Africa Finance Forum Blog
Taking a look at women’s financial inclusion via mobile money – Barriers and drivers to the mobile money gender gap in Rwanda24.04.2017,
This post was originally posted on the GSMA website.
The widespread nature and affordability of mobile makes it the perfect vehicle to bridge the infrastructure gap that people in low- and middle-income countries often face. Mobile is also the gateway to life-enhancing services such as mobile money, which is undoubtedly contributing to increasing financial inclusion in emerging markets.
However, women tend to be consistently left out of the picture. Data from the Global Findex 2014 shows that women in low- and middle-income countries are 36 per cent less likely than men to access and use mobile money, which translates to 1.9 billion women worldwide. But this number masks greater imbalances at both the regional and country level. For instance, while in Sub-Saharan Africa the gender gap in mobile money ownership stands at 19.5 per cent, in Niger it is 60 per cent. In South Asia women are 67 per cent less likely than men to have a mobile money account.
How mobile money is contributing to financial inclusion in Rwanda
Rwanda is a dynamic mobile money market and the existence of a formal national ID system has contributed to financial inclusion via mobile money. To date, 37 per cent of Rwandan adults are considered financially included. 23 per cent of Rwandan adults or nearly two thirds of those who are financially included, have a mobile money account. 17 per cent of Rwandan adults are 90-day active mobile money users, at the same level of Ghana and not too far behind Uganda. In Rwanda, mobile money is catching up rapidly in spite of low literacy levels and handset ownership. This is impressive, especially if we consider that the first mobile money service in Rwanda was launched in 2010, while in Kenya and Ghana mobile money has been live since 2007 and 2008, respectively.
Source: FII data
In Rwanda, women are 20 per cent less likely than men to have a mobile money account. To better understand the origins of this gender gap, we decided to focus on the barriers that prevent women from accessing and using mobile money at the same rate as men. Also, in order to understand how the barriers affect different female mobile money users, we decided to assess what separates a regular female mobile money user (here defined as a user who has carried out at least one P2P/month on average over the last three months) from a power mobile money user (here defined as a user who has carried out at least one P2P/week on average over the last three months).
These insights allowed us to come up with some concrete suggestions on how to better reach women with mobile money in Rwanda. In order to do this, we conducted 40 semi-structured interviews and five focus group discussions, with women and men that are regular and power users of mobile money. Men and women were kept in separate groups to ensure that the opinions shared during the discussion were unbiased. All the interviewees lived in Kigali and were between 25-34 years of age, so the results may look different in rural areas.
Some barriers prevent women from accessing and using mobile money at the same rate as men
Our research showed that the women in the study tended to be more price sensitive than men to the fees associated with making a mobile money transaction. This can be partly explained by the fact that women often have a lower disposable income than men - as they were much more likely than men to do unpaid housework, they had lower income levels. Also, when women worked outside of the house, they were more likely to be employed in jobs that earn lower wages.
While men were more likely to value the convenience offered by the service over the fees, the opposite was true for women. Women therefore tended to find ways to avoid what they felt were unnecessary charges. Also, women were more likely to send mobile money more frequently and in lower amounts than men, leaving them more exposed to transaction fees. This pattern may be explained by women's lower levels of disposable income compared to men, as mentioned earlier on.
Lower confidence and understanding
Women in the study were much less confident than their male counterparts in their ability to make a mobile money transaction. There was a widespread perception, both among men and women that finance and technology are not traditionally female domains leading to the perception that women are less knowledgeable and less confident in these areas. Also, women were less mobile than men, meaning that they were less likely to be exposed to people who transact regularly and to opportunities to learn how to use the service, which fuelled the perceived sense, of both men and women, of lower understanding.
Low levels of trust
Lower levels of understanding of how the mobile money service works, make women less likely to trust the service with their money. Also, women who reported having low trust in the service were likely to complain about negative customer service experiences, or of the negative customer service experienced by others. Finally, more so than men, women preferred to use the bank for larger amounts of money, as banks were perceived to be safer than mobile money. As such, women seemed to be more likely than men to store money on their mobile money account up to a certain amount, at which point they would withdraw the money and deposit it into a bank, deemed more trustworthy with larger sums than mobile money.
In the next blog, I'll explore the reasons why women like using mobile money, and I will compare regular and power users of mobile money, to understand how the barriers impact them differently.
