Field Note 11 GRANTING ACCESS: LEVERAGING SOCIAL PAYMENTS TO EXPAND DIGITAL FINANCIAL INCLUSION IN COTE D’IVOIRE CONTEXT The role of cash transfers for poverty reduction They proved difficult to monitor effectively, were has expanded globally over the past two decades. expensive, and did not lead to financial inclusion. The latest State of Social Safety Nets survey Recipients often found it hard to manage their reports that as of 2015, nearly every country benefits and to save, and were more exposed to around the world, including many in Sub- theft, among other issues.4 Saharan Africa, has at least one social safety net program in place. Among these programs, there While the World Bank expanded its lending is a marked trend away from providing food and operations to social safety nets in West Africa, other in-kind support to delivering cash transfers in parallel, IFC, together with the Mastercard to the poorest households. Overall, these Foundation, started supporting the use of programs support nearly 2 billion individuals in mobile money wallets in WAEMU markets in developing countries. While these cash transfers 2013 through market-level activities and proof- are expanding, the majority still reach only one of-concept pilots with the private and public tenth of the poorest 20 percent of the population, sectors. While less mature than established in part due to a lack of mechanisms to target and digital finance markets such as Kenya or deliver the benefits.1 However, the increasing Tanzania, WAEMU markets are nascent but availability of mobile phones and mobile-based rapidly evolving markets in terms of digital digital payment channels offer new ways to financial services and new payment channel improve the delivery of cash transfers while also development5. Côte d’Ivoire, for instance, has supporting the financial inclusion of the poorest nearly 12 million registered mobile money users households living in remote areas. For example, (between Orange Money, MTN Mobile Money in Colombia, the DaviPlata mobile platform and Etisalat’s Moov Money) as of March 2018 of Banco Davivienda was used to pay almost (ARTCI data), compared to less than 3 million 1 million beneficiaries of the Familias in Accion people with bank accounts.6 program. In Uganda, the Social Assistance Grants for Empowerment (SAGE) program was Côte d’Ivoire is the regional leader and the hub successfully piloted using a SIM card-based for digital financial services development in cash payment system building on MTN’s mobile WAEMU at both public and private level. Since payments infrastructure, delivering bimonthly 2011 the Ministry of Education for instance payments to over 560,000 beneficiaries.2 has been involved in mobile money school fee payments. For the year 2015-2016, 99.3% of Côte Until very recently, such unconditional cash d’Ivoire’s 1.7 million secondary school students transfer (UCT) programs have been all but paid their annual school registration fee via nonexistent in the West African Economic mobile money7. In the first quarter of 2018, MTN and Monetary Union (WAEMU).3 This started launched the first mobile savings and credit changing in 2012 when the World Bank together service in the region, in partnership with a local with the concerned ministries initiated UCT bank. Financial institutions are also playing an programs in Senegal, Guinea-Bissau, and Côte increasing role, with the microfinance institution d’Ivoire. The initial programs were small-scale Baobab and the bank Société Generale having and designed as hand-to-hand cash payments, launched their agency banking models. and quickly brought forth concerns over misappropriation. 1 World Bank (2015) The State of Social Safety Nets 2015. Washington DC: World Bank. 2 Merttens, Fred et al (2016). Evaluation of the Uganda Social Assistance Grants For Empowerment (Sage) Programme. Endline programme operations performance. Oxford Policy Management. 3 WAEMU countries include Togo, Benin, Côte d’Ivoire, Senegal, Niger, Mali, Burkina Faso, and Guinea-Bissau 4 Pickens, Mark, David Porteous, and Sarah Rotman (2009). “Banking the Poor via G2P Payments.” Washington DC: World Bank. 5 An e-money account/wallet that is primarily accessed using a mobile phone that is held with the e-money issuer. 