Want DFS Uptake? Do Feasibility Assessments – PERSPECTIVES FROM MSTAR/BANGLADESH

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write on their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 24,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $1.83 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursement to 795 farmers. Both banks are interested in scaling up these efforts.  

By Tajmary Akter, mSTAR/Bangladesh Technical Specialist

At mSTAR/Bangladesh, we have found that digital financial service (DFS) feasibility assessments are an excellent method to accelerate DFS uptake. When determining digital financial service feasibility, assessments are integral to understanding and analyzing context. They provide insights to understanding community needs, challenges, opportunities and potential action and are proven to be an effective method for learning and evaluation.

In the Bangladesh context, the DFS market is dominated by mobile financial services, especially person-to-person money transfers; other usage options have not yet reached a significant portion of the unbanked, low income and rural communities. mSTAR/Bangladesh has conducted several assessments since 2013 to understand this and explore opportunities for DFS integration in development working areas, especially health and agriculture.

As a member of the mSTAR/Bangladesh team, I was able to take part in several assessments addressing some of the following objectives:

  • Mapping the existing transaction patterns among key actors of relevant value chains and analyzing existing rules and regulation (e.g. government regulation for mobile money).
  • Identifying the constraints or root causes that explain why DFS is currently not being adopted among unbanked, rural and low-income populations.
  • Identifying opportunities based on assessment findings to troubleshoot existing challenges and accelerate DFS in the broader context.

The assessment findings significantly contribute to troubleshooting challenges by identifying community needs. For example, from learnings identified in assessments, our team was able to contribute to the design and execution of two DFS innovations targeting smallholder farmers and businessmen in rural communities:

  1. A card-based micro-credit facility through agent banking with Bank Asia, in partnership with the USAID Agricultural Extension Support Activity.
  2. An agri-credit facility through mobile bank accounts with the IFIC Bank, in partnership with the USAID Rice Value Chain activity.

Assessments have the potential to help drive DFS innovation by analyzing opportunities in existing transaction channels like our team did in an agriculture value chain assessment in February 2017. This kind of assessment not only explores opportunities at the local community level but also at the organizational level. The assessment showed that adopting DFS in a suitable way could offer an organization’s increased operational efficiency by saving time, resources and costs. Another recently published assessment conducted by the mSTAR/Bangladesh team determines DFS feasibility in agricultural mechanization value chains.

Through different assessments, our team has been able to provide insights and recommendations for why, what and how DFS may integrate efficiently into different sectors. Through these efforts, we have been able to support our overall goal of supporting, building and accelerating the DFS ecosystem in an effective manner in Bangladesh.

For the full list of assessments completed under mSTAR/Bangladesh, see the Technical Reports section on this webpage.

Tajmary Akter has been a technical specialist with mSTAR/Bangladesh since September 2016. She has experience working with agriculture, nutrition, livelihoods and market development programs with an expertise on gender issues. She completed her Masters in Anthropology and has worked as a development professional for more than eight years.

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A Holistic Approach Leads 3,100 Farmers to Register for DFS Initiatives -PERSPECTIVES FROM MSTAR/BANGLADESH

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write on their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 24,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $1.83 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursement to 795 farmers. Both banks are interested in scaling up these efforts.  

By Md. Majidul Haque, mSTAR/Bangladesh Technical Lead for Digital Financial Services

Digital financial services (DFS) are playing a key role in achieving financial inclusion objectives worldwide, and Bangladesh is no different from global trends.

The mSTAR/Bangladesh team has been working in the DFS space in Bangladesh since September 2013 and has seen firsthand the phenomenal growth in DFS adoption, particularly mobile financial services (MFS), in the country over the last couple of years.

While the adoption of DFS has increased rapidly, barriers to DFS uptake remains a concern for traditionally marginalized and financially excluded populations in Bangladesh. DFS usage in Bangladesh is mostly composed of cash-in and cash-out services, which is in part due to limited availability and awareness of additional use cases. Marginalized and financially excluded populations, however, require a wider range of financial solutions and serving them presents both unique opportunities and challenges in the design and delivery of these solutions. There is no single solution. Innovative DFS products and services are the only way to address those unmet needs.

mSTAR/Bangladesh (mSTAR/B) has helped to successfully pilot test two completely new DFS innovations (see more here and here) in Bangladesh to provide smallholder farmers with access to agricultural loans, savings, transfers and merchant payments. These pilots are the first examples to date in Bangladesh where a bank and MFIs have partnered to extend micro-credit agricultural loans to farmers. Farmers are also able to use such micro-credit to securely and easily purchase inputs from participating retailers through a digital channel, in particular through mobile phones and NFC-enabled debit cards. Farmers are now able to access micro-credit at rates less than half of what they had previously had access to and with extremely flexible re-payment terms and conditions, with repayment due in full after six months, as opposed to weekly repayments from other sources.

