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Turning Crisis Into Opportunity: Advancing Digital Financial Inclusion in Morocco

Increased government-to-person payments help pave the way for a growth in mobile payment accounts
Market in Marrakesh, Morocco. Photo by Sim Br, Flickr Creative Commons License.

As COVID-19 has severely limited travel and made it harder for people to visit bank branches, the quest for digital financial inclusion has become more important than ever. Many developing countries with strong cash cultures are now receiving support from governments as they take action to accelerate the move from cash to digital. During the last few months, governments have set up government-to-person (G2P) payments to send much-needed financial support to low-income families and small businesses, outside of the usual social protection mechanisms. This growing interest and need on the part of governments to invest in digital payment channels is providing a unique opportunity to advance digital financial inclusion. 

Taking advantage of the opportunity in Morocco

Scale2Save’s project in Morocco, in partnership with Al Barid Bank and its payment institution subsidiary Barid Cash, has taken advantage of this opportunity to further our work digitizing G2P payments and developing a mobile payment ecosystem.

After strict lock-down measures imposed in March began to impact the economy, the Moroccan government released an emergency fund aimed at supporting low-income people. Grants ranged from $90 to $130 per month depending on household size and were disbursed in April and May. Beneficiaries could collect their grants in cash at any financial service provider (FSP) within the country.

With its large network of payment points within the country, Barid Cash became one of the disbursement centers where beneficiaries could receive their payments. As G2P recipients visited Barid Cash outlets to collect their grants, the FSP tried to incentivize them to open mobile payment accounts and thus shift from cash to account-based government transfers. Barid Cash used several methods to encourage the opening of mobile payment accounts, including:

  • Waiving the costs on mobile payment accounts for G2P beneficiaries.
  • Adding useful services such as water and electricity payments and mobile top-ups.
  • Conducting an information campaign to highlight the advantages of mobile payment accounts, which include quicker access to funds, avoiding queues at payment points and the “stay safe at home” advantage of digital transfers over cash.

Accessibility got a big boost when the Moroccan Central Bank, Bank Al-Maghrib, temporarily simplified account opening procedures during the pandemic, allowing anyone to open a basic payment account, capped at $555, without going to the branch. Based on a client's phone number and digitized national ID card, the new rules deferred KYC (know-your-customer) regulations when a basic account opens.

A dip and then a significant increase

When the crisis first hit Morocco in March, client enrollment rates for Barid Cash suffered from the effects of the lockdown and lack of branch visits, going down 36 percent in March, compared to the average of January and February.

But the digital account narrative soon flipped. In April, the client enrollment rate jumped suddenly by more than 80 percent compared to March, and May experienced a similar growth rate. The spike in uptake came from the COVID-19 emergency funds released in April and May, as well as the measures taken by Barid Cash to persuade customers to open a payment account. The average client enrollment rate for April and May showed a 62 percent increase compared to the average of the pre-crisis period of January and February.

Lessons for building a digital payment ecosystem

From this experience, we have learned that agility is key. Barid Cash was able to act fast to become a key disbursement point for COVID-19 funds, and took advantage of this position to bring more clients into the mobile payment ecosystem. Bank Al-Maghrib served as a key enabler here, having decided to ease KYC requirements for remote opening of low balance accounts for the entire sector. There is hope that this measure is not temporary.

Clients also need a reason to switch to digital. Barid Cash paid attention to what their customers needed and used a mix of measures that met these needs to encourage the opening of mobile payment accounts.

In the end, circumstances also played an important role in building trust and confidence in a new service. For many lower income people, a digital payment account came at just the right time, when lockdown measures were making it very difficult to withdraw cash. Customers can now use these accounts going forward to access their money more quickly, send and receive funds and pay bills. We believe that these convenient features will encourage people to use their accounts more actively, thus helping to boost their economic resilience.

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