6 World Bank (2018) Global Findex and BCEAO (2018) Etat Des Services Financiers Par Téléphonie Mobile dans L’UEMOA en 2017 7 GSMA data. https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/10/2015_GSMA_Paying-school-fees-with-mobile- money-in-Cote-dIvoire.pdf 2 Mobile money accounts drove increases in account ownership in BCEAO overall Adults with an account (%) 50% 45 41 43 42 40% 38 35 30% 20% 16 10% 0% 2014 2017 2014 2017 2014 2017 2014 2017 2014 2017 2014 2017 2014 2017 Côte d’Ivoire Benin Burkina Mali Niger Senegal Togo Faso Financial institution account only Both FI & Mobile money account Mobile money account only Source: Global Findex 2017 As part of the Government of Côte d’Ivoire’s STEP 1: SCOPING OUT POTENTIAL National Social Protection Strategy,8 a new PAYMENT CHANNELS AND targeted social safety net program using cash transfers was launched in 2015, supported by ANALYZING BENEFICIARY NEEDS IDA (International Development Association) financing9. In March 2017, the first 5,000 I. Scoping the market for payment service beneficiary households (30,000 individual providers beneficiaries) received a quarterly allowance of 36,000 FCFA (approx. USD 60) in their Orange When the World Bank and the IFC teams started Money electronic wallets which was scaled up thinking about payment channels for this to 35,000 beneficiary households (or 210,000 program, the first step taken was to share with individual beneficiaries). This was the first time the Government an overview of current trends that such a large number of Ivorian households in safety net payments from countries such as received cash transfers through mobile money Uganda, Haiti and Colombia. The purpose of this technology 10. contextual knowledge exchange was to identify what experiences may be applicable in the Ivorian This field note summarizes the steps taken by context to help start the program. the World Bank and IFC to operationalize the mobile money-based government-to-person Markets like Côte d’Ivoire offer fragmented (G2P) transfers together with the government of payment services. To identify suitable payment Côte d’Ivoire. While there were many steps in the options for the national safety net program, a course towards implementation, this note focuses scoping study was done to better understand primarily on three main areas of collaboration: existing payment channels. It included not (1) supporting the government to scope available only a survey of payment service providers (e.g. payment mechanisms and develop a payment banks, remittance companies, mobile network strategy, (2) training beneficiaries on the usage operators, the postal service, microfinance of the payment mechanism, and (3) preparing for institutions, mobile money services) but also an scale-up. The field note ends by presenting some extensive review of social protection programs lessons learned that may be useful for stakeholders in Côte d’Ivoire and internationally, including the in other contexts planning similar initiatives. legal framework surrounding them. IFC together with the World Bank presented these finding to the Government through a series of workshops that included detailed orientation on the mobile money market in Côte d’Ivoire. 8 Republic of Côte d’Ivoire (2013) “Stratégie Nationale de Protection Sociale. 9 World Bank (2015). Republic of Côte d’Ivoire Project Appraisal Document, Productive Social Safety Net Project. Report No: PAD1189. Washington DC: World Bank. The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. 10 Previous experiences in Cote d’Ivoire included small pilots such as MTN and the World Food Program during the last civil unrest. 3 The mobile-money market is relatively well STEP 2: SELECTING A PAYMENT developed in Côte d’Ivoire compared to other SERVICES PROVIDER payment services assessed, including traditional banking. The relative strength of mobile money is supported by the good mobile network coverage, A number of criteria were considered in selecting which serves 77 per cent of the population a payment services provider (PSP), including: (with at least 2G internet) as of 201711. This high coverage, combined with favorable regulations, • Cost of the transfer has enabled the mobile money services of • Transparency and the ability to monitor mobile network operators (MMOs) to penetrate payments effectively rural areas. The 2017 Global Findex reports a 38 • Accessibility in rural areas percent mobile money account penetration in • Security for beneficiaries Côte d’Ivoire, with 31 percent penetration in rural • Ease of use for beneficiaries areas alone, which is indicative of the very high • The development impact of the uptake and relevance of mobile money among mechanism, including its potential to lead the target population of the social safety net to financial inclusion program12. The regulatory environment also • Accessibility to those lacking ID favors mobile money, with MNOs experiencing documents relatively few barriers to competition, while • Sustainability considerations, such as not sanctioning other types of digital financial long-term profitability of G2P payments services (DFS) that compete with mobile money for the service provider and a pro-poor in other markets. growth strategy II. Assessing the needs of beneficiaries of The Ministry of Employment and Social the social protection program Protection in Cote d’Ivoire, which oversees this safety net program, opted to use a The challenge for the program was to find a mobile money-based payment mechanism to solution that has a relatively soft learning curve deliver transfers for all program beneficiaries. and financially inclusive within the constraints Mobile money had a number of advantages