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Do You Provide Technical Assistance? Then You Just Got Competition: Mobile Money

By Wayan Vota on December 16, 2013


In reading the GiveDirectly study on cash transfers, Chris Blattman’s analysis, and the background research on both mobile money and cash transfers, I’ve come to agree with a point that Chris made in a Technology Salon: mobile money cash transfers will disrupt traditional development practices.

If your career or company business model is based on giving food, training, or agricultural inputs to poor people, mobile money is now your direct competitor.

Why? GiveDirectly gave poor people around $720 US on average to spend however they wanted and households increased their monthly livestock and non-agricultural businesses incomes by 33% percent ($15), durable assets, mainly roofs, by 58% ($279), and consumption by 23% ($36). The mobile money cash transfers also lead to a 0.25 standard deviation increase in the food security index for households (but truth be told, I’m not really sure what that means).

Anyway, show me a skills training course with those outcomes. Better yet, show me any training program where 92% of the funding reached the poor themselves. Yes, that’s right, the total cost of GiveDirectly programming is just 8% of the total funding raised.

What does this mean for your job?

I think we are on the cusp of a seismic shift in development. All the mobile phone and mobile money hype is starting to be justified. We’ve already seen mobile services upend domestic cash transfers, with national banks international remittance companies in a panic. We are starting to see real disruption in education and even mobile device manufacturing.

This study is the first shot across the bow of the development ship. And while we are on a big boat (no, not the Titanic or Lusitania), those groans you are hearing is it slowly shifting. We have to get more efficient, and have more impact, if we are going to hold overall funding steady, much less fight to raise it in this political climate.

I see abandoning much of our insistence on capacity building and training as a first step. This study shows we can have amazing impact without any technical assistance. Now cash transfers are not for everything – notably education and health outcomes didn’t change over the year – but why should we ever hand out food to increase food security? And why do business training when the poor seem pretty good at increasing incomes themselves? Finally, don’t give a cow this Christmas – give cash.

There will be few winners and many losers

Have you see the staff list for GiveDirectly? One thing that strikes me about the $2 million a year charity, is that they have 5 staff. When Inveneo was that size, we had 12 staff, and most development organizations are equally staffed. Yet GiveDirectly has a tiny staff in comparison, and mainly M&E field staff.

If we apply anything near that funding/staffing ratio to the top 5 USAID vendors (John Snow, Chemonics, MSH, FHI360, and DAI), we are all in for a restructuring on par with the US manufacturing sector. It may be more profitable than ever, but domestic manufacturing is really only the high-end boutique firms or place-specific specialists, neither of which are major employers, and certainly not of the generalist middle manager.

So should we all run scared like Chicken Little? No, of course not, but that doesn’t mean we can be complacent. Mobile money is here, its only getting bigger, and it will impact every single one of us. And every single one of our companies.

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Written by
Wayan Vota co-founded ICTworks. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of his employer, any of its entities, or any ICTWorks sponsor.
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One Comment to “Do You Provide Technical Assistance? Then You Just Got Competition: Mobile Money”

  1. Thanks for an interesting article. I enjoyed listening to the NPR Planet Money and Morning Edition pieces on GiveDirectly in Kenya (http://www.npr.org/blogs/money/2013/08/23/214210692/the-charity-that-just-gives-money-to-poor-people); it was presented in a way that non-ICT and development geeks could really grasp the story, and it’s great to see media channels outside of Devex cover development.

    GiveDirectly is focusing on unconditional cash transfers delivered via mobile money. In some environments, mobile and other electronic payment channels can lower the costs of these transfers. To me, this isn’t competition — it’s an amazing opportunity! Staff resources that are now taken up traveling to deliver cash can be placed elsewhere, without such high levels of risk to their safety.

    There’s a long way to go before mobile money is a disruptive, ubiquitous, low-cost mechanism to deliver funds. Kenya remains a unique environment. In the Philippines, for example, where less than 26% of the population is included in the formal financial sector, mobile money penetration hasn’t reached the levels that many were hoping; only 7.30% use mobile phones to send money.

    There are some innovations that are worth watching for their potential disruptive impacts on operations. Currently, Mercy Corps, in partnership with Banko, is providing unconditional mobile cash transfers to victims of typhoon Yolanda/Haiyan (http://asianjournal.com/news/mobile-money-relief-effort-in-philippines-spurs-banking-access/). Also in the Philippines, USAID Scaling Innovations in Mobile Money, implemented by DAI, has done some incredible work in partnership with local government units, enabling real property taxes, scholarships, and payments to teachers via mobile. In addition to eliminating challenges in the local government unit’s existing manual system, including high cost of cash handling, safety concerns, and inefficient back end operations, this mobile-based fees assessment and collection solution aims to streamline government financial processes and reduce delinquent tax payments. (http://www.simmphil.org/whats-new/quezon-city-and-usaid-launch-mobile-money-system)

    Mobile money, in addition to other channels for electronic payments, has the potential to disrupt operations, but it’s still a mechanism. It will take much more — a paradigm shift toward unconditional cash transfers – before either will dramatically impact aid models.