Government of Indonesia, as part of its long term plan to digitise all G2P programs, transformed the existing in-kind food subsidy program, called Rastra or Beras Sejahtera, to a direct transfer of the subsidy amount to the bank account of the beneficiary. The initial rollout was started back in 2017 in 44 cities/regencies and expanded to 118 cities/regencies across multiple provinces/islands in Indonesia. The Ministry of Social Affairs of Indonesia (MoSA) intends to target a total of 15.6 million beneficiaries in 2019. MicroSave Consulting as per the request from MoSA, initiated a study to evaluate BPNT operations implementation. This evaluation is a follow up to the evaluation that MSC did for BPNT in 2017. Using a mixed method approach by interviewing 2,398 beneficiaries and 779 e-warongs/agents in 93 regencies/cities in Indonesia, the study reports key issues in the operations, feedback and satisfaction of the beneficiaries and e-warongs to the program implementation, including some policy recommendations to MoSA for future implementation.
In addition, the study also analyses the role of digitizing G2P programs on financial inclusion and key barriers for low income beneficiaries to enter the digital economy.
“I am going to stop. I did it with [supplier x], I told his representatives not to come here anymore. I work with my own money and I am free to stop whenever I want,” exclaims Mr. Mataba, a non-exclusive agent who operates in the Kongo Central region in the Democratic Republic of Congo (DRC). He started his business as an agent six years ago, first with Airtel Money and then with other electronic money operators.
Like others, Mr. Mataba had been motivated by the lure of commissions but over time, he saw profits decline. He continues, “If the providers improve their services, I will continue and ask my friends who are agents to continue too. Otherwise, we will stop and they will lose customers as happened with the transfer agencies “Ami fidèle” and others…”
Mr. Matamba knows that many people in his region work as agents, and has been concerned about their working conditions. He formed an agent association, and as president, he brings agents’ complaints to the attention of the suppliers’ representatives. Yet he believes that he has not yet been heard, and has decided to stop working with one supplier and is in the process of moving away from the others.
In the DRC, the digital financial service market has been booming. Mobile money operators mainly dominate it—although recently, financial institutions have started to develop their offers. One such institution is FINCA RDC, which was a pioneer in this field.
MicroSave Consulting (MSC) conducted a qualitative study in the Kinshasa, Central Kongo, Katanga, Kasaï, and Kivu regions. The team met stakeholders of the distribution chain from the five major suppliers, comprising division managers, sector managers, super-agents, and agents. MSC focused its research on understanding the behaviors, perceptions, and attitudes of agents, based on our MI4ID approach.
The study identified a wide range of agent profiles and approach models. Indeed, agents have a central role in the service distribution chain. Not only are agents the points of contact for customers, but they also represent a major expense for providers, costing 40 to 80% of the revenue generated by the activity. Providers must, therefore, approach the development and operation of agent networks with a clear strategy to ensure sufficiently rigorous operational control. It is paramount for a provider to build and maintain an optimal relationship with its agents.
Using MI4ID approach allows to map the agents journey from the awareness stage to the development of the business stage, in order to understand what are the enablers and barriers to their success. The agent journey represents the ideal stages through which an agent evolves to become a full-fledged ambassador for the providers supplier. The support provided at each stage by the provider creates and boosts the agent’s loyalty. Agent path modeling makes it possible to capture and communicate an agent’s experience during a particular action or event.
An analysis of agents’ careers in the DRC has revealed key lessons that providers can use to improve their commercial relationship with agents and make them more accountable. The final objective is to guarantee a good level of service quality and reliability to clients.
1. From becoming acquainted with the function of agents to the application
Building knowledge and understanding the agent’s profession
From one prospective agent to another, the experiences of obtaining the right information concerning the role of an agent are different depending on the contact person. Family and close acquaintances who are already in the business play an important role in attracting the interest of a potential agent. They have a prescriptive role and are critical to winning the potential agent’s trust, especially with regard to the services of electronic money operators: access to the profession is perceived to be easy. No minimum level of education is required and it is possible to start an agency business with low investment in terms of equipment and location, and with low working capital in the form of liquidity.