that beneficiaries may face, such as lack of ID, over the other types of PSPs on the market. limited literacy and numeracy, limited exposure Unlike prepaid ATM cards and traditional cash to technology, etc. payments, mobile money allows deposits to be made onto a full-featured transaction account. To effect payment, a conservative choice The transaction account was considered such as a traditional, cash-in-hand payment important to the program’s objective of mechanism might be the surest way to ensure exposing previously unbanked beneficiaries to that beneficiaries received their transfer reliably. financial services and leading to their inclusion However, payments in cash are more costly to in the formal financial sector over time. the program compared to digital payments, and deprive beneficiaries of the means to use a While banks also offer payment onto a transaction account, which has the advantage transaction account, they were deemed of offering secure storage, long-term savings, unsuitable for the program population due not P2P transfers and other payments – while also only to the sparse coverage of branches and providing a first step to more robust inclusion ATMs, but also the stringent Know Your Customer in the financial system as the market develops (KYC) requirement for formal identification (loans, insurance, etc.) that many program beneficiaries lacked. While microfinance institutions were another option considered by the program, there is only one Among beneficiary individuals, average MFI in Côte d’Ivoire with sufficient geographical coverage (UNACOOPEC), and this institution household size is large at 6.5, larger was experiencing financial difficulties. Mobile than the average for all households in money thus became the only financial service the registry at 4.5 (containing poor and offering true traceability, rigorous payment non-poor households). 48 percent monitoring, and a distribution network across are aged 15 or older, and 37 percent the country. are literate. 71 percent of all heads of households hold an official government identification (National Identification Card and/or National Document issued by the National Identification Office). 11 World Bank analysis based on data from the Autorité de Régulation des Télécommunications/TIC de Côte d’Ivoire (ARTCI) 12 World Bank (2017) Global Findex. 4 There were initial concerns that not all In addition, there were some program regions where beneficiaries would be reachable by MMOs. In Orange was the only mobile money provider with particular, beneficiaries who live in isolated rural agent presence. This coverage advantage in rural areas, who lack state-issued ID documents, and areas was essential, since the program specifically who cannot read and write, may have difficulty targets the rural poor. using a mobile-phone-based payment interface. However, it was ultimately decided that even A multi-provider approach was also considered in such beneficiaries could be reached by MMOs if order to give beneficiaries choice in providers and to appropriate mitigation strategies were adopted. accommodate beneficiaries that live in areas where The various mitigation strategies adopted by the the other two mobile money operators might have safety net program are discussed below. better coverage. However, it was decided that, until the safety net program could improve its capacity The government ultimately opted to use Orange to manage payments – in particular, through the Money to manage all payments in the program. development of a dedicated computer module to Orange was the clear market leader. While Moov manage payment lists – the advantages of using and MTN both have a national presence, neither multiple PSPs were outweighed by the additional had a clear advantage over Orange in terms of either complexity involved. GSM network coverage or presence of mobile money agents in any of the program regions at the time of program start. Figure 1: Digital transfers with Orange – How do payments happen? 01 02 Wire Transfer Bank Bank Account of the Ministry of Account of Orange Social Protection E-money conversion 04 05 03 Orange money agent Orange money account P1 06 Cash-Out P2 P3 e-wallet admin interface E-money Funds Pool Orange money mobile money transfer system Cash E-Money 5 STEP 3: DESIGNING CUSTOMIZED I. Limited literacy, numeracy and phone usage among participants. TRAINING FOR BENEFICIARIES The safety net program purposely targets poor Using mobile phones to make social payments and vulnerable families. This population group has a strong potential to increase financial often has limited education and exposure to inclusion in Côte d’Ivoire13. Many targeted writing, including numbers. Most beneficiaries program beneficiaries were already mobile did not know when a message from the program phone users, while the rest were sensitized had arrived, let alone how to locate it in the to begin using a basic feature phone given phone and read its content. Another