While implementing those DFS innovations, there were few areas where we had to give some distinct concentration to successfully support optimal results from these pilots so that these initiatives can be scaled up in future. We found the following to be particularly important in that regard.

  • Needs Assessment: A needs assessment is very important before designing and implementing any innovations through any channel, whether DFS or not. In case of the above-mentioned innovations, we conducted DFS assessments for Agricultural Value Chains (AVC) and separately Rice Value Chains (RVC) to understand the needs, capacity and aspirations of the different value chain actors.
  • Selection of DFS Provider and Target Base: Selecting a DFS provider is not always easy. DFS providers have different service offerings, pricing, interest, reach, and customer service. Successfully deciding which DFS provider is the right fit for the pilot requires planning and research. Similarly, it is also recommended to start off pilots in one or two areas on a small scale at the beginning. Learnings and experiences from such pilots can be used to design large scale transitions. For these two pilots, we partnered with Bank Asia Limited and USAID’s Agricultural Extension Support Activity (AESA) project, implemented by Dhaka Ahsania Mission (DAM), as well as IFIC Bank Limited and the USAID RVC project, implemented by IRRI/Bangladesh.
  • Product Design & Defining Service Delivery Channel: Throughout the product design process and service delivery channel identification, strong involvement of all partners is essential to shape and guide the development of product concepts. In our case, through active participation from all partners, they were able to deliver flexible micro-credit solutions tested through both mobile phones and NFC-enabled debit card for two groups of target customers.
  • Setting Pilot Goals and Expectations: It is important to set goals and expectations of the pilot, which eventually helps to determine focus, define specific measurable targets and offer motivation. Before starting these pilots, we worked with the partners to define all the parameters that should be achieved and how we would define success.
  • Coordination among Stakeholders: Synchronization between stakeholders carries a huge importance to make an initiative successful. In our pilots, all partners were very clear and agreed in writing to pilot objectives, their roles and benefits, the operating model and other relevant issues.
  • Training and Field Readiness: Providing field forces and the targeted customer base with training and capacity building on how the services work and their potential benefits are critical, as is thinking about how to communicate these messages to other relevant parties. Along with our partners, we helped to conducted several trainings and workshops before implementing those mentioned pilots.
  • Capturing Pilot Impacts: It is very important to capture impacts from pilot testing to measure whether the pilot was successful and actually met the needs of the target base, as well as to identify possibilities to scale up the initiatives. For both our pilots, we conducted pre- and post-assessments with 109 farmers, six ag-input retailers and one MFI. Based on those assessments, it appears that in addition to the better interest rates and repayment terms, the loans have also enabled farmers more flexibility in the types of inputs they purchase. Thanks to these products, farmers are no longer dependent on credit from retailers, who would often push them to buy certain products. In addition, for farmers who previously had higher interest loans with rapid repayment, these products offer more flexibility on when they can sell their crops as the flexible repayment terms enable them to sell their crops later at a higher price, rather than rushing to sell.

The mSTAR/Bangladesh team, along with all other partners, is now working to scale up those initiatives. More than 3,100 farmers and 50 ag-input retailers have already registered through these initiatives in just 10 months since they launched. While this is only a drop in the bucket of a country with more than 160 million people, we hope that these ground-breaking innovative products will serve as inspiration to catalyze a revolution in agricultural financing in Bangladesh.

Md. Majidul Haque has just under a decade of experience in the technology and financial services sectors that include telecom, banking and international development organizations with a focus on new business, product development, project management, action research and business development related to digital financial services (DFS), financial inclusion, e-commerce, payment gateway & value-added services (VAS). Majidul has successfully introduced DFS to a wide range of segments, including smallholder farmers, ag-input retailers, local government officers, community health workers, ultra-poor women, slum dwellers, ready-made garment workers and field staffs. He served as the technical lead – DFS with FHI 360 from April 2016 until July 2017.

