IFC INCLUSIVE BUSINESS COMPANY PROFILE Roshan Company background Launched in 2003, Roshan (Telecom Development Company Country: Afghanistan Afghanistan Corp) is a leading telecommunications provider with over six million mobile telephony subscribers. A social Sector: Information and Communication enterprise, the company’s vision is “to be the benchmark Technologies emerging market telecommunications company that focuses on customers, stakeholders, and employees, IFC’s Investment: $65 million in debt providing quality and value in an ethical manner while financing contributing to the social and economic development of Afghanistan within the region.” Roshan directly employs over 1,130 people—96% are Afghan nationals and 18% of the total are women. Roshan is owned by an international Fund for Economic Development or AKFED (51%), Monaco consortium made up of three shareholders: The Aga Khan Telecom International (36.75%), and TeliaSonera (12.25%). Drivers For Roshan’S Inclusive Business Model •• Vision to contribute to Afghanistan’s economic development •• Significant market opportunity in mobile telephony •• Great need for mobile financial services—around 95% of the population is unbanked •• Demand for electronic payments from institutional customers First, as a social enterprise, Roshan’s primary inclusive concerns, there is a great need to leverage mobile phones business driver is its vision to provide all Afghans with access to deliver financial and value-added services. Decades of to mobile telephony, as well as to play a key role in the conflict have had a negative impact on the formal financial country’s reconstruction and economic development. system and resulted in a low level of trust among people Second, the low fixed line penetration (less than 0.7% in formal banking. Roshan has an opportunity to build of the population) creates a strong need for mobile upon the trust that people have developed in mobile telecommunications. When Roshan entered the market communications to offer mobile banking and other services. in 2003 there was only one other player, presenting a Fourth, institutional customers such as the government, significant market opportunity for the company. As of microfinance insitutions, development and aid agencies 2012, according to the World Bank’s World Development are increasingly turning to electronic payments to increase Indicators, mobile cellular subscriptions stood at 54 per 100 transparency, security, and efficiency of payments, thus people in Afghanistan, indicating room for further growth. building the payments ecosystem and making it viable for Third, with around 95% of the country’s population Roshan to generate revenues through mobile money and unbanked, low bank branch penetration, and high security other services. 1 IFC INCLUSIVE BUSINESS COMPANY PROFILE roshan’s Inclusive Business Model Roshan engages low-income people through its core business in two key ways. On the customer side, Roshan offers mobile telephony as well as value-added services such as mobile payments, remittances, and agri-commodity prices among other offerings. On the distribution side, Roshan’s 33,000 agents—typically micro and small business entrepreneurs—sign-up mobile subscribers, sell airtime, and offer value-added services. Mobile Telephony and Value-Added Services Central aspects of M-Paisa’s value proposition are security, Mobile Telephony: Roshan offers four types of pre-paid 24-hr accessibility, and ease-of-use. Rather than travel tariffs for telecommunications, enabling customers to select a great distance to reach a bank and face security risks, an option best suited to their needs and budget. Customers customers can access financial services through mobile benefit from a loyalty program by earning rewards such as phones. Women entrepreneurs can make loan payments free talk time and text messages. The SOS loan, an airtime from home, avoiding late payment penalties. M-Paisa has credit service, helps customers borrow airtime from friends, helped police officers receive salaries in full–the first time family, and Roshan. Also, customers may share airtime for a for many due to corruption in cash payments. Organizations fee through M-Share. like NRC have replaced cash and voucher payments with electronic payments to internally displaced persons and Mobile Financial Services: Roshan’s M-Paisa1 product, refugees. M-Paisa services are also easy to use—customers launched in 2008, is Afghanistan’s first mobile financial transact via text messages (SMS) or an Interactive Voice service. M-Paisa is advancing financial inclusion, especially Response (IVR) system that is available in Dari, Pashto, and in remote rural areas, and supporting the development of English. About 70% of Afghanistan’s population is illiterate, the economy. Customers must submit a national ID or joint making the IVR system critical for large-scale adoption. customer registration form to sign-up for the service.2 M-Paisa’s flagship offering was loan disbursements and repayments for customers of the First Micro Finance Bank Afghanistan (FMFB-A). Roshan has since expanded its © Roshan offerings to include salary disbursements, airtime recharge, cash deposits and withdrawals, domestic and international person-to-person money transfers in partnership with Western Union, merchant and bill payments, salary payments, and humanitarian aid disbursements. Roshan earns revenues through customer fees to agents for each transaction. Its institutional customers include two microfinance institutions, the Afghan National Police, the Ministry of Rural and Rehabilitation Development (MRRD), the Norwegian Refugee Council (NRC), and the Department for International Fund for Development (DIFD). 