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Humanitarian Payment Digitisation: Focus On Uganda’s Bidi Bidi Refugee Settlement

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Executive Summary

Mobile network operators around the world are leveraging their mobile money bulk payment offerings to deliver humanitarian cash transfers to people affected by crises.

At a time when humanitarian budgets are being stretched to their limits, electronic money transfers, notably mobile money, offer a cheaper, faster, more secure and more transparent means of getting help to those who need it, compared to a physical cash equivalent. The pace at which humanitarian organisations are shifting from in-kind aid, to cash transfers, then to digital cash transfers, is intensifying. As such, the humanitarian sector is increasingly leveraging mobile money, specifically their bulk payment offerings, to facilitate the delivery of digital cash transfers. The benefits of delivering funds electronically to beneficiaries through a mobile money provider stretch beyond just efficiency and transparency - the opportunity to promote financial inclusion is vast. Yet delivering humanitarian cash transfers (HCTs) in fragile environments is costly business for mobile money providers, thus, in order to build a sustainable business case, mobile network operators (MNOs) must drive the usage of mobile money accounts as well as GSM services to increase average revenue per user (ARPU).

For the first time in Uganda, mobile network operators are using their mobile money bulk payment service to deliver humanitarian cash transfers in Bidi Bidi refugee settlement.

Uganda hosts the world’s fastest growing refugee population - today, the country hosts over 1.3 million refugees. In northern Uganda, the mobile industry and humanitarian sector have collaborated to deliver humanitarian assistance to refugees via mobile money. This has resulted in savings in logistical costs, whilst also giving refugees greater dignity and choice. Such partnerships are a first for MNOs in Uganda who are rapidly adapting their mobile money services to meet the needs of their humanitarian partners.
This case study offers insights into the business models, modalities and operations involved in two mobile money humanitarian cash transfers projects in Bidi Bidi refugee settlement, in northern Uganda. Both projects are based on partnerships; the first between Airtel and Mercy Corps, and the second between MTN and the International Rescue Committee.

Significant investment in time and monetary resources is required from the mobile industry, NGOs and other ecosystem players to make HCT projects successful in geographic areas where mobile money is in its infancy.

Ugandan MNOs have dedicated substantial resources to expand and upgrade their infrastructure in Bidi Bidi refugee settlement to provide reliable connectivity, and to achieve the enabling environment necessary (robust agent networks, sufficient liquidity, training and customer service provisions) for successful humanitarian cash transfer projects. Mobile money is a heavily OPEX-centric business, with constant investment necessary to maintain a readily available and highly liquid network of agents that perform cash-out for customers. Additionally, NGOs in Uganda have committed time to navigating fast-moving regulatory environments and iterating projects along the way.
Furthermore, development agencies, such as the United Nations Capital Development Fund (UNCDF) have provided financial, operational and technical support to mobile money providers seeking to expand their businesses into more challenging locations.

MNOs and NGOs involved in HCT projects in Bidi Bidi have experienced similar success factors and challenges, which can be shared across sectors to inform future HCT projects.

Success factors include: • Frequent communication amongst stakeholders to build trusting relationships

• Flexibility, agility, and willingness to make projects succeed (HCT via mobile money is a new and promising chapter, which requires a fair amount of trial and error to get right)

• A focus on building out the mobile money ecosystem to foster wider financial inclusion

• Investments in connectivity infrastructure, agent network and liquidity management to ensure that beneficiaries have a positive, smooth experience

• Organisational capacity, notably sufficient technical knowledge of mobile technology within humanitarian organisations, for projects to succeed

• Significant investment in training and sensitisation of beneficiaries on how to use mobile money to receive payments

Challenges include:

• Fast-changing Know Your Customer (KYC) regulations for electronic money transfers, which have had a particularly negative impact on the ability of non-Ugandan HCT beneficiaries to access mobile money services1

• Strict and/or unclear guidelines on due diligence of partner organisations.
Humanitarian organisations must present the required due diligence documentation to the MNO before they can open a mobile bulk payment account. The requirements can be stringent, and this has caused confusion in the process of contract signing

• Low phone penetration amongst beneficiaries, many of whom are selected precisely because of their heightened vulnerability and are therefore unlikely to already own a mobile handset

• Agent liquidity management, including ensuring agents have the correct denominations of physical cash to be able to perform cash-outs Despite the challenges faced, in all cases, an innovative workaround or solution was found, made possible by the strength of the partnerships between the MNOs and NGOs involved in the projects.