How mSTAR Transitioned USAID IPs to DFS- PERSPECTIVES FROM MSTAR/BANGLADESH

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write on their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 24,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $1.83 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursement to 795 farmers. Both banks are interested in scaling up these efforts.  

By Ataur Rahman, mSTAR/Bangladesh Project Lead

For the past four years in Bangladesh, the mSTAR project has worked to completely transform USAID implementing partner (IP) payment streams. When we first started project operations in Bangladesh in 2013, we found that almost all project expenditures in Bangladesh at the field level were being done in cash. This is not that surprising. Cash is the most widely accepted form of payment across Bangladesh. InterMedia’s Financial Inclusion Insights found that 67 percent of Bangladeshis have yet to adopt DFS. But cash is risky and can be expensive, in terms of travel and staff costs needed to transport it around. Our job was to help show IPs the benefit of digitizing those transactions and supporting them to do so.

To date, mSTAR/Bangladesh has helped enroll over 24, 000 individuals—a majority of whom are women—into digital financial service accounts and helped USAID IPs and their beneficiaries transact just over US $2 million digitally. Since transitioning to digital payments, IPs like WorldFish realized annual savings of US $19,150 and reduced the administrative burden on technical staff by 600 days annually. Another IP, Dnet, saved the equivalent of 20 full-time staff per year in reduced administrative tasks while realizing an annual benefit of around US $60,900.

Here’s how we’ve transitioned these IPs and saved them valuable time and money.

The first step we take when digitizing payment streams is fully assessing the need or use of payments by understanding the beneficiaries of a project and the project itself. Through direct conversations with project staff and beneficiaries, we have found that while most program staff own mobile phones and are aware of mobile money, most don’t use it. Those who are adoptees only use basic products and services, such as personal transfers. This is because they are often broadly unaware of the intricacies of digital financial services (DFS), such as mobile financial services and agent banking products, and therefore lack trust in them.

Our conversations with projects made it clear that awareness is key. By increasing DFS-specific knowledge, we find that projects immediately recognize the benefits and are keen to adopt. While some organizations are trying to increase the uptake of DFS by increasing their knowledge and capacity to use DFS products, more effort and engagement is required. To this end, the mSTAR team in Bangladesh has focused its energy on increasing DFS-specific awareness among USAID-funded project staff and beneficiaries.

We provided hands-on training directly and through partner organizations to interested projects to promote DFS products among groups that previously had little access to such information. Group work in workshops and discussions identified potential gaps and established methods to overcome challenges. These workshops targeted each level of an IP, from project leads and finance staff, to program staff, frontline managers and beneficiaries, so that we could tackle every link in the IP value chain.

We found that it is important to include all levels of staff in the process to grapple with challenges throughout the management structure. A top-down approach often excludes practical field realities from the conversation, although DFS can’t be implemented without interest and buy-in from top management.

At mSTAR/Bangladesh, we have found that knowledge is power. An informed person is more likely to adopt DFS as compared to a person who is unaware of DFS and its potential. This reflects the need to better promote DFS products and their associated benefits in a language that can be easily understood by those who may find it difficult to differentiate between myths and facts. In our first year and a half, mSTAR/Bangladesh primarily reached out only to development projects but with time, we began to engage with donor agencies, DFS providers and regulators to identify gaps and to come up with realistic solutions. mSTAR/Bangladesh believes that access to formal financial services is not a luxury but a basic need for all—and awareness raising is one of the tools that can help inform stakeholders of the ways forward to achieving this goal.

 Ataur Rahman has been the project team lead for mSTAR in Bangladesh since its second week of implementation in October 2013. Prior to joining mSTAR, he was the head of outreach at Dnet for the Mobile Alliance for Maternal Action (MAMA) Bangladesh Initiative where he helped to design and implement mobile value added services and pilot the use of mobile money within the program. Before that he worked for the Bangladeshi government’s Access to Information (A2I) program led by Prime Minister’s Office funded by UNDP and the Bangladesh Telecentre Network (BTN), a collision of ICT4D initiatives secretariats.

Can dialogue lead to DFS uptake? – PERSPECTIVES FROM MSTAR/BANGLADESH

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write on their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 24,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $1.83 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursement to 795 farmers. Both banks are interested in scaling up these efforts.  

