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Mobile Money Transfers in Villages

Money Transfers
Through the process of mobile transfer, recipients in villages have empowered themselves economically to pay for urgent health care delivery, education of their children and wards, clothing, accommodation, travel and sundry other needs that village dwellers have. Village dwellers in the developing world have one common problem when dealing with daily survival tasks like health care delivery, food, travel, trade, education and more. That common problem is access to cash. Long distances separate them from banks and automated teller machines (ATMs). Therefore, they need help paying for urgently needed products and services. This situation compounds their poverty.

Farmers, craftsmen and producers often have to wait for designated market days to sell their products for badly needed cash. During days in between, they have to endure extreme lack and deprivation and sometimes, the conditions of sick persons get worse and in some cases may lead to death. Even when relatives living in cities or abroad have the means and desire to assist their kin, they cannot do so due to the non-existence of rural banking or cash points/ATMs. However, the situation is now improving. The introduction of mobile money transfer technology enabled by widespread ownership of mobile phones in rural areas and the emergence of several network providers has brought relief to village dwellers. In Nigeria, Mobile Telephone Network (MTN) introduced MTN Mobile Money, popularly called MOMO and its impact on the villagers is like a miracle.

The MTN mobile money transfer launched in Nigeria on August 29, 2019. Although it had been operating in smaller African countries including Ghana and Cameroon, its potential to affect a larger population and therefore be able to lift more people out of poverty on the continent is bigger in Nigeria.

Definition of Mobile Money

The Centre for Economic Policy Research (CEPR), Europe’s leading network of Economic Research defines Mobile Money as follows: “Mobile money refers to financial transaction services potentially available to anyone using a mobile phone, including the unbanked global poor who are not a profitable target for commercial banks.”

A blog on the World Bank website further defines mobile money as “……Services whereby customers use their mobile device to send and receive monetary value – or more simply put, to transfer money electronically from one person to another using a mobile phone.”

For the village dweller, the rapid transaction that results in ready cash for his immediate needs is a miracle. Relatives and buyers of products and services across the globe can remit money home or pay for services rapidly. Through the process of mobile transfer, recipients in villages have empowered themselves economically to pay for urgent health care delivery, education of their children and wards, clothing, accommodation, travel and sundry other needs that village dwellers have.

What is the Attraction of Mobile Money Transfers?

  • Lower Costs of Transactions: To the village dweller, the costs of transportation, time and risks going to the cities and towns to receive or deposit money in banks are drastically reduced.
  • Ready Availability of Cash: The ready availability of cash to meet urgent needs is the most significant attraction.
  • Empowerment and Ability to Save: Women and young people will empower themselves when they receive money through their phones. The privacy of transactions enables them to save.
  • Economic Growth: The village economy grows with the ability of recipients to engage in buying and selling, especially during harvest seasons.
  • Earning Money: Mobile money transfer agents earn money from their charges and can meet their immediate family needs.

The Impact

In a study conducted on the impact of mobile money transfers on rural dwellers in the Niger Delta region of Nigeria. The conclusions found that: 

  1. It empowered rural women to become economically independent of their male counterparts in critical decision-making about themselves as well as increasing their capacity to save. Similar studies in Kenya and Bangladesh validated this as well.
  2. Mobile money enhances the informal insurance in the community against natural disasters through sharing.

Looking Ahead

The full impact of mobile money transfers on alleviating global poverty in rural areas continues to unfold as new studies into the technology and its application emerge. Many more countries in the developing world are now catching up to the miracle of mobile money transfers. It enables governments to put into practice the policy of financial inclusion that international financial institutions have advocated for as the gateway to alleviating global poverty.

– Friday Okai
Photo: Flickr

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Cash Transfers for Women in Poverty

Cash Transfers for Women in Poverty
The COVID-19 pandemic has thrust about 124 million global citizens into the grips of extreme poverty, “the first increase in extreme poverty” in two decades. This pandemic-induced economic distress disproportionately affects women by essentially forcing them into unemployment or informal labor. Informal work is marked by insecurity and inadequate job protection. Before the pandemic, about 95% of working women in Asia and 89% in sub-Saharan Africa participated in informal work. The World Bank Group said that targeted cash transfers for women in poverty are essential to building a more stable economy after the pandemic.

D3 Framework for Women’s Economic Empowerment

As a response to the growing levels of financial distress globally, governments around the world have launched various social protection programs. Cash transfers made up about 33% of these protection responses. However, in low-income countries, cash-based assistance reached less than 5% of the population, “six times lower” than figures in high-income nations, according to Brookings.