common for free by the project (the cost to the project difficulty was understanding the sequence of was approximately $10 per phone). Mobile digits to key into the phone to cash out. This was money payments use ordinary mobile phones problematic for many because they simply could and do not require an Internet connection. not recognize these digits on the handset. Many The transactional account allows payments, participants used their own ways of identifying transfers, remittances, savings, and the market numbers using their own imagination (linking in Côte d’Ivoire is quickly evolving to the point numbers to agricultural tools or zero to the where microloans and other value-added moon for instance). While some participants services (VAS) may become more common place. owned a phone prior to the program, they made a limited use of it. For new users, handling the However,significantbarriersremaintobeneficiaries handset was not intuitive. For example, some autonomously using mobile money. One such beneficiaries tended to use too much force constraint is the beneficiaries’ ability to manipulate when pressing the keys thus jamming them. the mobile phone interface. Low literacy levels, As a result, a number of participants tucked poor and uncorrected eyesight, and a lack of away their phone after cashing out because experience with phone menu systems and USSD they were fearful of mishandling it and thus syntax impair usage. Poor numeracy can make it block the SIM card. difficult to make financial decisions, for example how much to withdraw now and how much Jeannette (53), Kanguierenou to save until later. Additionally, lack of understanding of the precise role of the PIN number in assuring the security of an account can “I would like to put my children’s numbers lead beneficiaries to share PIN codes with others, in my phone so I can call them, but I’m compromising the accounts. worried I might block the SIM card. I don’t use the phone, I go and get it charged in The only way to alleviate these constraints is to Brodo [the closest town]. Sometimes, I go ensure that beneficiaries are adequately trained. myself, sometimes, my brother goes.” Initially, many beneficiaries received their mobile phone on the day of the payment during the program launch ceremony, which did not give II. Independent use of financial services them time to familiarize themselves with the may not be an end-goal desired by all or cash-out process nor the phone itself. To speed up most safety net program participants. payments, cash-outs were in fact often made by Orange staff on behalf of beneficiaries. This set- Most participants welcomed the idea of learning up made it possible for almost all participants to a new skill, but others felt indifferent to this; receive their entitlement on the launch day, but either for lack of interest or due to a perceived did not create lasting results for the program in inability to learn. Instead, some beneficiaries terms of knowledge transfer. anointed a trusted relative who could handle the phone on their behalf while they themselves To develop training materials that were continued with their daily activities. adapted to the specific needs of the beneficiary population, the World Bank and IFC collaborated Even among the participants who had used to study beneficiaries’ learning needs and Orange Money for personal transfers prior to to produce targeted training materials. The the program, there was a tendency to hand program leadership together with the World an agent the phone to carry out the required Bank/IFC team reviewed progress after the transactions to cash out. In the past, some of first payment was made by conducting both these participants would ask a trusted family qualitative and quantitative research. They then member or friend to help execute the transfer. corrected any issues with a particular emphasis This meant that the opportunity afforded to on training. Three broad areas were identified for participants to access a formal financial service additional emphasis: independently was not as valued as expected. 13 There is much active investment in Côte d’Ivoire’s mobile infrastructure, including, for example, a World Bank-financed project aiming to bring coverage to the entire north of the country. See Lonie, Susie, Meritxell Martinez, Rita Oulai and Christopher Tullis (undated) Opportunities for Digital Financial Services in the Cocoa Value Chain. Insight from New Data. Côte d’Ivoire. 