By Tasnuba Sinha, mSTAR/Bangladesh Digital Financial Services Associate

In a world where we want to make an impact across borders, cultures, viewpoints and motivations, dialogues such as stakeholders’ meetings, conferences, formal network gatherings and seminars play an integral role. Dialogues like these allow for networking and relationship building, for role models to inspire next generation change makers, and for the exchange of experiences.

mSTAR/Bangladesh recognizes the potential and the importance of dialogue facilitation and has organized 11 dialogue facilitation programs in Bangladesh over the past four years. I have been fortunate enough to be a part of mSTAR/Bangladesh and have organized numerous events over the past 11 months including Mobile Money Consultative Group meetings, a Financial Inclusion Week Event and an Agricultural Value Chain Insights: Opportunities in Bangladesh report launching event.

In the last few years, our team at mSTAR/Bangladesh has built a strong local and international network of representatives from development organizations, donor agencies, digital financial services (DFS) providers, mobile network operators, technology solution providers, insurance companies and regulatory bodies – people who are doers and makers, who believe what we believe: that Bangladesh has all the potential in the world. Without this community, our work in supporting acceleration and adoption of digital payments would not be possible.

The first Mobile Money Consultative Group (MMCG) meeting was first held in August 2014 and ever since then, it has successfully created a community of passionate individuals who believe in the benefits of using digital financial services and ultimately building an inclusive digital ecosystem where all segments of society have access to formal financial services, particularly those at the bottom of the pyramid. MMCG provided a platform for change makers to come together and discuss challenges and innovative solutions. Held quarterly, the MMCG has been covering various issues from the importance of financial literacy to the need for innovation in mobile financial services products. Furthermore, several digital financial service providers have expressed many times during the meetings that they see all the challenges as an opportunity for them to develop their products in such a way that the challenges can be eliminated. Most importantly, our team believes in promoting collaboration, trust and community – the tenets of a strong digital financial ecosystem and after successfully conducting nine MMCG meetings, we can say that is what we have attained.

Another major event that mSTAR/Bangladesh (mSTAR/B) has hosted that I am particularly proud of is the Financial Inclusion Week event in October 2016. Aligning with the global theme ‘Keeping Clients First in a Digital World,’ mSTAR/B hosed an event entitled ‘Increasing the Uptake of Formal Financial Services through a Client-Centric Approach.’ The event successfully explored how different actors, from development organizations, to financial service providers, to government programs, have supported the development, promotion and uptake of digital financial services in Bangladesh. mSTAR/B was one of the very few organizations who took part in this global conversation. The modality of the workshop was designed in such a way that it provided the participants to perform a lively, interactive discussion where they explored scenarios reflecting existing needs, barriers to accessing formal financial services in Bangladesh and the actions and steps required to further accelerate financial inclusion.

The core purpose behind hosting any dialogue facilitation is to help people connect. Dialogues give organizations opportunities to see what other people are working on and understand challenges, and the need to develop new innovative products that would benefit all segments of the population. For us, that was the main objective. We aimed to provide such platforms that would help a development organization connect with a DFS provider or other development organization and inspire individuals to think of building the ecosystem through collaboration.

Tasnuba Sinha has been with mSTAR/Bangladesh since August 2016. During that time, she organized five events promoting dialogue facilitation. She has always been passionate about working in the development sector and graduated with a degree in Economics. Prior to mSTAR/Bangladesh, Tasnuba worked at a tech startup in Bangladesh.

More Awareness-Raising Activities Are Needed to Increase Use of DFS – Perspectives from mSTAR/Bangladesh

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write about their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 24,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $1.83 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursement to 795 farmers. Both banks are interested in scaling up these efforts.  

By Kazi Amit Imran, mSTAR/Bangladesh Communications Specialist

“We do not have any scope to adopt digital financial services in our project” – this is exactly how many development projects react when they hear about digital financial services (DFS) for the first time. Even though USAID has mandated the use of digital payments as the default method for its implementing partners since 2014, lack of technical knowledge and misunderstanding about what is required to use DFS still holds back many projects. One of the key components holding back DFS adoption is lack of awareness, both among the general population and development organizations whose programs support them. This is in part why many Bangladeshis—and development organizations—are unaware of and often hesitant to try DFS products.

The reality in Bangladesh is that the majority of the rural population still uses cash to make financial transactions. This segment is often broadly unaware of the intricacies of DFS products, and therefore can lack trust in them. While some organizations are trying to increase the uptake of DFS by increasing their knowledge and capacity to use DFS products, more effort and engagement is required. Even years after their introduction to Bangladesh, many people are still unaware of DFS, such as mobile financial services and agent banking products.

