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Malawi takes payments digital

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Malawi has taken a significant step towards creating a digital payment ecosystem in order to address poverty and drive inclusive growth. 

An event organised by the Government of Malawi, with the United Nations Capital Development Fund’s (UNCDF) Better Than Cash Alliance (http://www.betterthancash.org) and Mobile Money for the Poor initiatives, brought together digital payments players to accelerate the progress of digital finance in Malawi. The convening also marks the release of an in-depth analysis of the country’s readiness to transition from a nearly cash-only economy to one where digital payments are widely available through an ecosystem approach.

Minister of Finance, Economic Planning and Development Goodall Gondwe said that the transition to digital payments is part of the Government’s commitment to achieving social and economic goals within the Malawi Growth and Development Strategy. 

“This is part of our mandate to realise balanced and sustainable economic growth and to reduce poverty,” said Gondwe. “We believe creating an economy where digital payments are widely available is the right path for us to embark on and we are doing so based on sound economic and fiscal policies.”

The research was conducted through a partnership between the Malawian Ministry of Finance, the Reserve Bank of Malawi, and the Better Than Cash Alliance, and is entitled The Opportunities for Malawi’s Transition Away from Cash (http://betterthancash.org/wp-content/uploads/2015/04/BTCA-Long-Version-Malawi-Diagnostic.pdf). The report detailed the current state of Malawian digital payments, providing an important baseline to track progress. The study also identified four potential opportunities for Malawi, including the Government advancing on digitizing its centralized payment system with support from banks, and merchants accelerating digital payment acceptance via mobile money and debit card at the point of sale. 

“Malawi is moving forward to build a strong digital ecosystem that will respond to the needs of the people in the country,” said Tillman Bruett, Advisor and Programme Manager, Mobile Money for the Poor (MM4P), a UNCDF initiative, undertaken in Malawi with the support of the US Agency for International Development. “We expect that as a result, Malawi will progress from 3.5 percent of total active adult population using digital financial services at the start of this year to 15 percent by 2019.” 

As part of the programme, UNCDF plans to provide technical and financial assistance to build capacity in public and private sector organizations to support the switch from cash to digital for the most promising payments streams identified in the research.

Making payments in cash can be expensive and inefficient for governments, companies and international organizations. Cash is also difficult to trace, and extremely vulnerable to theft and loss. Many people living in poverty only use cash, and this is a key barrier to broader financial inclusion because cash makes it costly to provide financial services.  According to UNCDF, in least developed countries such as Malawi mobile penetration is at 30 percent while access to a bank account is at 14 percent.  Mobile payments can therefore be one way to accelerate this shift.

Malawi’s approach can set an example for other countries in the early stages of transitioning to digital payments. 

“Digitisation is an important development tool for many countries looking to reduce the cost of delivering payments, increase transparency and increase access to financial services for citizens,” said Dr. Ruth Goodwin-Groen, Managing Director, Better Than Cash Alliance. “By undertaking this research and by using it to plan its shift, Malawi has taken a bold step in increasing transparency and moving towards an economy where the Government, businesses and people can pay and get paid electronically.”

Transitioning from cash to digital payments is a complex process, however, and requires collaboration between the government and businesses, as well as building trust and increasing familiarity among citizens. That reality is why leading figures came together today to discuss the diagnostic data and develop a blueprint for the country’s digital payments future. Participants noted that by working collaboratively to address the barriers to transitioning payments from cash to digital, they would be able to accelerate the shift and ensure that it brings real benefits to citizens in the form of greater financial inclusion.

USAID/Malawi Mission Director Doug Arbuckle noted in his remarks: “The U.S. Government is glad to join many other governments and international organizations in encouraging a transition away from cash to digital payments in Malawi.  This can be a long road, but the benefits are clear and overwhelming.”  

Mia Seppo, United Nations Resident Coordinator and United Nations Development Programme Resident Representative, added: “The introduction of digitisation is timely as Malawi is currently going through public service reforms that will ensure equitable access to financial and payment services in a manner that is transparent and efficient.” 

Malawi is a focus country of MM4P and member of the Better Than Cash Alliance.

Africa News

IoT’s answer for Africa

IoT and digitization enables us to efficiently, proactively and predictively address the sustainability challenges that are faced globally and on the African continent, RESHAAD SHA, CEO of Liquid Telecom.

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With Africa’s population set to increase from around 1.3-billion in 2018 to 1.7-billion in 2030, both challenges and opportunities are presented with regards managing issues including food production and security pose  as well the utilization of limited natural resources in a sustainable manner.

Water scarcity and quality for example are realities that negatively impact health, food production and security. Population growth rates and climatic changes place an exponential demand on this scarce and dwindling resource. These are just some of the sustainability challenges facing not just the African continent, but other developing nations and the world as a whole. In addition to this, the demand for the delivery of basic services as healthcare and sanitation also increases.

Against this background of African population growth lies the grim projection that Africa will account for more than 50% of child deaths (under 5) by 2030, while each day, nearly 1000 children die owing to preventable water and sanitation-related diarrheal diseases according to the UNICEF 2017 trends in child mortality report. It’s an alarming fact, given that while some 2.6-billion people have gained access to improved drinking water sources since 1990, 663-million people still do not have access.

The department of Water Affairs and Forestry estimate that the agricultural sector accounts for more than 50% of water use in South Africa and experience water losses of between 30 and 40 per cent. Further, the department states that around 35% of irrigation system losses, often nutrient enriched and containing herbicides, pesticides, and other pollutants, return to rivers. These are just some of the ways in which reactive, inefficient, and manually driven processes have limited us in responding in an impactful manner and timeously mitigating these risks

It is for these reasons and other socio economic and environmental concerns that the United Nations has established its Sustainable Development Goals strategy, addressing the global challenges we face, including those related to poverty, inequality, climate, and environmental degradation.