6 There could be many reasons for this, such as In addition to the program presentations done by the fact that smallholder farmers may view social workers, initial training material consisted the household as a unit and divide up tasks of printouts of visuals of a handset, designed as between people in the household to best manage a self-study tool to help participants familiarize everything that needs to be done – but still valuing themselves with the phone keypad and the access to the service, collectively. But independent digits. Subsequently, more emphasis was placed use of a financial service is not prioritized. on community-based training and peer-to-peer learning since some beneficiaries – often older and One key take-away is the importance of taking uneducated – are used to turn to other community into account this heterogeneity in beneficiaries’ or family members for support. This confirms the preferences and abilities when developing positive role played by “helpers”. training materials for a social protection project, or indeed its financial inclusion strategy. While Social workers have been equipped with large some beneficiaries may be poised to benefit visual aids akin to a flipchart-size comic book, from a transactional account that can lead to explaining the program objectives, offering financial inclusion, others may experience this basic numeracy tips, and detailing the cash as an unnecessary barrier to receiving their out process (see annex for example training cash payment. Likewise, among beneficiaries materials). For example, one visual depicts a interested in using financial services, not all are program participant standing with an agent able to benefit from services of the same level of and keying into their phone the cash-out sophistication. sequence in exchange for cash. The visual aids are complemented by audio recordings of the Chantal (52), Pliké-Somolo training script to ensure consistent messaging across all locations even after translation into “There is no network coverage. So I gave all my various local languages. Since there is a strong documents to the children of another beneficiary need for on-going training support, existing when they all went to the next village to cash village committees have also been trained on out. It’s too far for me to walk to.” an abridged version of this material so that they can conduct refresher training. III. The training methodology employed STEP 4: PREPARING FOR relied on visual aid on how to use a handset. SCALE-UP From the inception, there was little need to The review of the pilot and the design of the explain to participants the benefits of using mobile customized comprehensive training was an money and Orange. Their level of awareness and opportunity to build a deeper understanding of trust in the service was already very high. Many the user experience and to try and address barriers participants had good personal experience or to future sustained use of mobile money as a positive feedback from their friends and relatives financial service, given the state of the ecosystem who used the service. Everyone could relate to and regulatory concerns. Five key insights aspects of convenience and security. What is more, relevant to the scale-up phase were uncovered. almost all of them felt they could easily memorize Interestingly, some of these challenge established a PIN to secure their electronic wallet. global best practice. Firmin (41), Kanguierenou I. Number of payment service providers “Orange Money is about cash-in and cash-out. When developing a payment strategy, social You can also send money to someone. At the protection programs have to consider whether bank, there is too much paperwork to fill out. one PSP can reliably deliver payments to all You need to have a check to get money. With program beneficiaries or whether multiple PSPs Orange Money there is less paperwork.” are needed. In some contexts, it may be that no single PSP has the capacity to manage all of the program’s payments, especially if the provider Christine (42), Ankanzakro lacks a presence in certain program regions or if their staffing or liquidity are insufficient. However, “I trust Orange Money. My money is in my even if a PSP with sufficient capacity to manage phone. You can’t take my money if you don’t all payments can be found, it still may be desirable know my secret code [PIN].” to contract with multiple PSPs. When multiple PSPs are involved, competition increases between providers, potentially decreasing costs to the program. This also helps the program respond 7 to beneficiaries’ individual preference by giving II. Regulation them a choice of providers. Finally, this can also help compensate for differential geographic Some regional disparities were observed among coverage between PSPs, by, for example, the beneficiary population in terms of access to allowing each beneficiary to choose the PSP a valid government-issued ID. Although nearly who has an agent or a cash point nearest to all beneficiaries understood the need to have an their home. official ID in their daily lives and were willing to set aside part of their transfer to obtain one, they Despite all the advantages of using multiple did not all possess the right documentation such providers, the Ivoirian experience shows that as a birth certificate to obtain a legal ID. it may still make sense for social protection programs to contract a single PSP. In Côte d’Ivoire, Since this is an issue in many African countries the