Perspectives 2020-2021 Public Sector

Citi Perspectives for the Public Sector 26 27 Africa’s mobile money momentum accelerates First launched in the 2000s, Safaricom’s M-Pesa, which has expanded to several other countries, is one of the best known examples of cellphone- based banking in developing countries and studies have shown its considerable benefits in terms of economic growth. In Kenya, 72% of the population has a mobile money account, while in Uganda 43% do. 10 The benefits of mobile banking ubiquity have been further highlighted by the experience of COVID-19. Kenya’s mobile banking volumes rose 16% from $3.6 billion to $4.18 billion in July, the biggest jump ever, while there were 158 million transactions, according to the Central Bank of Kenya. 11 In total, Kenya now has 62 million mobile money subscribers. The government sought to curb COVID-19 by encouraging the use of mobile money payments. Mobile money service providers removed charges on transactions below certain thresholds to support vulnerable populations, such as low-income consumers. Additionally, transaction fees for bill payment and transferring cash to bank accounts were eliminated to discourage the use of cash. Similar measures were implemented in Uganda .12 While other countries globally have failed to replicate the formula that led to success in Kenya given their different circumstances, the pandemic has encouraged greater creativity among governments in the region. COVID-19 has accelerated the shift to mobile money by encouraging public and private collaboration. The following are some examples of advances made during the pandemic: • Nigeria: The use of mobile money and ‘no touch’ cashless transactions grew by nearly 15% in March. 13 • Rwanda: By late April, users were making three million more mobile-money transfers – a five-fold increase – compared to before the pandemic. The value of transfers between individuals rose six-fold to RWF40 billion ($42 million). 14 • Ethiopia: Despite protectionist policies and a cash-oriented society, mobile money looks set to grow because of COVID-19. A recent policy shift allows non-financial institutions to act as mobile-money providers, which will make mobile money more accessible. The government also recently introduced incentives for citizens to increase their use of digital payment methods. 15 Philippines grows digital payments amid COVID-19 fears Digital payments gained momentum in the Philippines as COVID-19 spread and made it difficult for consumers to pay at bank or store counters: citizens ditched cash to avoid physical contact. Registered users of the nation's largest provider of mobile money services, GCash, increased by 150% to 20 million after the initial peak of the pandemic; total payments made on the platform in May increased eight-fold from a year earlier. The current quarantine measures still require people and businesses to take steps to ensure social distancing which has boosted digital money. As in other countries, the public and private sector have worked together to digitize services and promote digital payments in the Philippines. With support from the government, taxis will soon be equipped with scan-to-pay systems so that users can pay by scanning QR codes displayed on fare meters with their smartphones. The Philippine government is also stepping up efforts to promote digital currency. It has increased the number of government institutions that accept digital payment via EGov Pay, a digital payment platform for administrative services developed by government and public and private sector banks and launched last year. The government also plans to introduce a new National QR Code Standard by the end of the year. The hope is that country-wide use of mobile money will boost efficiency and safety by cutting lines at stores and government agencies. In addition, the central bank has said that electronic payments or mobile money will allow low-income earners without bank accounts to access financial services further promoting financial inclusion of the most vulnerable. 16 Conclusion Digitization of both donations and disbursements was already a hugely important trend that has gathered pace in recent years. COVID-19 has accelerated its adoption. In terms of donations, the immediacy of digital payments – especially combined with social media – has the power to galvanize and mobilize public opinion and convert it into significant donations that can have a major impact in developing countries. At the same time, digital payments are simple, safe and seamless, improve efficiency and security (for donors and development organizations and NGOs) while enhancing reporting and accountability. For disbursements, the impact of digitization – and especially mobile money – can be even more dramatic. As government responses to COVID-19 have shown, mobile money can deliver emergency funds to vulnerable groups rapidly. Moreover, by avoiding the need to handle physical cash, mobile money increases security and reduces fraud while promoting social distancing with ‘no touch’ payments. The swift response of many emerging market governments around the world to COVID-19 and the recognition of the value of mobile money is encouraging. The pandemic has acted as a catalyst for public and private sector collaboration and will spur governments to develop and refine regulatory frameworks for mobile money. While COVID-19 is a human tragedy that will have repercussions for years to come, the mobilization of fundraising support and increased reach of mobile money will have lasting positive consequences. 10 https://www.vox.com/future-perfect/21420357/kenya-mobile-banking-unbanked-cellphone-money 11 Webinar: Public-private collaboration in COVID-19 emergency payments response: Lessons from Colombia https://www.youtube. com/watch?v=d-yc3YsPBeQ&feature=youtu.be 12 https://medium.com/@acclabs/mobile-money-and-covid-19-what-can-we-learn-from-east-africa-5df456ca907b 13 https://www.voanews.com/covid-19-pandemic/coronavirus-pandemic-fuels-mobile-money-transactions-nigeria 14 https://www.economist.com/middle-east-and-africa/2020/05/28/the-covid-19-crisis-is-boosting-mobile-money 15 http://www.xinhuanet.com/english/2020-09/01/c_139334795.htm, https://www.dw.com/en/ethiopians-are-dipping-into-digital- wallets/a-54917399 16 https://asia.nikkei.com/Business/Companies/Digital-payment-grows-in-Philippines-amid-COVID-19-fears COVID-19 Catalyzes Digital Donations and Disbursements Why Colombia’s Ingreso Solidario Worked • Collaboration with private sector • Leadership and clear communication • Flexibility in delivery channels and outreach methods • Consolidated registry • Enabling regulatory framework GSMA’s Top Mobile Money Regulatory Responses to COVID-19 • Collaboration with private sector • Leadership and clear communication • Flexibility in delivery channels and outreach methods • Consolidated registry • Enabling regulatory framework