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A Mobile Money Transfer Directory for Africa

Benjamin Lyon started CreditSMS, a new outfit that is focused on providing an efficient an accessible platform for microfinance institutions to deliver and track loans via SMS. I’ve been tracking what they’ve been doing since they first popped on the radar two months ago. I’m intrigued by the question: can we decrease the cost for MFI’s with the use of simple SMS technology?

The crux of the inefficiencies can be found in the number, distance and expense of MFI personnel to track and receive payments. Ben states it this way:

“By allowing microloan officers to receive weekly loan repayments via SMS instead of spending time and money to travel to group meetings, MFIs will spend significantly less on fuel and have more time to pursue and manage a larger loan portfolio.”

This might very well be true, and I’m at least interested in seeing the experiment go forward.

A Mobile Money Transfer Directory

In the course of their research they needed to do more discovery on the possible ways to transfer funds with in Africa. This meant embarking on a study of the types of options available by every operator in every country. With that data, they decided to create the Mobile Money Transfer Directory.

This first stage looks like its about creating a simple index of the operator, the money transfer service and a designation of the service. I can see this becoming more dynamic later, with data points like “transaction cost” and “number of merchants”, along with a slew of other pieces of information needed to understand the mobile money transfer systems (and how they differ) in each African country.

[Note: African Signals, the wiki for mobile/web pricing in Africa, turned out quite useful. Ben used that as a starting point in gathering much of his information.]

My Favorite African Tech Blog Reads of the Week

July 20, 2009 / HASH / Comments Off

This last week has seen a higher than average number of great technology blog pieces by a number of people. Here are my favorites.

Bankelele writes about Professor Calestous Juma with a review of a talk that he gave on how Africa can use technological innovation to stimulate economic recovery, spur economic growth and spread prosperity.

Aptivate gave us their Top 10 Rules for Designing Low-Bandwidth Websites. This is a goldmine, every web designer in Africa should print this out and hang it above their monitor.

Jon Gosier gave us a Comparison between On- and Off-network GSM Rates in Nigeria. Proving that, “with the exception of Etisalat, itâ€™s quite clear that itâ€™s cheaper to own four cell phones than one [in Nigeria].” (I hope this data makes its way to African Signals)

Ethan writes about Mike Best and his team’s work in post-conflict Liberia around digital storytelling.

South Africa’s popular mobile social networking application, Mxit, is now at 14 million users. “MXit users currently send approximately 35,000 messages per second during peak times and visit the system more than 20 million times per day.” Wow!

Bill does a review of Ndiyo, the thin-client computing solution for Africa. Specifically, on how Ndiyo “provides an alternative to traditional Western notions of how technologies should be deployed, used and paid for in developing countries”.

Lessons from the mLearning Summit in Zambia

July 14, 2009 / HASH / Comments Off

There’s an excellent post up on MobileActive about the recent mLearning Summit held in Zambia, titled “Go Mobile: Using Mobile Learning to Teach 21st Century Skills”. Steve Vosloo is a South African who has spent a lot of time researching how mobile phones can be used in education, here’s a video put together by him from this event.

“Steve Vosloo noted that m-learning summits have two main goals: To introduce and popularize the mobile phone as a tool for engaging students, and secondly, to identify local content needs. Examples of this may include applications that support grade submissions and attendance in remote locations or projects that explore how texting can be used in literacy.”

Africa’s Poor: Premium SMS in the Crossfire

June 30, 2009 / HASH / 57 Comments

If you provide services to poor people, should you make a profit?

That’s essentially the question raised by Katrin Verclas on MobileActive, and it’s an excellent one. Specifically, Katrin calls out the new Google Trader service offered by Google in Uganda, in conjunction with the release yesterday of their SMS products with Grameen and MTN Uganda, one of the local mobile phone operators. Basically, they charge 220 Ugandan Shillings per use, instead of the median 110 UGS charge across most networks. This is called a premium SMS rate.

Premium SMS rates are charged so that third-party service providers can make money off of services that they provide over the mobile phone network. The operator makes their (ridiculously high) profit as normal, and the overage is for the third-party. You’ll find a lot of dating, event and sports services offered in this way all over the world, not least across Africa.

Back to the question

The question posed is if people who are claiming to help the poor should charge, and if so, should they make a profit?

I think we’ve seen from the Grameen model in Bangladesh (ex: Grameen Bank and Grameen Phone’s Village Phone program) that you can (and possibly should). By doing so you help both parties; first, by providing a service that consumers value and are willing to pay for, and second by making the business of running an operation self-sustaining. Many good business, or project, ideas die due to lack of sustainable cash flow.