About the Author
Elisa Minischetti is the GSMA Connected Women Insights Manager. Before joining the GSMA, Elisa worked as an intern at the social enterprise WomenCraft in Ngara, Tanzania, where she contributed as Grant Manager and Budget Analyst. Prior to that, Elisa worked for Europe Direct, Forli', Italy, as a European Trainer and covered roles at the Italian Consulate and at a shipping firm in Germany. Elisa holds a Master's Degree from the Johns Hopkins University's School of Advanced International Studies in International Economics and Conflict Management. This degree was a complement to her MA in International Security and Politics from University of Bologna and BA in Political Science and International Relations from University of Siena.
Financial development indicators (IMF, AfDB, World Bank and OECD) indicate that African financial systems are generally less developed compared to other regions of the world. It should be recalled that, in the aftermath of independence, most African countries inherited rudimentary financial systems. This state persisted until the 1990s in a number of countries. The savings rate remained very low despite the start of the growth period from the early 2000s.
According to the African Economic Outlook report (AfDB, OECD and UNDP, 2014), external financing flows to Africa were in the order of USD$ 200 billion in 2014, 4 times the level in 2002. They accounted for 9% of GDP compared with only 6% in 2000. However, aid still accounts for close to 50% of these flows for the 27 poorest countries. Notably in all Sub-Saharan countries, the ratio of taxes collected as a percentage of GDP increased from 18% in 2000-2002 to 21% in 2011-2013, the increase mainly driven by commodity-exporting countries. This amount corresponds to about 50% of official development assistance in 2013 (Africa Progress Panel, 2013). The mobilization of domestic revenues through tax collection remains insufficient, as a result most African states are still dependent on the international donor community to finance country budgets.
There is evidence that development aid resources are used more to finance consumption needs and other types of spending that do not necessarily stimulate investment. More recently, Ndikumana et al. (2015) indicated that only domestic resources (savings and credit to the private sector) and, to a small extent, foreign direct investment, have a significant effect on domestic investment and economic growth in Africa. This is a major achievement that should appeal to the continent's policy makers. It is in line with the very abundant economic literature, which shows that domestic savings are the real driving force of investment.
In addition, historical evidence shows that countries that have modernized their financial systems have seen their economies grow faster while attracting foreign direct investment - Venice (as early as the Middle Ages), the Netherlands and Great Britain in the 17th century), Japan, France and Germany (19th century), etc. For their part, the United States underwent a transformation of their economy thanks to the reforms initiated by Alexander Hamilton. This drove the modernization of the American financial system between 1789 and 1795. It brought the United States from a bankrupt country (after the American War of Independence), with an embryonic financial system, to a credible country that repaid its debts and which, as a result of these reforms, was endowed with a more efficient financial system. Thus, the United States had all the elements of a modern financial system before the nineteenth century. These conditions allowed the US economy to start a good growth process in real terms over a long period. Throughout each period, it appears that the development of a modern financial system precedes the acceleration of growth, followed by progressive economic development over a long period.
On the whole, African countries need to realize a Kondratieff, i.e a long cycle of economic growth mainly supported by phases of innovation. Consequently, they should primarily promote the deepening of their financial systems. Otherwise, the vagaries of nature and the international state of affairs will always dictate the financing of the continent's economic agenda.
In spite of a dominant informal sector, total insurance industry assets are estimated at around US$ 300 billion, over US$ 400 billion for pension funds, over US$ 121 billion for Sovereign wealth funds, the asset management industry stands at US$ 634 billion, and so on. These figures certainly make people dizzy, but remember that enormous disparities exist between countries. Southern Africa, North Africa and Nigeria are the main financial reservoirs of the continent. It is therefore urgent to pursue the integration / economic and financial cooperation agenda. Progress margins are enormous for other countries in view of the low level of financial inclusion.
Domestic savings are the most reliable source of financing to support the investments needed to transform economies over the long term. As a result, deepening of local financial systems is crucial for economic development. This requires commitment and innovation.
The Financer l'Afrique: Densifier les systèmes financiers locaux book highlights that contrary to what is usually stated, Africa has, on the whole, the financial resources necessary to finance its economic transformation agenda. The continent is a net creditor vis-à-vis the rest of the world.
