Better Than Cash Alliance Webinar: Digital Food / Electronic Payments Pilot Study Presentation

transcript

E-Payments Deliver 15% Greater Cost Efficiency in Kenya

Is This the Future of Food Aid?

March 19, 2014

Dr. Ruth Goodwin-Groen Managing Director,Better Than Cash Alliance

Introducing Our Speakers

Jamie ZimmermanSenior Associate, Bankable Frontier Associates, lead author of study

Cheryl HarrisonHead of Innovations, World Food Programme (WFP) Kenya

Marc Van PuyveldeContactless Payment Solutions, MasterCard Worldwide

Join the discussion on Twitter: Use #BTCAwebinar and @BetterThan_Cash

Session Agenda• Introduction to the Better Than Cash Alliance• Methodology• Key Findings • WFP “Cash for Assets” Journey• Lessons for Stakeholders • Next Steps• Q&A

Poll #1: Which category does your organization align with most?

• Government• Private sector (financial service provider, MNO, etc.)• Development partners (UN, NGO, foundation, etc.)• Academic institution• Other

The Better Than Cash Alliance

Governments, private sector and development organizations

committed to a global movement from cash to electronic

payments.

• Advocates for organizations to commit to transition their

distribution of government benefits, humanitarian aid assistance,

payroll and supplier payments from cash to electronic

• Provides the policy, technical and financial assistance needed to

identify and implement the most effective approach for local

market conditions

• Develops cutting-edge research products, good practices and

case studies in order to achieve scale globally

The case study is part of a cross-country comparative study of government-to-person (G2P) and donor-to-person (D2P) payments.

Data was gathered in 2013 to understand how WFP moved from in-kind distribution to e-payments through interviews with:

• WFP • National Drought Management

Authority • Equity Bank in Kenya• Recipients

Methodology

Key Findings

1. E-payments were 15% more cost efficient than in-kind distribution

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Key Findings

2. E-payments scaled up from 5,000 to 81,000 households (i.e., 485,000 beneficiaries) during the 2011 drought

Key Findings

2. E-payments scaled up from 5,000 to 81,000 households (i.e., 485,000 beneficiaries) during the 2011 drought

3. Beneficiaries prefer e-payments over food aid and maintained the same food consumption levels

Poll #2: In which phase of the shift to electronic payments is your organization?

• Have not started (either in-kind or cash envelope)• Beginning to shift to e-payments • Increasing use of e-payments • Almost all payments are electronic• N/A

WFP tested different delivery models, including mobile money and card-based payment systems:

• Mobile money was faster to start up and can offer advantages for an emergency response, but

• A debit card linked to bank account comes with more benefits for both donor and recipient and is the preferred model for longer-term resilience programs

Key Elements of the Pilot: Choosing an Effective Payment System

• WFP overcame challenges with recipients’ lack of ID and tough registration conditions

• WFP-trained staff used to delivering in-kind food aid to collect e-transfers data

• WFP developed a secure centralized system to store beneficiaries’ personal data and manage transfers

Key Elements of the Pilot: Collecting and Managing Personal Data

Results

• Stronger controls on aid delivery• Higher level of accountability among distribution partners• Economic empowerment of the beneficiaries• Increased financial inclusion for the “unbanked”• Growth of the local economy

The shift to e-payments allowed the program to operate more efficiently and contributed to societal benefits:

Poll #3: What is the most important reason to shift to electronic payments for your organization?

• Cost saving• Better security and increased transparency• Speed and scale• Beneficiaries’ economic empowerment• Stimulating local economies

Key Lessons for Stakeholders

1 Ensure a strong delivery value chain

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1 Ensure a strong delivery value chain 2 Invest in partnerships to

amplify efficiency

3 Ensure a predictable flow of funds before committing to scaling up a program

2 Invest in partnerships to amplify efficiency

3 Ensure a predictable flow of funds before committing to scaling up a program

2 Invest in partnerships to amplify efficiency

4 Consider adjusting payment frequency for reduced cost and increased timeliness

5 Create two-way communication channels with the beneficiaries

5 6Create two-way communication channels with the beneficiaries

Test, learn, iterate

Objectives of the Merti pilot:• Examine if the model is technically

achievable and commercially sustainable at scale in remote and economically marginalized areas

• Identify its benefits for WFP, providers and recipients in terms of value, growth and costs

Next Steps: Exploring an end-to-end electronic model

Next Steps: Results

For Recipients• More convenient• Better security• More choices• Lower costs for

withdrawal• Increased access

to financial services

For Merchants• New business

opportunity• Reduced cash

handling

For WFP• Cost efficiencies• Increased

transparency and accountability

• Ability to scale and become sustainable in a commercial environment

Poll #4: What is the payment system your organization is using/considering?

• Cash• Mobile money• Prepaid card without a bank account• Debit card with a bank account• Other, including voucher

Design aclient-centricpayment system

Key Recommendations

1 Leverage transparent and regulated business models

2 Include financial inclusion in your design

Dr. Ruth Goodwin-Groen (Moderator)Managing Director,Better Than Cash Alliance

Discussion

Jamie ZimmermanSenior Associate, Bankable Frontier Associates, lead author of study

Cheryl HarrisonHead of Innovations, World Food Programme (WFP) Kenya

Marc Van PuyveldeContactless Payment Solutions, MasterCard Worldwide

Thank youinfo@betterthancash.org | @BetterThan_Cash

Better Than Cash Alliance Webinar: Digital Food / Electronic Payments Pilot Study Presentation

Economy & Finance