The Bill and Melinda Gates Foundation, World Bank Group, Consultative Group to Assist the Poor and Women’s World Banking have curated guidelines for systems that will provide cash transfers for women in poverty. Developed in 2019 by a group of experts, the D3 framework aims to allow room for adaptation by countries according to their own specific situations.

D3 stands for Digitize, Direct and Design. The “digitize” aspect pertains to the systems of technology that would be most suitable for providing cash transfers directly to the women who need them. Digitizing the system involves using mobile phones or cards that belong to the women receiving the funds. Directing the payments into an account registered to the recipient would ensure that she has direct access and power over the funds.

The design of each cash transfer program will appear different in every country, depending on the current economic status and structure of systems, if existent. In every step of the process, it will be important to listen to the voices of the women affected and to appoint women to positions that will have an influence on decision-making.

Cash Transfer Systems in Multiple Countries

  • Brazil. Brazil’s Programa Bolsa Familia has registered more than 46.9 million people, making it “the largest conditional cash transfer [program] in the world.” Women account for 93% of registered participants.
  • Togo. The West African nation of Togo launched NOVISSI, a digital payment system that provided citizens with almost immediate payments at the beginning of the COVID-19 pandemic. During the two phases of the program, NOVISSI gave $34 million worth of cash transfers to “a quarter of [Togo’s] adult population” in 200 of the most impoverished districts, according to the World Bank Group.
  • India. The South Asian nation of India has a cash transfer plan targeting impoverished women by transferring funds directly to a PMJDY account, which are accounts for unbanked citizens. In just the span of a week, India was able to “distribute three months of cash transfers to approximately 200 million low-income women,” according to the World Bank Group.
  • Pakistan. The country increased payment amounts during the pandemic for existing female beneficiaries in the country’s already established cash transfer program.
  • Turkey. The Middle Eastern nation also has a cash transfer program in place that directs money to women.  However, “new mothers and recent widows” would receive higher amounts, World Bank Group reports.

Evidence for Effectiveness of Cash Transfers

Data shows that disasters disproportionately affect women. Therefore, there should be disaster relief programs, such as government-regulated cash transfers, that prioritize helping women.

Currently, there is not a lot of sex-disaggregated data related to the benefits of cash transfer programs. However, there is existing data that supports the theory that direct cash transfers for women in poverty are beneficial.

Studies have recently proven that cash transfer programs help girls stay in school and help delay young marriage and early pregnancy. There is growing data that shows digital cash transfer programs lead to fewer reported cases of domestic violence against women and improve women’s independence and social status.

Researchers must still collect more sex-disaggregated data; more data will allow governments to plan more effective economic relief systems. By using the D3 network and the existing data, the World Bank Group is encouraging all governments, especially low-income countries, to establish effective cash transfer programs for women in poverty. The goal of these women-focused cash transfer systems is to ‌reach every woman in need, regardless of where they live or their technological capabilities.

– Melissa Hood
Photo: Wikipedia Commons

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4 Countries With Conditional Cash Transfer Programs

Conditional cash transfer
Conditional cash transfer (CCT) programs serve as poverty reduction tools. The government provides monetary support to individuals with low incomes on the condition that the individuals meet certain requirements. For example, an individual may receive a cash transfer on the condition that he or she keeps his or her child in school and ensures the child receives all necessary child immunizations. The aim of CCTs is to stop the transmission of poverty from generation to generation, which is why conditions, especially related to healthcare and education, are in place. CCTs have shown success as poverty reduction tools in many countries, especially in regions such as Latin America.

Benefits and Criticisms of Conditional Cash Transfers

A benefit of CCTs is that they allow people to use welfare to meet their specific needs. CCTs empower impoverished communities by giving them the choice, through the provision of cash, of how to use aid to best meet their individual needs. Other welfare programs are able to fulfill a specific need, but they also restrict the voice of impoverished communities to choose how to best fulfill their needs.

Another benefit is that giving individuals money is cheaper than providing people with goods. When paying for goods, the government must also pay for the secondary costs associated with the goods, such as storage and transportation. Therefore, direct cash payments are more cost-effective than programs that distribute goods.

A common concern with CCTs is that recipients will spend the money on alcohol and drugs instead of their basic needs. Researchers have conducted studies to learn more about how recipients spend CCT money and results show that most recipients spend the money on meeting their families’ needs.