We need to look at smarter ways that leverage technology in order to addressing these challenges. The situation requires a radical response that delivers a proactive, predictive and data driven approach to addressing these issues with exponentially growing levels of speed and impact.

The IoT ecosystem, comprising of sensors, connectivity, data analytics and workflow automation platforms, and applications are at the core of acquiring, analyzing and harnessing the insights that can be integrated into agriculture, service delivery, health and resource management processer – IoT is at the core of a digitization

One such sector which has benefited immensely from technology is in agriculture pest control, with the implementation of AI and IoT by Spanish startup AgroPestAlert. The innovation makes use of “smart” traps that capture insects and analyse their wing beats to identify their species and even their sex. Placed throughout the fields, the traps communicate with the system to predict an imminent invasion. The system will send alerts to phones, tablets and computers and use an easy-to-understand visual tool to cue farmers instantly.

Around 200-million Africans use approximately 1-million manual pumps across the continent to manually access clean drinking water.  IoT applications have been utilised in assuring the delivery of water through manual these pumps, According to estimates, at least one-third of those pumps will break down at least once in its lifecycle, and up to 70% will break in the second year of operation. The impact of not having access to clean drinking water is dehydration or water borne pandemics.

In the Kenyan Region of Kyusoa, Oxford University began a proof of concept project in 2013, which made use of motion sensors) to capture the movements of the pumps’ handle which was transmitted and analysed in real time. A decision support system based on real data was  used to predict pump malfunctions, allowing for a better planning and shortening the time needed to repair broken pumps, or avoiding malfunctions altogether, directly improving the access to clean drinking water for the rural population.

Liquid Telecom realise that the future of sustainability lies in technology and innovations such as IoT. We provide high speed fiber connectivity to interconnect as well as access platforms to build IoT solutions, in addition to access to Microsoft Azure suite of platforms for analytics and algorithm driven based processing and execution. Our Pan African network enables collaboration and cross border innovation and learning, fast well as the capability to efficiently scale out these solutions on Africa’s Liquid Cloud.

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Africa News

Africa start-up ecosystem can drive blockchain

Through nurturing and technical support, Africa’s tech start-up ecosystem can be a major driver of Blockchain-based innovation says BEN ROBERTS, Liquid Telecom’s Group Chief Technology and Innovation Officer.

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African communities have always come-up with inventive solutions to local problems. Take Somalia as an example. The country is said to have one of the largest diaspora populations in the world. It has few commercial banks and relations with international creditors remain fro­zen due to debts incurred in the late 1980s. 

So its population uses Hawala; an infor­mal value transfer system based on the per­formance and honour of a large network of money brokers. For example, it would mean a Somali based in the US would give money to a local branch agent, where it is sent to a cen­tral country clearing house, then onto a clear­ing house based in another country (typically somewhere in the Middle East). From there it goes to a Somali agent, before the funds are finally collected by an individual in Somalia.

Much like blockchain, the Hawala system is built on trust – but that’s where any similarities end. In fact, cryptocurrencies – many of which are blockchain-powered – may eventually be­come a replacement for Hawala and other exist­ing forms of international remittances. Cryptocur­rencies can enable people to exchange currency online without any middleman – even banks. 

International remittance is one of many compelling use cases for blockchain. The technology’s ability to digitise trust makes it a unique fit for many African countries, par­ticularly those where processes and supply chains remain poorly designed and susceptible to corruption.

At Liquid Telecom, we’re excited about the potential for blockchain technology across the region. Along with other emerging tech­nologies, we recognise this as another major new digital opportunity for businesses that utilises our network infrastructure and servic­es. The rise of blockchain innovation will rely on the skills and talent of the region’s soft­ware developers, who themselves rely on a high-speed internet connection and access to cloud-based tools. Our fibre footprint – which will soon stretch all the way from Cape Town, South Africa, to Cairo, Egypt – is providing the foundations for digital innovation, while our partnership with Microsoft is enabling access to the cloud-based services and tools needed to create digital solutions for local problems.

Last year, with support from Microsoft, we set-up our Go Cloud initiative, which is helping to provide the region’s start-up communities with technical support, training and access to software. Using Azure Cloud, start-ups can cut development time and experiment easily with modular, preconfigured networks and infra­structure, enabling them to iterate and validate blockchain scenarios quickly by using built-in connections to Azure.

We’re starting to see the first crop of African start-ups experimenting with blockchain and cryptocurrencies. Take Rwandan start-up Up­lus, which is utilising blockchain to secure all transactions on its digital crowdfunding plat­form. The technology also allows the platform to take contributions from any country and covert it to the local currency.

A lot of existing applications in Africa tend to fall short when it comes to user experience, and blockchain could certainly help address some of these issues – be it by creating a new trusted way to make payments or verify user identification. During this early stage of block­chain experimentation and proof of concept, it will be crucial for start-ups and businesses to develop solutions that are relevant for Afri­can communities. Without that, the technology won’t gather momentum.

Regulation can nurture or constrict the tech­nology and will have a role to play in being a ‘make or break’ for blockchain. Living in Ken­ya, I’m proud to see how proactive the gov­ernment has been in seizing the blockchain opportunity. The creation by the President of a taskforce earlier this year dedicated to blockchain – led by the former permanent secretary for Ministry of Information and Com­munications, Dr. Bitange Ndemo (see page 7) – shows how committed the country is to being a leader in emerging technologies. As more African countries follow Kenya’s lead, blockchain should hopefully find itself reso­nating more powerfully with local businesses and consumers.

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