The importance of increasing DFS-specific knowledge is crucial for spurring adoption, and the benefits that come from having access to formal financial services. Over the past four years, the mSTAR activity in Bangladesh has focused on increasing DFS-specific awareness among USAID-funded project staff and beneficiaries, particularly through publications, blog posts, videos, and other multimedia content. We developed different kinds learning documents targeting different audiences including project leads, finance staff, program staff, frontline managers and beneficiaries. mSTAR/Bangladesh’s approach to awareness raising was very much focused on tailoring content to appeal to and meet the needs of specific audiences.

Early on, many USAID-funded implementing partners (IPs) were hesitant to use DFS often due to a lack of awareness and capacity, although with technical support from mSTAR/Bangladesh that began to change. By documenting and sharing the learnings from these early adopters, we were able to convince other USAID IPs to consider the potential benefits of DFS to help them enhance operational efficiency and better achieve their development objectives.

Though it varies from context to context, we’ve found that sharing success stories of beneficiaries and infographics, in particular, have had a dramatic impact on influencing IPs to consider DFS. The success stories validate the benefits and the changes that DFS adoption brings about to individuals’ lives, as well as to IPs at an organizational level. The infographics, meanwhile, helped them to very easily visualize the benefits from transitioning to DFS, such as this one, which captured the impact using DFS had on achieving project objectives. Meanwhile, our infosheets have brought about price transparency in the DFS market in Bangladesh for the first time. Prior to our creation of the first Mobile Money Infosheet in 2014, it was not possible to find information on corporate pricing on any of the mobile financial service (MFS) providers websites. Once we started putting their prices and service offerings side by side, they took notice. bKash, for example, the country’s largest MFS provider waived their disbursement fees for all USAID projects and also reduced their cash out fees for recipients of payments from USAID projects from 1.85 percent to 1 percent.

At mSTAR/Bangladesh, we have seen that an informed person is more likely to adopt DFS compared to a person who is unaware of DFS and its potential. This reflects the need to better promote DFS products and their associated benefits in a language that can be easily understood by the intended audience.

You can view all of our learning documents online here.

Kazi Amit Imran served as the Communications Specialist for mSTAR/Bangladesh from May 2014 to May 2017. Prior to this he served as a Communications Manager at BRAC. He has a masters degree in development studies and business administration.

Why We Need to Advance Digital Financial Services for Factory Workers

By Majidul Haque

‘We want to be paid in cash! We are very much happy with the way we are receiving our salaries. We don’t need any banking system or MFS account!’

I heard this from most of the attendees in a town hall meeting I was holding with ready-made garment (RMG) workers in Bangladesh. As a Technical Lead for digital financial services at FHI 360, at the time I was writing a guide for BSR’s HERfinance project on how garment workers could use mobile financial services (MFS). Through the town hall meetings I could better understand workers’ opinions on using MFS instead of cash to receive wages.

Their plea for cash was natural. Cash has a real-life feel that comes from seeing, touching and counting notes, as Mr. Chhavi Ghuliani, Associate Director at BSR, notes in his article ‘Why is cash a problem?’. Digital channels, on the other hand, are intangible.

It might be appropriate to say that these unbanked workers’ preference is to always have something physical, as it ensures direct access to their money. Building trust in MFS might grow slowly unless they can practically feel or see its actual benefits. Therefore, raising awareness of the benefits of MFS among workers can play a vital role in digitizing salary payments.

After I explicitly explained the benefits of using MFS to the group of workers, they replied positively about accepting their wages digitally.

It might be appropriate to say that these unbanked workers’ preference is to always have something physical, as it ensures direct access to their money.

The RMG sector in Bangladesh has significant influence on the Bangladeshi economy in terms of employment, production and foreign exchange earnings. The industry employs over four million people, most of whom are unbanked. In Bangladesh, 90 percent of wages are paid through cash and RMG factories are no different in that regard.

In Bangladesh, 90 percent of wages are paid through cash and RMG factories are no different in that regard.