The result is a strong demand from prospective agents that suppliers cannot meet, and the development of a market for the sale of SIM cards. Providers would do well to pay attention to how information is communicated to prospective agents and the channels used, given that the experiences of agents in the field are highly varied.
The purpose: Integrating the agent’s role
To reassure hesitant prospective agents, it is important that the provider’s sales representatives meet the prospective agent to confirm that the candidate matches the required agent profile. A prospective agent may have an existing relationship with the provider either as a credit customer, that is, as an agent for financial institutions or as an airtime credit reseller. For such prospective agents, the opportunity of becoming an agent through a rigorous selection process gives them a sense of importance and is crucial in establishing a sound relationship.
Obviously, the main source of motivation for prospective agents is the commission earned, and this usually means obtaining a regular but not necessarily high income. For non-dedicated agents, the possibility of stimulating the growth of the main activity is an important factor. When potential agents receive better and more realistic information from providers, they can get a sense of the working conditions and benefits expected through this activity more accurately.
2. Registration and launch of activities
In DRC, agents who work for electronic money operators but lack the official documents have to complete the registration process through an information sheet, which simplifies the procedure for setting up an agent account. However, this information sheet does not explain the rights and duties of an agent. Agents are not informed or trained in detail about what is expected of them in terms of work, how to carry out this work, and what to do in case of difficulties. It is essential to establish the principles of a partnership relationship with the agents because this will inform the choices that will guide the agents’ behavior during the implementation of the activities.
A second problem that agents face stems from the shortage of a start-up kit in the form of transaction booklets and marketing material, which some agents experience. This fosters a sense of inequality between agents and a supposed lack of consideration on the part of the provider. As a result, agents incur additional expenses, and this increases their expectations about the profitability of the activities. Agents with potential may also lose interest in the activity or fail to comply with the rules.
The providers could improve the stock management policy to ensure proper distribution of marketing materials to agents. They could also improve the tools for monitoring those in charge of supporting new agents and thus ensure better management of agents from the very beginning.
Agents need training that goes beyond simply learning how to do transactions. Such training would help them understand the intricacies of their role and help them succeed in the business. Providers should support agents throughout their careers through initial and continuous training that is diversified according to the agents’ capacities and aspirations. For agents of electronic money issuers, obtaining the status of agent issuance of the agent SIM card, equipment, and activation should be systematically pegged to the successful completion of the initial training. By incorporating practical exercises into the training, the agent will be able to assimilate the tasks expected of them.
3. Business management and development
Agents face a number of obstacles that prevent them from developing their activities successfully. First, the value proposition faces a challenge from the agents’ dissatisfaction with the commissions earned. The frustrations of agents and the predominance of transactions at the counter result in additional fees to clients, a loss of interest in this activity, and diminished quality of customer service.
Secondly, the frequency of payments and delayed payments by agents erodes their confidence in the supplier. Difficulties in managing commission payments compound the inability to grow capital and lead to attrition. Lastly, a lack of incentives discourages agents from selling the services. The provider should propose an economic model and value proposition for the agent that reflects market dynamics. The rewards must be a clever mix of monetary and non-monetary incentives.
Furthermore, in terms of the management of operations, the agents have mixed perceptions about the quality of support they receive from providers. To avoid making mistakes, some agents in the DRC allow customers to write down the account number on the transaction book or on the mobile phone, which increases the risk of fraud. Then in case of an error, it takes a long time to deal with the complaint. Moreover, poorly trained agents who are not familiar with the support mechanisms have to bear the costs by reimbursing customers. Therefore, the providers should invest in more sophisticated interfaces to reduce agents’ margins of error and shorten the time required to process claims.
Another challenge is liquidity management. Agents lack the capacity or willingness to invest capital into their float, and liquidity supply mechanisms are insufficient. As a result, they use informal strategies to compensate for this shortfall. The agent is forced to keep clients waiting indefinitely for them to replenish the float. They cope by either refusing a type of transaction, by dividing a transaction between several agents, by transfer of money between agents, and by keeping the client’s money until sufficient funds are available. However, informal procurement strategies can create risks of fraud and breach of trust. To avoid the lack of liquidity, the provider must ensure a greater variety of supply distribution methods, such as fixed and mobile points, and set a satisfactory level of supply service.