4 Countries With Successful Conditional Cash Transfer Programs

  1. Brazil’s Bolsa Família. Established in 2003 by Brazil’s former president, Lula da Silva, the program provides 32 reais (about $19) every month for each child in a family with a household income of fewer than 140 reais ($82) in exchange for parents ensuring that their child attends school and regular doctor’s appointments. The government will provide money for up to five children per family. Bolsa Família is the world’s largest CCT program, benefitting 11.1 million families every year. The program has decreased income inequality and poverty in Brazil. Estimates indicate that rates of extreme poverty in Brazil “would be between 33% and 50% higher” if Bolsa Família was not in place. Overall, the program is responsible for decreasing income equality in Brazil by 12%-21%.
  2. Argentina’s Universal Child Allowance for Social Protection (AUH). Beginning in 2009, the program provides money to children from impoverished families. Every month, child beneficiaries receive $55. The government provides 80% of the money to the child monthly and places the remaining 20% into a savings account for the child. In exchange for the money, children must attend school and meet health objectives. The AUH reaches almost four million children, decreasing poverty and increasing childhood well-being in Argentina. In the early years of the program, child poverty decreased by 13.1 percentage points and “12.5% of households receiving the AUH in 2015 were no longer in poverty.”
  3. The Philippines’ Pantawid Pamilyang Pilipino Program. Beginning in 2008, the program provides families with grants of P500 ($11) to P1,400 ($32) every month. The grant amount is dependent on the number of children in a household and the grant conditions have ties to education and child health care requirements. A couple of these conditions involve keeping children in school, attending regular pediatric check-ups and females attending check-ups in the case of pregnancy. From the start of the program to 2019, more than 5 million households benefited from Pantawid Pamilyang. The program has “increased the delivery of babies in health facilities by skilled health professionals by 20 percentage points” while raising “elementary school enrollment” among impoverished children by 5% and increasing high school enrollment rates among impoverished children by 7%.
  4. Jamaica’s Program of Advancement Through Health and Education (PATH). Since 2002, the Jamaican government has committed to providing cash grants to impoverished families in exchange for children obtaining an attendance rate of 85% or higher in school and on the condition that parents take children younger than 6 years old to doctor’s appointments following a schedule that the Ministry of Health created. PATH benefits 350,000 Jamaicans, improving school attendance and increasing health care visits for children.

The Role of CCTs in Reducing Global Poverty

Conditional cash transfers have gained prominence as a strategy to help impoverished families in real-time while also working to prevent future poverty through the transmission of intergenerational poverty. While CCTs positively impact families in multiple countries, improvements to education and health services must accompany the programs so that children can receive quality education and adequate health care services. Increased participation through CCTs in tandem with improved public services can have a more significant impact on the world’s impoverished than CCTs alone. The combined power of conditional cash transfer programs and public service improvements have the potential to create lasting change globally.

– Anna Ryu
Photo: Flickr

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The Potential of CCT Programs in Nigeria

CCT Programs in NigeriaDespite having some of the greatest potential for development in Africa and a vast amount of resources, Nigeria remains one of the poorest countries in the world. Over the years, the Nigerian Government has attempted to implement various poverty alleviation strategies in order to diminish poverty. Unfortunately, little progress has been made. However, more recently, the Nigerian Government has started implementing a new strategy in order to fight the persistent poverty in the country through Conditional Cash Transfer (CCT) Programs. It is hopeful that CCT programs in Nigeria will bring lasting benefits for impoverished communities.

The Success Rates of CCT Programs

Around the world, CCT programs have become increasingly popular and have been overwhelmingly successful. Positive results have also been seen in certain regions in Africa. As explained by the World Bank, “Cash transfers targeted to the poor, particularly children and other vulnerable groups, now help millions of Africans to support their basic consumption, avoid destitution and respond to shocks.” To achieve this success, most programs focus efforts toward providing cash transfers to poor families with children. In return for these transfers, families must maintain their children’s school attendance as well as keep up with regular health checkups. As a result, the country profits through an increase in the value of its human capital.

The COPE CCT Program

Beginning in 2007, the Nigerian Government implemented the In Care of the People (COPE) CCT program, which at the time was the only nationwide government-sponsored CCT program. The program was launched across 12 Nigerian states and aimed to break intergeneration poverty through cash transfers with the conditions that households maintained their children’s school attendance of at least 80% and receive regular immunizations and healthcare visits.

In the development of COPE, one of the main goals that the Nigerian Government was hoping to achieve was to reduce poverty short-term and promote an increase in the value of human capital in the long-term. Although many Nigerian citizens benefited from the CCT program, there were complications in the execution of the program. One key example that is necessary for the program to succeed is to extend the length of time in which households participate in the program. When first implemented, the program only lasted a year for participating families. However, in order to effectively assist these households, it is important that the Nigerian Government expand the period of time in which families can benefit from the cash transfers.

The Kano State CCT Program

While the COPE CCT program was designed to impact different states across Nigeria, the Kano CCT program took a different approach. The Kano State government implemented a pilot of this CCT program from 2010 to 2012 in order to increase female school attendance and reduce female drop-out rates in the specific region.