social protection program considered and not solely in Côte d’Ivoire, serving the poorest contracting multiple PSPs but ultimately decided populations remains a challenge when program against it, both during the pilot phase of 5,000 participation is conditional on having an ID. The beneficiary households and for the expansion to imperative of respecting KYC requirements and 35,000 households. There were two principal anti-money laundering and counter-financing reasons why this decision was made: of terrorism (AML/CFT) rules must be balanced against the need to foster the financial inclusion • Limited management capacity. New social of the underserved. protection programs may not have the management capacity needed to manage The Ministry of Employment and Social payments made through multiple providers Protection, which champions the safety net directly, and not all markets have a developed program, had a multi-pronged approach for system of payments aggregators to provide the pilot program that allowed 100 percent this service. In particular, unless the program of beneficiaries to receive their transfer using is using a robust digital management mobile money. The program design was adapted information system (MIS), the additional in specific ways to accommodate the fact that complication of managing multiple PSPs – not all potential recipients possessed the required such as generating multiple payment lists documents to fulfill KYC requirements. Crucially, and monitoring data from multiple sources the program allowed beneficiary households to – may lead to increased errors and have designate trusted non-household members to negative impact on service delivery. receive the program benefit onto their mobile money account (see Box 1 for details. ) • Simplified payment experience for beneficiaries. From a training perspective, only one training script needed to be developed based on the cashing-out and other transactional processes of Orange. This also decreases confusion on the part of beneficiaries as peer support from other program beneficiaries is one of the key ways to get them in the habit of using the USSD syntax and other procedures necessary to access payments. In Côte d’Ivoire, as in many markets, each provider has a different USSD syntax, which is already confusing. In terms of customer service, having one call center and one support team that handled all enquiries streamlined communication. 8 BOX 1. STRATEGY IMPLEMENTED BY THE PRODUCTIVE SOCIAL SAFETY NET PROJECT (PSNP) FOR EXPANDING ACCESS TO MOBILE PAYMENTS TO HOUSEHOLDS WITHOUT ID Since not all program beneficiaries had access to ID documents acceptable to the MMO for KYC purposes, it was necessary to make some modifications to the design of the PSNP in order to allow all beneficiaries to be paid through the mobile channel. These modifications and exceptions were: 1. Temporary KYC exception. Initially, the program negotiated a temporary exemption from the MMO’s usual KYC requirements to allow beneficiaries to open accounts using the ID card issued by the program instead of the usual national IDs. 2. Support for getting an ID. Beneficiaries were informed of the need to acquire a state-issued ID to continue receiving their benefits, and were encouraged to use their initial benefits to finance the cost of doing so. 3. Modifying program design to accommodate those without access to ID. Since not all beneficiaries have access to the documentation needed to acquire an ID, even once they understand the benefits, the PSNP allowed households flexibility in designating a trusted transfer recipient. • Male recipients. Although PSNP households are normally encouraged to nominate a female recipient, the PSNP elected to allow the household to designate a male recipient on an exceptional basis if no women in the household had an official ID. • Community recipients. In cases where no one in the household had an official ID, the PSNP allowed the household to nominate a trusted person in the community (outside of the household) on an exceptional basis. Such households are flagged for additional monitoring to ensure that beneficiaries really receive the transfer. Data suggests that initial concerns of fraud stemming from this exception may be overblown. 4. Collaborating with ongoing reform of the national ID system. Côte d’Ivoire is currently in the process of reforming its national ID system to expand access, including in rural areas and to non-citizens, and to offer low-cost and digital credentials that can be used to access public services. The PSNP is coordinating closely with this effort to ensure that its beneficiaries are among the first to receive these new credentials. As a result of this strategy, the PSNP was able to pay 100 percent of its beneficiaries onto a mobile money account in early 2018, thereby overcoming KYC as a binding constraint to digital social payments in the short term and laying the groundwork for full financial inclusion of project beneficiaries in the long term. In the long term, it is desirable for the program to have the latitude to choose transfer recipients based on factors linked to development outcomes and not have recipient choice be motivated by a need to mitigate against regulatory barriers.14 While the appropriate long-term solution remains a combination of risk- based KYC regulation15 combined with increasing access to official IDs, the innovative approach taken by the PSNP shows a strategy for how digital payments can be implemented in social payments programs in contexts where these barriers have yet to be overcome. 