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The Most Influential USAID Paragraph on Mobile Money

By Wayan Vota on November 18, 2013

mobile money definition

Back in December 2011, I organized a Technology Salon on mobile money with Menekse Gencer and Priya Jaisinghani to figure out how we could increase mobile money usage in development. Once recommendation was to put mobile money language into USAID Request for Proposals.

Fast forward to mid-2012, and Procurement Executive Bulletin No. 2012-05 comes out with suggestive language for mobile money references in USAID RFPs to promote the Better Than Cash Alliance goals:

USAID encourages host country governments, bilateral and multilateral development partners, contractors, subcontractors, grantees, sub-grantees, and private sector alliance partners to help strengthen the financial services sector in the countries we work. Where programs propose cash distributions, partners should consider incorporating electronic payment systems into program design and implementation where feasible, thereby reducing reliance on physical cash.

Now this is just an information request to understand the use of electronic payments by implementing partners, and the information provided in proposals cannot be an evaluation factor unless specifically stated in the solicitation document, but when was the last time you saw a suggestion in an RFP and didn’t follow it?

And I’m seeing multiple RFPs with this language these days – direct and obvious hints of USAID’s future direction away from cash and towards mobile money. Of course, who can argue that’s anything but a great idea? Mobile money is so much more efficient that I’m surprised implementers haven’t already made the wholesale switch. In fact, if you’re still using cash disbursements, do tell why!

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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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2 Comments to “The Most Influential USAID Paragraph on Mobile Money”

  1. Nick says:

    You mention “Of course, who can argue that’s anything but a great idea? Mobile money is so much more efficient that I’m surprised implementers haven’t already made the wholesale switch.” as if it’s entirely uncontentious – are you sure this is always the case? I haven’t seen a lot of good quality studies on it, but I’ve seen some unpublished pilots that show electronic transfers to be less efficient, especially in disrupted areas.

  2. Francis Ollivier says:

    I agree with Nick – this sounds naive to not even consider the context, and to take as granted that mobile money is “so much more efficient”. I encourage you to consider mobile-money to operate cash disbursements in South Sudan, Sudan, CAR, Mauritania and many more countries which either have zero mobile money infrastructure or struggle to reach maturity.
    To make a short-term cash transfer project possibly more efficient than cash-based operations, mobile wallets infrastructures needs to be very mature (particularly the agents networks and money flow. A poorly designed electronic cash transfer program was a failure because the beneficiaries couldn’t withdraw their cash, the transactions overflowing the local agents’ usual capacity), operational (usually not the case after a major disaster. The technical infrastructure comes back up rather quickly, but the agents networks are much slower to be brought back to operations) and the population targeted needs to be accustomed with electronic transactions. Right now, such contexts/countries can be counted on the fingers of one hand.
    Furthermore, there is no evidence that such programs actually help directly with mobile money adoption (my personal feeling is that it doesn’t because most of the time, such projects don’t analyze such tools in the broader context of mobile money and overlook the social constraints, mid to long term implications and side advantages for the beneficiaries, who are thus using these tools during the project abandon them later, for lack or further use/interest) – it does help with familiarizing the individuals with electronic money though.
    Lastly, let’s not confuse “electronic payment systems” with “mobile money” – the former encompasses a wide range of hybrid payments which can be well suited to the project/context, but which are not mobile money.