Although the COPE CCT program did not have overwhelming success, the Kano CCT program did see some success. For example, data from the World Bank shows that the number of girls enrolled in school slightly increased from 47% in 2009 to 50%  in 2011. However, there were also unexpected decreases in rates despite the CCT program. In Kano, in 2009, 47% of girls enrolled in class one enrolled in class six in, while in 2011, only 41% of those enrolled in class one were in class six.

Regardless of conflicting outcomes, the World Bank still rates the program’s efficiency as substantial. In Kano, the savings from the CCT program were also spent on the construction of additional boreholes and toilets in the schools.

Although the program itself still needs further development, the Kano CCT program has the potential to benefit households living in poverty as well as further improve female education attendance and drop-out rates.

The Potential of CCT Programs in Nigeria

Although these CCT programs still need improvement with regard to execution and development, the programs show great promise in reducing poverty rates, breaking intergeneration cycles of poverty and increasing the value of human capital in Nigeria. This is especially hopeful considering the success of the programs in other African countries. Because these programs target the health and education of youth living in poverty, these strategies help to create a strong foundation for children, thus creating a path for them to escape poverty in the future. With continued efforts to improve and develop these CCT programs in Nigeria, there is potential to greatly expand and improve Nigeria’s economy over time and reduce poverty in the region.

– Caroline Dunn
Photo: Flickr

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Digital Cash Transfers in Cote d’Ivoire

Digital Cash Transfers in Cote d’IvoireCote d’Ivoire had been consumed by civil conflict at the beginning of the century. However, the conflict ended in 2011, soon after the election of Alassane Ouattara. Since then, Cote d’Ivoire has been one of the fastest-growing countries in the world. However, its growth has failed to reach large portions of the population as the country still struggles with a 46.1 percent poverty rate while an additional 17.6 percent of the population lives on the edge of poverty. In 2014, the World Bank Group started working to initiate digital cash transfers in Cote d’Ivoire to assist the poorest and most disconnected.

The Rise of Mobile Money in Cote d’Ivoire

From 2012 to 2018, the number of active mobile money users grew from less than 1 million to more than 9 million. Of note, the number of mobile cellular subscribers increased from 18.1 million to 33.81 million during the same time frame. With a population of less than 28 million, it is evident how popular the use of technology is becoming in the country. Ivorians have adapted to using mobile money for several reasons:

  • Person-to-person cash transfers in Cote d’Ivoire are easy to operate.
  • Due to high fees and the historic failure of several banks in the country, more Ivorians are turning away from licensed financial institutions. In 2017, 34 percent of Ivorians had mobile money accounts compared to 15 percent with bank accounts.
  • There is a rising trend in the digitalization of secondary school feels.
  • Migrants are digitally transferring remittances back home.
  • Paying bills digitally is growing.

How the Cash Transfer Program Works

According to the World Bank, the program operates as follows: “(i) a targeting system for cash transfers; (ii) a social protection household registry; (iii) a cash transfer payment system using digital mobile money technology; and (iv) management information system and capacity-building.”

For the actual transferring of money, the government of Cote d’Ivoire has partnered with the digital financial service organization, Orange. The Account of the Ministry of Social Protection sends a wire transfer to Orange. Then, it creates e-money and puts it into the digital accounts of the intended recipients. The recipients can then access and use their money electronically or cash-out.

Initial Constraints of the Program

Despite the widespread use of mobile devices in the country, there are a few issues with the implementation of the program. Many beneficiaries already owned mobile phones. However, others are given a device through which the program struggled to adapt. Financial literacy has been another issue as some beneficiaries are unsure about how much to withdraw and how much to save. Moreover, the lack of understanding of the importance of the PIN number resulted in some beneficiaries sharing sensitive information, thus compromising their accounts. Regulatory issues such as the requirement of a state-issued ID also created challenges in ensuring beneficiaries are eligible to continue to receive their transfers.

Successes of the Program

Peer-to-peer and community-oriented training focus on increasing knowledge surrounding the operation of devices and building awareness about security best practices with accounts. Those without a proper state-issued ID have been informed on how to obtain one. In addition, exemptions have been provided which allow beneficiaries to designate a trusted transfer recipient within the household or community. This led to 100 percent of beneficiaries receiving their payments in 2018.

By going digital, administrative and transactional costs are limited. As of April 2019, 300,000 poor individuals have benefitted from the program, more than half of whom are women. Additionally, as of the same date, 720,000 individuals have been registered with the social program’s registry. This expands the number of potential future social program beneficiaries.

Overall, the implementation of cash transfers in Cote d’Ivoire is an excellent example of how technology can assist those who are most financially vulnerable and most disconnected from the rest of society.

– Scott Boyce
Photo: Flickr