14 Check systematic review exploring how women recipients yield better development outcomes when receiving conditional cash transfers. https://assets. publishing.service.gov.uk/media/57a08a6aed915d622c00070d/EconomicTtransfer2012Yoong.pdf Also how the bargaining position of women improved after they received transfers, and that women were then better able to influence the pattern of expenditures at https://openknowledge.worldbank.org/ bitstream/handle/10986/7471/WPS4282.pdf?sequence=1 15 A recent study on the regulatory environment for DFS in Côte d’Ivoire shows that while risk-based KYC is already adopted in regulation from the BCEAO, that this regulation conflicts with and is nullified by conflicting regulatory requirements. http://www.cgap.org/sites/default/files/Working-Paper- Market-Stystem-Assessment-of-Digital-Financial-Services-in-WAEMU_0.pdf 9 III. Agent network These programs generally generate large, predictable cash flows in well-defined For beneficiaries to be able to realize the benefits geographical regions. Such cash flows can help of the social transfer, they need to be able to improve the business case for deploying agents turn it into cash. The relatively weak presence of to program regions. Social protection programs mobile money agent networks in some program should work with PSPs to understand their areas, as well as the liquidity constraints of some needs and business models, and actively agents, are challenges. Even in countries like communicate a program’s medium- and Côte d’Ivoire, with relatively high rural mobile long-term strategies to PSPs to allow them money penetrations (94,443 mobile money to integrate these into their own expansion agents as of December 2017, or approximately 1 strategies. Social protection programs should agent for every 89 active Ivoirians mobile money also look for opportunities to help incentivize users)16 there is still low agent coverage in the MMOs to invest in agent networks. For example, poorest regions. it might be possible for the program to cluster beneficiaries who receive payments through a To supplement these weak fixed agent given PSP geographically in order to improve networks, the program elected to have the PSP the business case to that PSP to deploy an agent deploy roaming agents that would travel to the in that area. When liquidity management is villages during the periods in which the program identified as a constraint, the program could makes its transfers. This method allowed the also consider spreading payments out over program to ensure that all beneficiaries were time so that not all beneficiaries in a given able to access their benefits in cash in a timely community receive payments on the same day. fashion and without excessive travel costs Such a practice could help local agents cope or waiting times. However, there are also more effectively with program cash flows, disadvantages to such an approach. Deploying improving overall liquidity while also providing itinerant agents can be costly compared to using more steady business throughout the month. existing agent infrastructure. Additionally, the In general, it may help to view investments fact that this cash-out capacity is only available made by MMOs in rural distribution networks during specific periods means that beneficiaries also as investments in the general financial cannot cash out on demand, which may limit infrastructure of these communities. the utility of their accounts for managing day- to-day finances. If cash-outs are only possible Social protection programs should recognize on fixed “payments days” attended in person by that their programs account for a significant program staff, then the mobile money platform share of the digital cash flow in many areas risks becoming simply an alternate cash-delivery and work actively to use this market power mechanism with few benefits beyond traditional to incentivize investments in rural financial cash payments. infrastructure that will pay significant dividends not only for the delivery of the social protection This means that robust and accessible agent program itself but also the broader financial lives networks are needed if beneficiaries are to of program beneficiaries. fully benefit from having a financial account. In the short term, stopgap measures such as the deployment of itinerant agents may be necessary. In the long term, however, social protection programs should conceive of themselves as key stakeholders in the mobile money sector and should actively attempt to encourage providers to expand agent networks. 