Lastly, there is the problem of business development: the agent as a partner must contribute to customer development and needs support from the supplier to deal with customer complaints properly. The supplier needs to encourage agents to recruit prospective clients and manage customer relations. The management of an agent’s career seems to be an area that is lacking in the partnership relationship.
Although the Congolese agents interviewed planned to remain in the business for an indefinite period, some agents have the ambition to move up the distribution chain ladder but do not have a direct relationship with the suppliers and are neither informed nor supported to achieve their objectives. The provider should step up support to agents to foster motivation and success. In short, a study of the agents’ journeys in the DRC highlights not only the opportunities available but also the bottlenecks that curtail the agents’ progress towards success and ultimately encourage agent attrition.
For suppliers, the improvement of the relationship with agents hinges on the win-win principle, which is guided by an understanding of agents’ aspirations because the agent needs to feel included. To establish good relations, the provider must also define and implement a strategy on agent satisfaction management. This entails not only setting up a more tailor-made system of agent segmentation and management but also strengthening the quality of the network and systems to monitor communication with agents. These measures are necessary because agents are the pillar of customer relations. An investment, therefore, guarantees the growth of digital financial services.
Today’s blog focuses on liquidity management. It uses recent insights from MicroSave Consulting’s (MSC) field study of DFS agent networks in the Democratic Republic of Congo (DRC), which in turn stem from interviews with over 50 agents.
Our research in the DRC showed that a significant number of agents have been using informal rebalancing methods due to inadequate access to liquidity—both cash and electronic. This behavior poses risks to the client, agent, and DFS providers alike. Insufficient initial capital investment in DFS by the agent has been fueling the practice of informal rebalancing, complicated further by the dollarization of the economy. Moreover, a scarcity of rebalancing points due to the lack of financial infrastructure in the DRC has been compounding the practice.
Why is liquidity so important in the DFS business?
Liquidity refers to the adequate availability of cash and electronic value. A DFS agent requires both to serve customers effectively at their shop or counter. An agent’s lack of liquidity will cause them to turn away customers, which, in return, (a) causes dissatisfaction; (b) erodes trust in DFS; (c) limits the agents’ ability to earn commissions and be profitable; and (d) influences brand perception negatively.
Although liquidity management is a risky and costly part of the DFS business, providers and agents must prioritize it if they are to flourish. DFS industry practitioners agree that liquidity management is critical for success, and yet challenging to “get right”—particularly in areas that lack basic banking infrastructure, roads, and security. Such market characteristics are common across most of the DRC except for a handful of major cities, where the infrastructure remains basic. According to the research conducted by CGAP, the primary cost of the mobile money business for retail agents is liquidity management, which consumes 20-30% of the total expenses for this business line. Solving liquidity issues takes a conscious effort, as it will not resolve itself on its own.
Findings from agent interviews in DRC
1. MNO DFS agents are generally not investing enough capital in the DFS business, which affects both their profitability and sustainability.
MNOs in the DRC are not consistently imposing minimum initial capital requirements on agents when starting out in the DFS business. Agents reported starting their DFS business with as little as 10 USD. This is problematic, as an agent will not be capable of serving customers who wish to deposit or withdraw funds at their agent outlet. As such, neither the agent nor the provider will earn any commissions and would have to turn customers away, causing dissatisfaction.
In contrast, banks and MFIs in DRC impose a minimum capital requirement of 500 USD on their agents in accordance with Structure 29 issued by The Central Bank of Congo (BCC). As a result, they are better prepared to serve clients. However, the downside is that this large amount of starting capital represents a significant barrier to entry to this occupation.
