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Mobile Money Afghanistan Creating a Transparent Framework for the Movement of Money and Providing Financial Inclusion

Mobile Money Afghanistan Creating a Transparent Framework for the Movement of Money and Providing Financial Inclusion For the Unbanked. Shainoor Khoja Managing Director, Roshan CSR August 2010.

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Mobile Money Afghanistan Creating a Transparent Framework for the Movement of Money and Providing Financial Inclusion

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  1. Mobile Money Afghanistan Creating a Transparent Framework for the Movement of Moneyand Providing Financial Inclusion For the Unbanked Shainoor Khoja Managing Director, Roshan CSR August 2010

  2. What happens when this Police Officer gets paid his full pay, can support his family and values his job? 59% of the population said corruption is a bigger problem than insecurity or unemployment. One out of two Afghans had to pay at least one kickback to a public official. More than half the time (56%) the request for illicit payment was explicit by the service provider. Approximately $2.5 million in bribes was paid in the last year, which is equal to 23% of Afghanistan's GDP. UNODC Report

  3. RoshanAbout Afghanistan • 75% of the population lives in rural areas without access to a bank. • More than 70% of the population lives on less than $2/day.

  4. M-PaisaToday and Looking Forward Cash Scratch Card Bank Integration Cross Border Money Transfer Deposit Salary Payment Point of Sale Buy Airtime Pay Loan ATM Online Merchant Payment Send/Receive Money Pay Bill Withdraw Deposit through Credit Card Merchant Payment

  5. M-PaisaWhy Salary Disbursement? • Problem: Ministry of Interior physically distributes salaries to the Afghan National Police. • Solution: M-Paisa can serve as a secure instantaneous scheduled mechanism to transfer and receive funds. • Improve safety and security related to money transfer. • Provide transparent movement of funds versus the current method. • Reduce soldiers taking absence without leave (AWOL). • Increase employee satisfaction and guarantee salary payment. • Provide a mechanism for financial inclusion.

  6. M-PaisaBenefits

  7. M-PaisaOpportunities to Promote Financial Inclusion • Over 1 billion people across Asia, Africa and Latin America have access to a mobile phone, but not a bank account. • Cell phone banking is potentially six times cheaper for routine banking transactions. • In Afghanistan, there were ~356K MFI clients in 2008, which is equal to 18% of the 2 million households living under the poverty line.

  8. M-PaisaThe First Microfinance Bank Afghanistan & Hope for Life First Microfinance Bank Afghanistan • FMFB has only 17 branches across the country. • Largest MFI institution in Afghanistan. • Loan clients can receive and repay loans through M-Paisa. • Opportunity to reduce cost of loans by 5 percentage points. • Branches in Badakhshan serve as M-Paisa agents (cash in and out point). Hope For Life (MFI) • Provide small loans $200 to $1,000 USD to groups of five to nine. • Active in Kabul and growing number of clients: 54% are women. • No branches in country – only one main office. • Loan officers interface with recipients in their homes. • Loan officers save approx. 4 hours a day and can securely get funds back to the office.

  9. M-PaisaHope for Life • Number of loan officers using M-Paisa grew from one to 18 in just three months for this MFI. • Seven females officers also using the service. • M-Paisa makes it safer to travel with funds. • M-Paisa reduces fraud. 347% 310%

  10. M-PaisaBenefits

  11. M-PaisaCreating a Regulatory Framework • Know Your Customer (KYC) • Fully compliant. • Monitoring of all transactions – resource heavy. • Any suspicious activity reported to the Central Bank. • M-Paisa is regulated under the Central Banking Authority – Da Afghanistan Bank (DAB). • To register for M-Paisa, all customers need to have either taskara card (national identification) or passport. • In conjunction with DAB and Government, Roshan is taking a lead role to help shape and create a regulatory framework for mobile money.

  12. M-PaisaChallenges to Salary Disbursement & Loan Payment • Current methods have been around for many years and willingness to change at working levels faces resistance. • Lack of capacity, technological illiteracy and illiteracy pose challenges. • Develop tools to resolve this (IVR, Voice SMS, Auto-dialer). • Engagements and alignment of all necessary parties. • Ensuring reach and distribution mechanism to unlock the base of the pyramid.

  13. M-PaisaLooking Forward • Faster economic development, not dependent on international aid. • Spurring and supporting Afghan led businesses and their development. • Empowering communities to take control over their own development. • Largest impact for the rural communities and the ultra-poor. • Access for the unbanked.

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