2 IFC INCLUSIVE BUSINESS COMPANY PROFILE © Roshan Roshan also focuses on customer education to increase familiarity with the new technology, build understanding of the offerings in the M-Paisa basket, and create confidence in the service. The right messages are critical for adoption. Using the slogan “the hawala on your mobile,” Roshan helps customers understand M-Paisa by comparing the service to the country’s centuries-old hawala system of money exchange dealers who transfer payments domestically and internationally. Distribution Network A strong distribution network is essential to reach people scattered across difficult terrain. Roshan has developed an agent network by building relationships with thousands of small stores that sell basic necessities. There are around 33,000 Roshan agents including nine flagship stores owned and run by Roshan, 6,550 street vendors, 400 kiosks, 4,200 licensed retailers (micro outlets with two employees), and 4,300 non-traditional outlets such as barber shops, salons, restaurants, etc. Agents receive regular training on product information and promotions from Roshan’s sales force, which in turn enables them to impart knowledge to customers. entrepreneurs to offer GSM services using their own phones to customers who cannot afford phones. To help women in rural areas earn a livelihood, Roshan, in partnership Roshan has developed with AfghanAid and USAID, offers a Women’s PCO (WPCO) program. Women receive a $250 loan from FMFB-A while an agent network by Roshan provides a subsidized PCO kit consisting of a handset, SIM card, charger, 12,500 units of talk time, and building relationships with a signboard. WPCO operators also get an additional 60% thousands of small stores airtime credit when they buy airtime. that sell basic necessities 1 M-Paisa was supported by the Vodafone platform used by Safaricom in Kenya for M-Pesa. Since December 2013, M-Paisa has been supported by Comviva and operates in three languages. This functionality will help expand services and increase usability. The Comviva platform also features bank and utility system integration, enabling money transfers from bank Among Roshan’s agents are Public Call Offices (PCOs) run accounts to mobile wallets and utility bill payments from phones. by village elders out of either their homes or small kiosks. 2 The Joint Customer Registration Form (CRI) is accepted by the Afghan Roshan’s PCO program currently enables 15,000 micro Telecommunications Regulatory Authority (ATRA) for customer sign-up. 3 IFC INCLUSIVE BUSINESS COMPANY PROFILE results of Roshan’S Inclusive Business Model •• Catalytic role in the development of the mobile telecommunications industry in Afghanistan •• More than six million mobile phone subscribers and 1.2 million registered M-Paisa customers •• 1,000-plus farmers using the Malomat agri-commodity price and information service •• As of 2014, Roshan had 15,000 PCOs, of which 320 are run by women During the past decade, Roshan has played a catalytic role service has over 1,000 users and benefits entire villages since in the establishment of the telecommunications industry communities often share services to reduce costs. in Afghanistan. The company’s success in the market The company engages large numbers of low-income incentivized new entrants thereby driving down prices and entrepreneurs as distributors in its value chain with making mobile telephony affordable for the masses. SIM its 33,000-strong agent network. Roshan has over 500 cards that were priced at $650 each dropped to $100 when registered M-Paisa agents who double as cash-in and Roshan entered the market in 2003; today they cost less than cash-out outlets. M-Paisa agents are present in 120 cities and a dollar. towns across the country, covering 32 provinces. Roshan’s network is available in 240 cities and towns Based on the success of Roshan’s social enterprise model, throughout Afghanistan’s 34 provinces. As a result, over Roshan’s parent company, AKFED, is expanding the model to 71% of Afghanistan’s population can access Roshan’s GSM Burundi, Tanzania, and Uganda in 2014. Roshan has received voice and data services. Its 3G network is available in all several international awards for innovation including from major cities in the country. Of Roshan’s six million mobile the Bill & Melinda Gates Foundation, USAID, and the GSMA. subscribers, 99% have pre-paid accounts, and more than 1.2 million are registered M-Paisa customers. Its Malomat IFC’s role and value-add IFC’s Investment: $65 million in long-term debt financing Investment Year: 2013 •• Provide finance to a large company with limited access to funding from private commercial banks in Afghanistan •• Offer long-term debt, enabling Roshan to make capital expenditures for its 3G network roll-out •• Help Roshan to have greater operational flexibility through access to long-term debt •• Send a positive message to potential investors that it is possible to finance infrastructure projects in Afghanistan (Published May 2014) For more information, visit ifc.org/inclusivebusiness and roshan.af 4