For instance, if a 220 shilling SMS can save you the 1500 shilling visit to the doctor or veterinarian, or give you a 10% higher return for your crops, is it worth it?

Is there a problem in the question?

There ends up being a paternalist nuance to that original question. After all, is it up to us to decide what services to offer the poor and at what price? Aren’t poor people able to make the value-based decision on whether a trip to the doctor is more useful to them than a call or an SMS to one? If services are being offered, the person making the decision to call, SMS or go physically to solve their problem, or not, is ultimately the arbiter of whether or not a service has merit and should be offered. It’s a classic market-led approach – if the price is too high for the service, equilibrium will not be reached and one will give, usually price.

This is particularly true when talking about for-profit companies offering services – like Google is with Google Trader. They don’t operate under the same development/grant funded subsidization that a lot of others do in Africa. Even if their goal was not to make a profit on this service, they still need to cover internal costs, as does every organization that isn’t provided with free money.

Final thoughts

This space in Africa, of offering services to the poor (in lieu of the governments actually doing their jobs), has been primarily “owned” by large development and aid organizations. This has created a false floor for the economy, as projects and initiatives are propped up by outside money and services rarely have to survive on their own. This is changing, as low cost and high value options come into the market, be they mobile phone operators providing new communication opportunities, or cheap chinese batteries and LED lights for local energy/lighting needs.

I’m sensing a flux in the space, like two bull buffaloes before they fight, the heavyweights in the aid industry and in business are circling each other before they knock heads. The marketing is over who is helping the poor and marginalized in Africa best. In the end the market will decide, and regardless of the messages spouted by both sides, the “poor African” will choose the winner.

If there’s a problem with collusion and price fixing in an industry (like there sometimes seems to be with SMS services in a country), that’s something beyond the scope of individuals and needs to be tackled separately by regulation. However, that’s not the case here, we have expensive SMS services in East Africa, but the new entrants into the space always offer low rates, and the costs of switching providers is relatively low.

No, this is market-based competitive services and both non-profits and for-profits have the right to offer them at whatever price they like. Equally, individuals have the right to use it or not, be they premium SMS rates or not.

I’d like to hear some other African’s thoughts on this.

Do you want big multinationals like Google and MTN coming in and providing their services to you? Should we be asking questions for the poor, or is that condescending in itself? What is the sticking point here, and is there a side that I’m missing?

**UPDATE**
Thanks to Katrin’s email to Rachel Payne, Google’s lead in Uganda, we have the following response from her on this topic, and it does clarify quite a few unknowns:

Hi Katrin.

Yes, I saw your blog post where you speak in detail about the pricing. However, what is written is not quite accurate. You see, Google, Grameen and MTN launched three types of mobile services yesterday: Google SMS Tips (targeting low-income, rural users primarily), Google SMS Search (urban, mainstream) and Google Trader (all users).

The second service is somewhat similar to other “premium SMS” content services currently available (except that it is built on Google search technology) and therefore, is the same price as other content services. To accommodate the first group, we have priced Google SMS Tips at half the price of a content service; this is available for the cost of a person-to-person SMS, which many rural individuals are willing and able to afford currently.

The third service drives income and livelihood benefits, so we decided to begin charging at the normal content service rate and monitor whether this excludes rural communities or not (we did extensive testing during the pilot, which included pricing discussions and most of the users found that Google Trader provided far greater, direct value than the 110 shilling price difference). For all services, we are offering them for free for the first few months, just to ensure that all users have an equal opportunity to try them out, risk-free and allow them to access critical content during this period so that they can assess whether or not they would like to continue to use the service.

I hope this helps provide a bit more information that clarifies the questions raised.

New SMS Services in Uganda from Grameen, Google & MTN

June 29, 2009 / HASH / 23 Comments

Grameen Foundation’s AppLab has released a new suite of mobile phone applications developed in Uganda, using Google SMS Search and in partnership with MTN Uganda as the mobile operator. The services include:

Farmerâ€™s Friend: a searchable database with both agricultural advice and targeted weather forecasts
Health Tips: provides sexual and reproductive health information
Clinic Finder: helps locate nearby health clinics and their services
Google Trader: matches buyers and sellers of agricultural produce and commodities as well as other products. Local buyers and sellers, such as small-holder farmers, are able to broaden their trading networks and reduce their transaction costs. (known locally as “Akatale SMS”)

Back in 2004 Grameen started to replicate in Uganda what they had done in Bangladesh with their Village Phone Operators. That is, they would go 20km beyond the best phone signal and provide a loan to a lady in the village that would let her buy a phone and an antenna that would extend the range of the network. The lady would then resell services to local individuals who didn’t have access, or the ability to buy their own phone.