It provides a detailed analysis of the main actors of long-term domestic investors in Africa, the amount of resources currently available and most importantly recent reforms and policies to be implemented to increase institutional demand in Africa. As an economy develops, it is only natural that savings accumulate in various financial institutions, such as banks, insurance companies, pension funds, etc. The book draws attention to different approaches to deepening domestic financial systems and optimizing the use of local savings to stimulate the pre-conditions for sustainable endogenous growth.
This post was originally posted on the Alliance for Financial Inclusion (AFI) website.
In Tanzania, access to financial services for the unbanked expanded drastically when convenient and relatively cheaper options became available to receive and send money through simple feature mobile phones.
Four mobile network providers were in stiff competition in a market of 39 million registered mobile wallets (this registered wallet number does not include multiple wallet holders nor some of the dormant wallets from providers that did not exclude them after recycling their mobile numbers), 13 million of which were active ("active wallets" refers to the use of a mobile money account at least once in 90 days. This is the total number of all active accounts in the referenced month). This was in October 2014, when three of the four mobile money providers signed on to interoperability and made Tanzania the first country to successfully develop and implement standard business rules for interoperability (Source IFC: Achieving Interoperability in Mobile Financial Services: Tanzania Case Study).
By February 2016, the fourth provider had signed on and Tanzania was a global leader in the interoperability of digital financial services delivered by mobile network providers. How did this happen? This article highlights the key factors contributing to DFS interoperability in Tanzania.
Establishing an enabling environment
A regulatory environment nurturing competition and cooperation provided a foundation for dialogue and engagement around interoperability. The Bank of Tanzania, the country's central bank, played a monitoring role, ensuring that DFS providers offered services in compliance with risk mitigation frameworks (guidelines were issued that emphasized the use of international standards) that supported the dual objectives of financial stability and financial inclusion. This led to policies advocating for non-exclusivity in the use of mobile money agents and ultimately to agent interoperability. However, as the market continued to grow and mature, some market players demanded interoperability to kickstart client uptake, which had not seen rapid growth. Comprehensive interoperability was a clear need.
The Bank had to assume a leadership role in the push for sustainable interoperability. It opted for a market-based approach to interoperability, which was backed by evidence, and began to coordinate the process. It approved a neutral market facilitator, the International Finance Company (IFC) and the Financial Sector Deepening Trust (FSDT) of Tanzania, to facilitate engagement with DFS providers and reach agreement on an interoperable solution.
A market approach works
The IFC facilitated the industry-led interoperability project, with financial support from The Bill & Melinda Gates Foundation and the FSDT. This involved coordinating industry meetings to develop and reach consensus among mobile money providers on business rules and commercial agreements for interoperability and submit them to the Bank of Tanzania for consideration. This exercise began in September 2013 and, after several meetings in which participants reached a greater understanding of the regulatory framework, market demand, payment systems and rule development, consensus was reached. A year later, in September 2014, two of the four mobile network operators (MNOs) signed off on the wallet-to-wallet operating rules, which led to technical arrangements to initiate interoperability. In December 2014, the third MNO came on board. It took another year for the fourth to sign on, and by February 2016, Tanzania was one of the first markets in the world to have full interoperability of mobile money services (Figure 1).
Figure 1: Key Milestones for Mobile Money Interoperability in Tanzania
Other markets could learn lessons from Tanzania's journey. It is worth noting that although Tanzania was well-suited to a market-based approach to interoperability, with its supportive central bank, conducive regulatory framework, and a sufficient level of market competition and maturity, two other factors played an important role: (i) the value proposition for the private sector was taken into account; and (ii) private and public sector dialogue was enhanced through the public policy lens of financial stability and financial inclusion. This helped the regulator balance its dual mandate and ensure financial inclusion initiatives do not compromise financial stability.
The next frontier
Tanzania's interoperability journey is still underway: the market is currently expanding the use case for interoperable services through merchant payments and extending interoperable services beyond MNOs to banks and other players. This will also involve improving the clearing and settlement process, shifting from bilateral arrangements to a multilateral process that includes a switching process. The Bank of Tanzania is continuing to play a monitoring role and provides guidance and direction on a process that is efficient and creates value not only for market players, but also for users and other stakeholders. In the end, this will ensure the best solutions are implemented and satisfy both private sector and public policy objectives-a task guided by the same principles that led to interoperability in the first place.