16 BCEAO (2018) Etat Des Services Financiers Par Téléphonie Mobile dans L’UEMOA en 2017 10 CONCLUSION Social protection programs should take advantage of this sustained engagement to train beneficiaries Currently, the productive social safety net program gradually over time, building their capacity to use is unconditional in nature, with households DFS autonomously. This way, by the time that they receiving quarterly transfers of FCFA 36,000 exit the program, those beneficiaries who desire (approximately US$ 72). This transfer amount to and can benefit from using DFS to improve their is the equivalent of 15 percent of consumption financial lives – by saving, budgeting, transferring of average poor households, and 21 percent of money, or even applying for digital microloans as consumption of extremely poor households. The the market matures – can do so. program covers 35,000 households as of June 2018 (194,000 individuals, 2.0 percent of the poor) The best suited approach is to have program staff from a social registry managed by the program supervise payments in the early days and phase out containing 92,000 households across 12 regions this support over time to avoid any risk of fraud, in the Northern, Western and Central zones and to keep cost down, and to foster autonomous has been extended to cover 80,000 additional use and financial inclusion. Though initially labor beneficiaries by 2022. intensive, this kind of approach may well be the best model to promote sustained adoption of There is much debate about the sustainability of digital financial services by the poorest. social protection programs targeting the poor, and on the lasting impact on beneficiaries once they stop receiving program benefits. To address RECOMMENDATIONS these sustainability concerns, many social protection programs have begun to encourage At a minimum, in Côte d’Ivoire, we recommend beneficiaries to use their program benefits to that as it scales up, the safety net program work invest in productive activities that can continue to to ensure that: bear fruit after the program ends. In the same vein, if social protection programs could have the effect 1) Cash-out points are accessible and located of bringing previously unbanked populations near beneficiaries’ homes; permanently into the financial system, then the continued benefits of financial inclusion could be 2) Beneficiaries can use the product autonomously one of the legacies of the program. and know where to go for help when needed; Merely paying benefits onto a digital account is 3) Mobile money agents have a business case for not sufficient to lead to lasting financial inclusion. ongoing presence in beneficiary localities to International experience shows that additional ensure the sustainability of cash-out points; support activities need to be added. These may include, for example, strategic support to MMOs, 4) MMOs have a business case for ongoing through public expenditure to improve financial relationship to the program (fees at a level that infrastructure, such as the expansion of the agent allows for investment, opportunity to cross- network, as mentioned above. Beneficiaries also sell value-added services, visibility concerning need training to understand how to use financial the program’s long-term plans, etc.); services. Even if beneficiaries are not active users of DFS at the outset of a social protection 5) Beneficiaries are supported with obtaining an program, the program offers a prolonged, often ID, needed to meet KYC requirements, over the multi-year engagement with beneficiaries that long-term; sees them regularly using a digital account to receive payments. 6) A multi-payment provider approach is introduced once existing data management capacity and MIS deficiencies are solved. 11 ANNEX 1: PICTURES OF THE BENEFICIARY TRAINING MANUAL Presentation of the program Introduction to the phone touchpad Advice on how to secure the PIN AUTHORS Christopher Tullis is a Social Protection Consultant working with the World Bank. Heba Elgazzar is a Senior Economist working for the World Bank. Kokoevi Sossouvi is a Digital Financial Services Consultant working with the World Bank and IFC. Meritxell Martinez is a Project Lead working for IFC Advisory Services on Digital Financial Services in social services and agri value chains. Acknowledgements The team would like to acknowledge the following people for the guidance and support during the implementation of the program and the development of this concept note: Riadh Naouar, Anna Koblanck, Rita Oulai, and Lesley Denyes from IFC, and the partners from the Ministry of Employment and Social Protection in Cote d’Ivoire. Contact the Publisher: Anna Koblanck AKoblanck@ifc.org +27(0) 11-731-3000 IFC, Sub-Saharan Africa 14 Fricker Road, Illovo, DECEMBER 2018 Johannesburg