However, paying salaries in cash brings several concerns to both RMG factories and their workers. Factories face the risk of theft or fraud in the shipment and distribution of cash and the amount of time and resources required to process disbursements is significant. Workers, as well, face the risk of losing their cash through theft while traveling home from factories. Cash can also discourage maintaining savings, which are essential to enabling individuals to adapt to future demand and shocks. Women workers, who represent more than 80% of the total RMG workers in Bangladesh, face even greater risks as they often have little or no control over their money if it is in cash. In many parts of Bangladesh, women are likely to be more economically dependent on men or other family members for their survival due to their limited earnings, the male dominated culture and lower education. In addition, according to research done by the Financial Inclusion Insights (FII) program, less than half of women in Bangladesh have access to formal financial services and even fewer women have a registered account. As a result, they usually handover their cash to a male relative to store.

Given the limitations with cash, the high mobile penetration rate, and the rapid growth of MFS in Bangladesh, MFS has the potential to be one of the best solutions to digitize salary payments—not to mention that it can also serve as a powerful catalyst to bridge the financial inclusion gap of RMG workers. Digitizing salary payments can bring more efficiency and transparency to payroll systems by ensuring access to formal financial services for both men and women. In addition, women can also have more control over their salaries and influence over household financial decision making.

To help the RMG sector capitalize on this opportunity, FHI 360 and BSR recently published a manual titled ‘Digitizing Worker Salary Payments: A Manual for Ready-made Garment Factories.’ This manual provides a blueprint for ready-made garment factories in Bangladesh, and the organizations supporting them, who are interested in using mobile financial services to make salary payments to their workers. It includes background information on MFS, the possible benefits and challenges, and useful tips and checklists for implementing MFS salary payments.

 

Md. Majidul Haque is the technical lead – digital financial services (DFS) for the USAID Mobile Solutions Technical Assistance and Research (mSTAR) activity implemented by FHI 360 in Bangladesh. He has just under a decade of experience in telecom, banking and international development organizations, with a focus on new business, product development, project management and action research related to DFS, financial inclusion, e-commerce, payment gateways and value-added services (VAS). He has also been a key technical advisor on DFS to BSR’s HERfinance program, supporting the digitization of payments to female garment workers in Bangladesh. Throughout his career, Majidul has successfully introduced DFS to a wide range of segments, including smallholder farmers, local government officers, community health workers, ultra-poor women, slum dwellers, and ready-made garment workers. He worked with eight different RMG factories to roll-out MFS to more than 6,000 workers for salary disbursement.

Liberian Health Care Workers Transition to Mobile Money

By Erica Bustinza, mSTAR/Liberia Project Manager

Meet Kou, a health worker in rural Nimba County, Liberia. During the Ebola crisis, Kou took action to combat the disease, going door-to-door in her community to stop its spread. The relentless determination of Kou and her peers to rise each morning and fight back against the illness helped bring the epidemic to a halt.

Despite facing life-threatening risks performing her daily work duties, Kou wasn’t able to access her pay. To pick up her salary she had to travel a far distance from her rural community to the bank, but travel was restricted due to quarantines and was risky because of the prevalence of Ebola and difficult road conditions. While many of her peers protested the lack of pay through boycotts, Kou continued working towards saving her country.

To increase efficiency of payments, FHI 360’s Mobile Solutions Technical Assistance and Research (mSTAR) Project, funded by USAID, is working with Liberia’s Ministry of Health (MOH) to offer mobile money salary payments. This gives health workers the option to receive their salaries from mobile money agents who are often closer and more convenient than banks.

Kou spends a shocking amount of her salary on collecting her salary. Her monthly net income is LD 14,300 (USD $146) of which she spends LD 800 on transportation to the bank to retrieve her salary. At the bank she is frequently told that the bank “system is down” and is forced to wait until the money is accessible, sometimes for several days. During this time not only is Kou missing work, but she’s also racking up costs. She spends LD 100 round trip to her relative’s house where she can sleep, LD 150 on food and LD 100 on a phone card to inform her family of the delay. At the bank, Kou waits in line for four hours and then pays LD 300 in bribes to finally pick up her salary. When she receives the cash it is LD 13,200 (USD $135) instead of the LD 14,300 that she expected. The bank can only offer the explanation that this is what was deposited and Kou has no access to a paystub explaining the additional deductions. After spending another LD 800 to return home, Kou is left with LD 10,950, only 77% of her salary.

mSTAR first worked with Liberia’s Ministry of Education to roll-out mobile money salary payments for teachers. The mSTAR team faced questions and challenges during the rollout, such as cash availability (liquidity) and participant targeting. When mSTAR began to plan for rolling out MOH salary payments the team did not assume that the challenges for health workers would mirror those in education. To gain a clear understanding of health payment systems, use of mobile technology, and health worker attitudes and trust in the government, mSTAR and the MOH completed two related analyses: Liberian Health Workers and Mobile Money: An Ethnography and A Contextual Analysis of Payment Disbursements for Liberian Health Workers. The ethnography describes the experiences and attitudes of health workers in Liberia with regards to mobile phone usage and salary disbursement, while the Contextual Analysis explores the cultural, social and environmental context of payment disbursements. The research was done by the mSTAR team and 10 researchers across five counties who conducted direct observation, focus group discussions and key informant interviews.