About the Author
Kennedy Komba is currently Head of Strategy and Member Relations of Alliance for Financial Inclusion. Prior to this new role which he assumed in April 2016, he was the Senior Advisor of the National Payment System in the Bank of Tanzania. He is an Accredited Fellow of Macro-economic and Financial Management Institute of Eastern and Southern Africa (MEFMI) and a Fellow of Fletcher Leadership School for Financial Inclusion of Turf University, USA. He has experiences in financial inclusion policy, strategies and regulatory frameworks. He was instrumental in leading the development of the Tanzania regulatory framework for the National Payment Systems including electronic money regulations. He also was involved in the development of the Tanzania National Financial Inclusion Framework.
This post was originally posted on the World Bank - People Move website.
Over 65 million persons were forcibly displaced worldwide due to conflict and persecution at the end of 2015. Many of them remain displaced for a long period of time. Personal transfers sent to refugees and Internally Displaced Persons (IDPs) can contribute to livelihoods in protracted situations and increase self-reliance. Existing evidence suggests that they can be an important source of income, sent from the diaspora in third countries or from families and friends left behind. They can also play an important role in helping set up economic activities in protracted situations. At the same time, refugees and IDPs also send remittances, to refugees and IDPs in other places or to family and friends back home during times of conflict and peace. As their main reason for moving was not economic, their remittance behavior and the challenges they face might differ from economic migrants and might change over time. Policy frameworks and regulations can limit or promote refugee and IDP access to remittances.
However, there is a lack of knowledge on remittances send to and from refugees and IDPs. Research has mainly explored remittances in the context of economic migration. A literature review conducted for the Global Knowledge Partnership on Migration and Development (KNOMAD) showed that there is almost no research on transfers sent and received by those internally displaced and the evidence on refugees is concentrated around a few country case studies. There is also a scarcity of quantitative research. A better understanding of remittances in forced displacement situations can help policy makers design policies and regulations to maximize their positive impacts and minimize the risks.
A KNOMAD workshop brought together leading researchers and practitioners in this field to define key research gaps from a policy perspective, identify solutions for methodological challenges and develop ideas how to improve the evidence base.
Among the key issues identified was understanding the regulatory environment and its impacts on the number of formal remittance service providers available to refugees and the costs of using them. The regulations are, on the one hand, linked to the legal status of refugees (and might in some cases serve to deter them from coming and/or integrating into the host country). These regulations might or might not allow them to officially send remittances, open bank accounts, provide the required identification documents and travel to use the services of different remittance service providers. On the other hand, there are financial regulations that are linked to security concerns, notably the AML/CFT and KYC regulations, and how the private sector implements these regulations. The second priority identified was understanding the role of remittances in the livelihoods of the displaced and how this is influenced by policies in the host country (like the right to work or set up businesses).
Regarding the data sources, participants agreed that further research should focus on quantitative approaches but triangulate the results, and include research over time (longitudinal data). Besides conducting new surveys, existing data sources should be exploited. The literature review prepared for the workshop listed a number of further data sets that have information on transfers and allow to identify refugees or IDPs but have not been exploited by researchers yet (see annex 2 of the literature review). Participants also recommended including more questions on refugees and IDPs and their remittances in ongoing household surveys, to see if it is possible to oversample refugees and IDPs, and to exploit UNHCR registration data. Furthermore, data collected by Central Banks and remittance service providers should be accessed and used. Remittance price comparison websites also generate data that have not been analyzed yet, and could potentially generate even further data. The workshop also triggered further ideas on exploiting synergies with humanitarians working on the establishment of cross-border cash transfers.
About the Author
Kirsten Schuettler is a Senior Program Officer at the World Bank's Development Economics - Global Indicators Group. In the Migration & Remittances team her responsibilities include monitoring remittances flows to the MENA region and contributing to the implementation of the Global Knowledge Partnership on Migration and Development (KNOMAD).
110 million people currently live in the WAEMU region; over the next twenty years, an additional 100 million more will be born. Most of them will be urban dwellers, as the area is experiencing rapid urbanizing. This trend is aggravating an already large housing deficit, which mostly affects lower income groups in a context of widespread poverty (about 43 million live below the extreme poverty line). In Abidjan alone, 40,000 additional new households come to the city every year. Municipalities are struggling to keep up with population growth and rapid urbanization and as a result informal settlements and slums are growing.
So how can the growing housing deficit be addressed?
