nepal February 2011
Better Prepared Retail Environment in Arid LandsBetter Prepared And Ready to Help
Retail Environment in Arid Lands
Observation Implication (s) Recommendationil bili l lik l i h i iAvailability
Mobile: Mostly M-PESA agents
People likely to find it easier to use M-PESA and Equity Agents.
In areas with connectivity, WFP could:i. Make direct payments to
beneficiary M-PESA agents
Bank agents – Mostly Equity Agent, KCB MtaaniA t
Equity Agents. beneficiary M PESA accounts to be withdrawn at an M-PESA agent; or
i S d h t b fi i Emergency Preparedness Mission Nepal February 2011
Agents i. Send cash to beneficiary bank accounts.
Connectivity - Safaricom is the dominant provider in
Cash transfer agents are likely
In areas without connectivity, WFP could explore the use of p
the Arid Zoneg y
to be in areas with connectivity.
WFP could explore the use of satellite connectivity, offline transactions or vouchers.
Better Prepared Financial Services in Arid AreasBetter Prepared And Ready to Help
Financial Services in Arid Areas
Emergency Preparedness Mission Nepal February 2011
Better Prepared Reasons for Customer ChoicesBetter Prepared And Ready to Help
Reasons for Customer ChoicesService Provider AttributesM-PESA • Availability
C i• Convenience• Secure• Fast• Easy to use.asy to use.
Shopkeeper • Availability• No collateral required for loans• Flexible as need arises
H E fEmergency Preparedness Mission Nepal February 2011
Home • Ease of access• Money is little-no need to bank• Have no fees and charges
Livestock • Great returns• Lifestyle
Equity Bank • No opening balance/lower charges• HSNP payment
S it f• Security of money• Marketing• Does not discriminate
Better Prepared ImplicationsBetter Prepared And Ready to Help
Implications• Use of formal financial services in the region is still low.
The majority of people have not yet interacted with any formal financial institution institution.
• Focus group participants desire basic financial services close by, enabling them to save and withdraw moneyg y
• It is therefore critical that these regions first access and experience use of financial service in its basic form
Emergency Preparedness Mission Nepal February 2011
• Expansion of mobile network operators likely to unlock use of financial services in the area
Better Prepared Better Prepared And Ready to Help
Emergency Preparedness Mission Nepal February 2011
More than half of the respondents having phones.
Among beneficiaries, however, this share is slightly lower.
Fewer beneficiaries from Turkana had lower phones ownership than Fewer beneficiaries from Turkana had lower phones ownership than those in Isiolo, Marsabit, Wajir and Garrisa.
Better Prepared SeasonalityBetter Prepared And Ready to Help
SeasonalityIncome: Collecting firewood, making charcoal, sale of livestock, small scalefarming in isolated areas, collecting building materials. During monthspreceding religious festivities such as Christmas and Ramadan people workpreceding religious festivities such as Christmas and Ramadan people workharder to be able to afford the expenses related to those celebrations.
Expenses: Income is used to meet basic household expenditures. Seasonald l d h l f h h f f d lexpenditures include school fees, the purchase of uniforms, medical expenses
and books. School-based expenses are incurred in January, May and Septemberwhen new school terms begin. Ramadan expenses include the purchase of foodnot ordinarily purchased
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not ordinarily purchased
Savings: a secret place, purchase livestock that can be sold later on to meet large expenditures.
Credit: Most people borrow for school-based expenses, especially at thebeginning of January and in September. School based expenses for the secondterm (May) are covered by high income and savings made in April. During the( y) y g g p gmonth of Ramadan people also borrow to meet expenses incurred during thecelebrations.
Better Prepared Seasonality‐Buna in WajirBetter Prepared And Ready to Help
Seasonality Buna in Wajir
Emergency Preparedness Mission Nepal February 2011
Better Prepared Better Prepared And Ready to Help
Emergency Preparedness Mission Nepal February 2011
Since the 2009 FinAccess survey M-PESA usage has increased considerably.
Currently many traders are using M-PESA to purchase goods to overcome the infrastructural issues.
Better Prepared Reason for not Using the Banks ‐ FinAccessBetter Prepared And Ready to Help
Reason for not Using the Banks FinAccess
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Better Prepared Promoting and Constraining Use of ServicesBetter Prepared And Ready to Help
Promoting and Constraining Use of Services
Driving Factors Constraining Factors
Float managementSecurity
Driving Factors
Increasing understandingNetwork connectivity
Constraining Factors
yLow literacy levelsNetwork downtimeDistancesPoverty
yDemographicsInfrastructure developmentGrowth in tradeNGO interventions
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Poverty
Collateral
NGO interventions
Financial EducationPolicy collaboration
InformationTrustOperational problem resolution
Process integration
resolution
Better Prepared Encouraging Usage of Financial ServicesBetter Prepared And Ready to Help
Encouraging Usage of Financial ServicesObservation Implication RecommendationInformation / education: still limited
Education of actual and potential clients is
Use of multiple mechanisms for education: still limited
awareness of the services and how they can be relevant for low income
potential clients is important, and should be built into delivery mechanisms.
mechanisms for dissemination should be considered. Partner institutions, agents, posters
users.Accessibility: Accessibility of financial services is increasing but
Building access to sustainable services to be carefully considered
Interoperability of agents, especially in remote locations, suggesting a bank
Emergency Preparedness Mission Nepal February 2011
services is increasing but still a significant issue for customers.
carefully considered especially where there are limited sources of liquidity in an area.
locations, suggesting a bank agent with a relationship with M-PESA.
T t P l till B ildi t t i th Diff t h i t Trust: People are still learning to trust the new mechanisms.
Building trust in the mechanisms, is likely to be important in encouraging the use of
Different mechanisms to build trust to be adopted, including training of clients, monitoring of g g
payment mechanisms., g
agents, and fast resolution of customer issues.
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