Some of the findings confirmed what was already known – that health workers spend a relatively large portion of their salaries and a significant amount of time away from their jobs and families to collect monthly pay. The reports confirmed widely held assumptions, like the lack of trust health workers felt towards their employer because of inconsistent deductions and unreliable frequency of payments.

The reports also unearthed new, surprising findings that will impact the project’s roll out. For example, a majority of health workers that participated in the study already use mobile money. They are sending remittances to family for child care, school fees and as unexpected expenses arise. In some cases, mobile money is even used to pay bills or pay the school for fees directly.

Kou doesn’t like the current system through which she receives her salary, but she is still skeptical of the new and unfamiliar mobile money system. mSTAR’s comprehensive look at Kou’s and her peers’ patterns allows mSTAR’s team to frame mobile money in a context Kou understands and build trust in the system by relating it to health workers’ current needs.

With this targeted method, Kou will better understand the system and will be more likely to enroll in mobile money payments, which will enable her to collect her salary while avoiding unnecessary travel away from home and expenses. Most importantly, the mobile money approach helps keep Kou safe, and in the rare occurrence where traveling becomes dangerous again in Liberia, Kou will be able to receive her salary and continue caring for her community.

Erica Bustinza is the Project Manager overseeing mSTAR activities in Liberia. She has worked in development for over 10 years in various geographic regions and sectors, primarily focused on access to finance, economic development and technology integration.

Photo credit: CDC Global

mSTAR’s First Podcast! Josh Woodard Talks What to Expect at Financial Inclusion Week 2016

More than two-thirds of Bangladeshis lack a formal financial account. This means that more often than not, they rely on cash, which can be both risky and costly. “You’re potentially just a natural disaster away from all of your cash savings in your house being wiped away,” Josh Woodard, technical advisor for mSTAR’s Bangladesh team, says.

[Please note that FHI refers to FHI 360 in this podcast.]

However, in Bangladesh, there’s a clear opportunity to address this. The country is pretty much entirely covered by mobile networks and more than half of the population owns a mobile phone. This combination makes digital financial services a perfect way to break down barriers to financial inclusion.

Over the past three years, the mSTAR/Bangladesh team has directly assisted eight USAID implementing partners in transitioning to digital payments, and they’ve seen tremendous success. As of June 2016, four of the implementing partners have made around US $1.51 million in digital transactions, all of which were previously done using cash. Most of those transactions were made to individuals who were previously unbanked or underbanked.

To continue this success and further the conversation on increasing financial inclusion, mSTAR’s Bangladesh team is joining BRAC, CARE International, Ecobank Foundation and other leading organizations as a partner in this year’s Financial Inclusion Week, hosted by the Center for Financial Inclusion. Financial Inclusion Week is a global conversation exploring the most important steps to full financial inclusion. This year’s theme is keeping clients first in a digital world.

mSTAR/Bangladesh’s conversation will focus on how different actors, from financial service providers to government programs, can support the development, promotion, and uptake of digital financial services that are aligned to the needs, capacities, and aspirations of the financially excluded in Bangladesh.

Josh Woodard, mSTAR’s Regional ICT and Digital Finance Advisor, describes the innovative ways mSTAR/Bangladesh is focusing on clients to advance financial inclusion in this first episode of Digital Development Leaders, a podcast by mSTAR and FHI 360’s TechLab.

Take a listen to Josh explain how mSTAR/Bangladesh is staying ahead of trends, focusing on clients, and innovating to increase financial inclusion. Please note that “FHI” is said in the podcast and is meant to refer to “FHI 360.” 

Josh was also interviewed recently by the Aid and International Development Forum (AIDF) about emerging trends in technology, check it out below.

To learn more about Financial Inclusion Week follow @mSTAR_Project and the hashtag #finclusionweek on Twitter.