Making housing finance more affordable will enable a greater number of households to purchase a home. The latest data (2013) indicates low mortgage penetration with region-wide residential mortgage lending at just 15,000 new loans, despite a documented need for nearly 800,000 homes a year. WAEMU governments are acutely aware of the demand-supply challenges, and most have developed ambitious programs to build affordable housing; however, these are not enough to meet the existing demand and the quantum of public spending required is not sustainable. Instead, country and regional policies should leverage the resources of the financial sector to grow effective demand by increasing affordability via reductions in monthly required payments.
Fortunately, the WAEMU region presents some of the best conditions in sub-Saharan Africa to develop housing finance. The peg of the FCFA to the Euro has imported low inflation and favored macroeconomic stability creating an ideal environment for lengthening loan tenors. By contrast, rates in Nigeria, Kenya, Uganda and Ghana are double digits, reaching above 30% in Ghana.
Short loan tenors present one of the greatest constraints.
Currently, average mortgage interest rates are 7.5% with loan tenors of 7 to 8 years. If we consider the cheapest formal house priced of FCFA 7 to 11 Million (USD 11,300 to 17,800), a household needs a minimum annual income of USD 6500 to 10000 in order to afford it. When the loan tenor is lengthened to 15 years, the income required is lowered by 40%. Extending tenors with fixed rate loans has a much greater impact than lowering the rates themselves. We have estimated that by increasing tenors to 20 years, up to 1.5 million additional households will be able to afford the cheapest currently available houses on their local market.
So what can be done to lengthen tenors and increase affordability?
Five years ago, the WAEMU governments and the private sector acted by establishing the Caisse Regionale de Refinancement Hypothecaire (CRRH), a public-private regional liquidity facility that refinances banks' mortgages by borrowing in the domestic markets. Since 2012, it has issued six bonds, which helped provide ten year loans to banks to refinance their mortgage portfolio, thus allowing them to make customers' mortgages affordable by extending the tenor.
These efforts should be encouraged. The CRRH has so far only refinanced over 4000 loans, which is little compared to the needs. Longer term financing into the CRRH would allow it to refinance banks at longer maturities. At the same time, the CRRH should look at ways to refinance the large microfinance and cooperative networks which are in good standing and are interested in extending housing loans. Over 70% of WAEMU households work in the informal economy, are excluded from the banking sector and rely on microfinance networks for their financing needs. Supporting the CRRH with long term financing will enable banks and microfinance institutions to gain access to long term liquidity. The results will be directly captured by households who will have access to longer term loans and thus increase their home purchasing power.
Will this be enough?
The housing value chain in the WAEMU region presents many weak links that need to be addressed in order to promote a healthy housing market. Access to clean property titles remains a significant issue which continues to curtail both the supply and the demand side of the value chain. Though some countries have implemented reforms to improve their land systems (new Code Foncier in Benin in 2013, Reform Sheida in Niger in 2006, and digitization of the tilting agency in Cote d'Ivoire), these reforms have yet to pick up speed and be implemented at the regional level. The construction of affordable housing must also be supported as government programs have proved slow and mostly target public sector employees. Finally, rental housing should not be left behind as home ownership is not the only option to promote a better quality of life.
The affordable housing sector is in the process of being catalyzed. There is now a widespread awareness in all WAEMU countries that something must be done to address the urbanization and population growth. Steps are being actively taken to address the housing deficit across the region. We believe that through the supported development of CRRH, the dream of buying a home is at last within grasp.
About the Authors
Caroline Cerruti is a Senior Financial Sector Specialist in the Africa region of the World Bank. She works primarily on housing and infrastructure finance, financial sector restructuring issues, and financial inclusion. She has been involved in various financial sector assessments jointly with the IMF. Before joining the World Bank, Caroline worked for the French Treasury on trade and financial regulation issues, and for three years as a banker in the European Bank for Reconstruction and Development. Caroline was educated at the Institute of Political Science in Paris (Sciences-Po), the Ecole Nationale d'Administration (ENA) in Paris, and is a CFA Charterholder.
Olivia Caldwell is Project Manager at the Affordable Housing Institute (AHI) where she focuses on housing development and finance in Sub-Saharan Africa and Haiti. Before joining AHI, Olivia worked with CEMEX and Bayer's Inclusive Business Platform, where she helped develop energy efficient affordable housing and infrastructure projects in Latin America and South East Asia. Olivia holds an Executive MBA at the London School of Economics and an MA in Sustainable Development from the United Nations Mandated University as well as a BA in Anthropology from McGill University.