I’m actually quite impressed with this initiative, as it fits in perfectly with Grameen’s mission: providing opportunity through the most basic of mobile phones. All of these services work on SMS-only phones, so anyone with a single bar of coverage and a phone has access to a lot of knowledge in their hands.

Here is a promo video from Uganda, explaining why these services are needed:

High-powered Partnerships

Beyond the applications themselves, what I find most compelling is how the Grameen Foundation collected such a high-powered group of partners. The list reads like a who’s-who of innovative mobile services and development in Africa with Google, MTN Uganda, Technoserve, Kiwanja.net, and BRODSI to name a few. It’s a mixture of for-profit businesses, local NGOs and non-profit tech organizations.

I remember a conversation a couple months back with Sian Townsend (Google) and Ken Banks (FrontlineSMS) about how they did the field studies for this project. Sian shared with us some of her research on mobile user experience while in Uganda – it was extensive. Through a month of rapid prototyping and studying how users were actually using the new services, the team quickly learned what was important and how to better serve information up to the end-user.

Though I haven’t been able to personally test the services yet, with this group, I would expect the results to be better than average. For instance, Google doesn’t tend to get involved with ideas that don’t scale. I imagine that they see replicability with both SMS Search and Google Trader in many other countries as well. Rachel Payne, the country manager for Google in Uganda, has a blog post here, but not much more information on the long-term plans for Google Trader. I’d be interested in seeing how this compares to Esoko out of Ghana.

Opening Thoughts from the Global Messaging Congress

June 23, 2009 / HASH / 4 Comments

The Global Messaging Congress is underway in London. I’m here to speak about extending the power of messaging – providing critical information in disaster zones. My goal is to showcase some of the interesting solutions we’ve seen in this space, from Ushahidi to Cartagen to SMS GeoChat – among others. I’ll also be calling upon the experts here to think of what they would do with their knowledge and expertise with the tools that they know and understand so well if called upon to do so during an emergency.

Notes from the Opening Remarks

It’s time to reinvent the industry. The personalization market is dying – the days of big money in ring tones and wallpaper is over. The economic crisis is tough and the regulatory market is not benign. So, why be optimistic?

1. Applications. Apple’s iPhone has changed the customers view of what an application is. The fact that a farting application can make $800,000 sends a certain signal. The question is how does this model change things once it moves beyond the early adopters?

2. Mobile social networking has become the epicenter of innovation. New business models and money making opportunities are being thrown off by this new market.

Operators, especially in places like the US, are trying to control what content shows up on the network. The government regulators and the operators policies are out of control, in fact there are some cases where the industry is suiting on the behalf of the customer. This will cause a downsizing in the US market for the next couple years from the content providers.

Keys to succeeding in the mobile social networking space:

Alternate billing solutions. You have to have your virtual currencies tradeable on the social networking platforms. All payment methods must be accepted, from SMS payments to credit cards.
Content. You have to have something there for people to use, read, play with. Quiz applications are the big thing right now (brings up example of a quiz app being #3 on iPhone apps right now).
Discoverability. The main problem from users perspective has been trying to find the applications and content that they want. This is an issue for both the content providers and the operators to solve.

Role of the operator is changing, it specifically has a large impact in billing. They need to take a significant cut in the amount they charge for this service – 50% is just ridiculous, it must change as it’s not sustainable or excusable.

“Apple’s app store is the big shadow hanging over all of us, except of course that they’re never here…”

Volume vs Value in Mobile Payment Systems

May 25, 2009 / HASH / 11 Comments

Bankers are not well known for giving riveting talks. However, Stephen Mwaura Nduati gave a surprisingly interesting one here at the Mobile Banking conference just outside Nairobi. He’s in charge of “Payment Systems” at the Central Bank of Kenya – a regulator.

He made the case for why regulation is needed, and what risks are naturally inherent within payment systems. Not just mobile payments, but all systems.

What I was most interested in was his slides giving out some data on the payment system space within Kenya. It’s really quite revealing on what the motives are, and why they’re there, for the Central Bank and policy makers.

