Video marketing with tablet, Kenya. Photo credit: Hailey Tucker, 2017 CGAP Photo Contest.
Digital financial services (DFS) cover a range of financial operations which are enabled by relatively new and direct electronic interfaces for clients: mobile (smart) phones, Internet, and ATMs. DFS+ offerings are typically more special-purpose services, including financing energy sources such as solar panels, or paying for school fees, health services, and insurance. With the continuing success of DFS, more DFS+ services are being implemented for the financially-excluded to obtain access to basic services such as health care and education.
PHB Development has been working on DFS+ projects to increase the contribution of digital financial services to financial inclusion, with the ultimate goal of improving livelihoods of the poor. One of these projects in Niger has focused on the education sector and the payment of teacher salaries.
In Niger, student academic test results had been decreasing due to teacher absentee rates. Some teachers were not showing up to school in part because of delays in their salary payments (see report in French). In focus group meetings with education managers in the project areas, concerns were voiced about weaknesses in the chain of payments for teachers. Isolated locations further from administrative centers were more vulnerable, as they were more likely to encounter problems such as theft and loss associated with cash payments.
PHB Consultant Jean Daniel Baloucoune and his team started working on this problem, trying to answer the question: “How can the salaries go to the teachers, instead of the teachers going to their salaries?” They conducted a feasibility study and formulated possible solutions to enable teachers to obtain their salary payments with less distance to travel.
The team concluded that a rapid payment service was needed to address administrative, organizational, institutional and technical issues. They proposed a solution that would diversify the available payment channels, allowing teachers to choose how they prefer to receive their salaries – via cash payment, mobile money, money transfer, or a bank/microfinance institution (MFI) account. This solution would require public-private partnerships, working with new payment and communications channels that are held by the operators, such as financial institutions, mobile network operators, and money transfer companies including mobile money.
Money transfer companies have the country’s largest agent network, but the PHB team observed that no one service had agent networks covering the entire country. Therefore, in order to provide coverage for all of Niger, it will be necessary to combine all of the different digital solutions available. This would take some time to complete, but implementation can get started now. While the full project implementation is still pending approval, the PHB team has identified the following stages for implementing their proposed solution:
Identify a representative region for the problems to be solved.
Establish a protocol of partnership with local operators.
Conduct a pilot – from six months to a year – to launch the new salary payment channels, follow the process, and analyze behavior changes of the teachers.
Assess the pilot and develop strategies to extend the program throughout Niger.
Ensure that the proposed systems are accessible for all, secure, and efficient, through evaluation beyond the pilot, and before a national roll-out.
At this point, the pilot is in place and is being studied, as teams analyze the potential for solid solutions to be implemented around the country. There is confidence that these payment solutions can positively impact the teachers, students and communities involved – helping to provide a better education for students in Niger.
The excitement around fintech in India is palpable. Many see it as a market-led solution to the policy objective of financial inclusion. Fintech regulation must therefore be designed carefully to prevent and mitigate risks while also preserving the potential for financial inclusion.
Facts and figures tell us the full story of financial and social results and allow us to compare that story to those of our peers. The ATLAS data platform is a new initiative to help tell those stories, consolidating data on pricing, client protection, and social and financial performance.