Kenya’s payment system timeline

You can see where Mpesa and Zap came into the timeline for payment systems in Kenya, but you can also see that it’s quite clear that the Central Bank of Kenya (CBK) thinks of many things beyond mobile payments.

Kenya National Payment System Modernization Framework

Low vs high volumes

Mobile payments are all the rage, clearly shown in the graph below. However, the amount of money flowing through the system from this is negligible compared to the other types of payments. There is a large difference between high volume systems versus where a lot of money flows, but with fewer transactions.

Monthly transactions in Kenya payment systems by type

Current payment system flows

Low volume, high value. These are what the CBK care about. Taking a look at the following two slides, you can see that though mobile payments and ATMs are what everyone talks about, what the bank really cares about making sure that the real time gross settlement (RTGS) system stays on the tracks.

Kenyas current payment systems flows

Average daily values for Kenyan Payment Systems

Talking Mobile Banking in Kenya

May 25, 2009 / HASH / 9 Comments

I’m attending the Fletcher mBanking conference in Nairobi today and tomorrow. Right now I’m sitting in the panel on “Perspectives on Mobile and Branchless Financial Services”. It’s quite a panel with, among others, Michael Joseph of Safaricom (of Mpesa fame), Adan Mohamed of Barclays Bank, David Proteous of Bankable Frontier Associates.

mbanking-kenya1

Points from the Panelists

David Porteous
He challenges Kenya to create a Kenyan model, not just of one-off success stories, but a Kenyan one that is open and usable by multiple actors in the country, not just one or two. Something that can be duplicated and used around the world. Lastly, he warns of “Regulator Flu”, much like Swine Flu it sweeps around the world and stifles innovation.

Adan Mohamed of Barclays
Adan starts with this provocative statement, “We will never have an environment where we have no branches.” He says it is ingrained in our psyche to use branches, and we will always need branches, so this idea of a branchless banking system is nice, but will run concurrently with the old status quo system. The use of technology continues to be small, it’s patchy, it’s mixed. There’s a long way to go, as people are nervous of what goes on behind this internet system.

Specific challenges revolve around regulation. For instance, if you want to run it 24/7, you have to get permission, you have to deal with money laundering rules, etc… He thinks that the central bank needs to be given a greater mandate. However, we need to see this space not revert back to the old ways, even as more control is given.

Customer contact tends to be low in a branchless system. He thinks this is a place where people want to be in touch and face-to-face with people. A lot of focus has so far been on the payment side of the occasion – we need to focus on the savings side of the equation as well.

Mark Pickens of CGAP
What we have today, is not necessarily what things will look like in the future, “what could disrupt the current landscape?” Mobile network operators are leading the charge. We think there will be 120+ initiatives like Mpesa in the next year around the world.

What is driving this for the mobile operators?

2.93B shillings from Mpesa of revenue
Increases in loyalty
Increases in users
Globally think there is 1b ppl with a mobile phone but no bank account

Where else could innovation come from?
What if the kinds of technology that poor people had in their hand changed dramatically? If the phones that people had in their hands could browse the internet. Not smart phones, but sub $100 phones for this.

Why would this matter?
GPRS and EDGE are dramatically cheaper than SMS (75x cheaper)
Mobile operators and banks would not own the customer due to owning the infrastructure. Anyone could reach out and find customers directly. The incumbents wouldn’t be as privelaged.
Localized creation of tools

3 main points:
Regulation. Particularly openness for non-banks to operate. Would there be a regulatory framework where this could be open for others to access and bes safe operating within? If we think that banking infrastructure needs to be openly accessible, then what is needed in the openness of mobile infrastructure?

Agents. The preponderance of Mpesa agents make a profit of $5/day. If there is limited capital in these dukas and agents, then how will he get liquidity to do it for anyone else? Maybe it can be done by extending lines of credit to the agents.

Consumers. The next round of innovation is beyond payments, but to use the wallet to store value. Who are the players that can provide this service on a safe basis? Paying for products directly would cut the cost for agents directly, and it would cut the cost of money within the system to the gov’t (2-3% of GDP). Poor people do have money, and they do save, but they put it at home in a jar, under the matress. What comes next innovation, is that the mobile needs to beat the matress

Peter Rinfretof Iris Wireless
Friction will continue to increase between operators, banks and other institutions like Western Union, etc.

The regulations and regulatory environment will change a lot for everyone. You’ll see regulations in one country that affect other countries. His example is the US is the largest remittance market in the world, and that has huge repercussions to what happens in the other countries around the world. Anti-money laundering rules will become stricter and more difficult for receiving countries to comply.

We’re not talking about a change of habit that is relatively new. This is money, something we’ve been dealing with for millenia. We’re talking about old habits dealing with money, so it will take time and it will evolve slowly. And it has to make sense within the market that you’re in. No two markets will look the same.

Michael Joseph of Safaricom
Mpesa launched in March 2007. It’s surprising to see how fast it’s grown. 19% of the population is banked, but 71% who have access to mobile phones in Kenya. The key success of Mpesa is not just good working technology, but to be successful with it you need to understand distribution. It’s not cheap. It’s not easy to put together an agent network that operates with integrity. “It is not build it and they will come.”

Customer growth is at 6.2 million customers in March of 2009 with over 11,000 new registrations each day. Trends: $1.7B moved in P2P transfers since launch. Average P2P transaction is just under 2500/= shillings ($30).

“This is what worries the banks, that we’re moving all this money around and they’re not getting any fees.” We’re not a competitor to banks, because they couldn’t operate on these small 30/= fee.

Safaricom has 300 staff dedicated to Mpesa. There are now over 10,000 agents. It’s the McDonalds effect” – whenever you are hungry there is a MacDonald’s. For us, whenever you turn around there is an agent.

“It is so important to have a regulator that is willing to take a risk with you.” It took nearly 9 months to convince the regulators in Kenya to allow them to launch Mpesa. We are treading new ground in Kenya, so having a courageous and risk-taking regulator made it possible. For money transfer we need some sort of regulation – a level playing field for others to do this a well. Regulation should facilitate and not frustrate.

“When we look back, money transfer will be the biggest thing that we ever did in the telecommunications world.”

The Grid in Tanzania and an African Mobile Phone Documentary

May 15, 2009 / HASH / 3 Comments

There have been a couple new entrants into the mobile and web space in Africa that I haven’t had a chance to review adequately. One of them is The Grid, by Vodacom. Also in this post is a new documentary on mobile phone use in Africa.

The Grid (Tanzania)

“The grid connects your cellphone and web browser into a social network that is aware of where you are. It uses cellphone mast triangulation to detect where you and your friends are and helps you leave notes on the places you go to”

The Grid launched into Tanzania in April. According to Vincent Maher, who heads up the project, there has been very favorable growth rates of the service.

Besides being a well designed and well integrated mobile/web social network, what I’m really looking forward to hearing about is The Grid’s location-based advertising unfold. For launch, they have partnered with Nandos, Sportscene, Jay Jays and Synergy pharmacies to deliver advertising within radii ranging from 0 – 10km from a users physical location. Vodacom has the muscle to pull this type of thing off, and the connections to create the advertiser relationships.

The Grid is really a direct competitor to Google Latitude (I’ve written about this here), something I’m really excited to see coming out of Africa.

Hello Africa

A documentary about mobile phone culture in Africa. I was excited to see the trailer for this last month, and the full version is now available. Find out more at ICT4D.at

Hello Africa from UZI MAGAZINE on Vimeo.

Before 2001, the year the first cell tower was erected in Zanzibar, people had very limited means of communicating with each other from a distance. Today, the situation is completely the opposite. Cell towers from main operators cover the whole island and people communicate all the time with their mobile phones. It is difficult to imagine how it once was before.

There are plenty of aspects about the ongoing changes that could be covered in a documentary, but the purpose of this fillm is not to elaborate and draw conclusions. The purpose is to catch the vibe, the know, show what’s going on right now. A snapshot of the Zanzibarian zeitgeist.

Quick Hits Around African Tech

May 10, 2009 / HASH / 6 Comments

I’m thoroughly enjoying Dambisa Moyo’s “Dead Aid” book. Buy it, has great food for thought, and numbers to back it up.

The New York Times article on big web content companies lack of profitability in places like Africa.

We’re seeing a new trend of microblogging platforms emerge across Africa. Most recently in the Congo with Akouaba, but also in Nigeria with Naijapulse and South Africa’s Gatorpeeps.

Matt Berg writes about the “Off-grid solar calculator” in North Africa.

Mobility Nigeria points out that Nigeria displaces Germany in the Opera Mini top 10 list.

Bankelele breaks down some of mobile payment tool M-Pesa’s strengths and weaknesses in Kenya.

We’ve announced Ushahidi’s Beta stage, and another round of funding.

APC talks about the broadband rollout issues and a movement to change policy in South Africa.

Where Africa and Technology Collide!