“You have to have a lot of money in the account and [have it] all the time because it will strengthen the trust of the customers who know that there is always cash. [The] customer will even advertise by encouraging his entourage to return to the agent who has the capital permanently.” Agent in Kasaï
2. Liquidity capacity is diminished because agents must maintain electronic float and physical liquidity in both USD and CDF (Congolese francs)
Another complication plagues the DRC and other dollarized economies, namely Zimbabwe, Liberia, and Somaliland. It is the need for agents to manage liquidity in two currencies—US dollars and Congolese francs. Agents must stock both currencies based on customer demand, and risk losing out as exchange rates fluctuate.
DFS providers in the DRC require that each agent holds multiple currencies (USD and CDF) in digital accounts and in cash to offer DFS services. However, the setup of the digital accounts prohibits the direct exchange or transfer of e-float from one currency account to another. This presents a unique operational and rebalancing challenge for agents.
Conflicts of interest often arise between an agent and a customer when the transaction involves currency exchange. Each party wishes to see their preferred rate applied, yet ultimately the agent is generally compelled to accept the client’s preferred rate because they do not wish to lose the client or decline the transaction. This has been affecting agent profitability and customer experience and satisfaction negatively.
“The exchange rate USD to Congolese francs is unstable. The price at which dollars are sold and bought differs. Some customers expect high rates from us when we serve them. This impacts my profitability, but I am obliged to serve my clients.” —Agent in Kongo Central
3. Many agents admitted to using informal methods to manage cash or electronic liquidity to avoid turning away customers—some of their liquidity workarounds may lead to fraud issues.
The formal rebalancing channel for DFS agents in DRC is through “super agents”, who are known locally as “cash partners”. Agents must travel to a local bank, MFI branch, or MNO commercial outlet to rebalance the electronic float or obtain physical cash. Many agents reported difficulties or unwillingness to do so—given that there are only 0.14 bank branches per 1,000 km2 in the DRC. Moreover, due to security concerns, carrying large amounts of cash is risky.
For agents, rebalancing through the official channel is time-consuming and risky. It also proves costly for agents in terms of the opportunity cost of shutting up their shop to travel to a bank branch. It is unsurprising that agents have been turning to unofficial methods to manage their liquidity. These methods comprise borrowing money from fellow agents or trusted acquaintances in their proximity and holding on to a client’s physical cash but waiting until a later time to add the electronic value into the client’s account. While these informal methods may help an agent to avoid turning away customers in the short run, they certainly bear more risk—for the client, agent, and provider.
“If I am stuck, I call my friends who send me liquidity. [For] example, if a customer comes to make a deposit of 500.000 CDF and I do not have 500.000 CDF in electronic money, I call a friend who is an agent who sends me virtual currency to serve the customer, and I settle with him at the end of the day.” Agent in Kivu
Agents in urban areas of the DRC reported fewer problems with liquidity management due to the greater access to bank branches (or other rebalancing points). Yet, they still reported that this activity was time-consuming, costly, and sometimes dangerous for them. The e-money providers (Vodacom, Orange, and Airtel) have partnered with banks and other financial institutions. As a result, their agents are able to obtain physical or digital liquidity from bank branches throughout the country. The agency banking providers (Finca and Equity Bank) require their own branches in the various regions to help their agency bankers manage their liquidity.
What next for liquidity management practices in DRC?
There is certainly room for Congolese DFS providers to support their agents better to manage their liquidity. Indeed, many are already looking at implementing new, official procedures and methods. These include implementing master agent models or partnering with new types of “cash-rich” institutions, that is, not just the banks, which could also act as liquidity providers. It is evident that partnerships will be required if the accessibility and availability of rebalancing points are to be improved.
Liquidity management partnerships and innovations from across the globe
As the DFS industry over the world matures, we see providers implementing new and innovative methods to help their agents manage their liquidity effectively. In the following section, we take a quick look at some innovative liquidity management practices that involve partnerships between DFS provider and one or more external entities. These new liquidity management practices are listed in order of relevance to the DRC market, where smartphone penetration remains minimal, which means that more advanced app-based solutions are currently less relevant.
Identifying cash-rich businesses that can also act as liquidity providers
Alongside the banks that traditionally supply liquidity, finding businesses that can provide liquidity would increase the number and also possibly the proximity of official rebalancing points for agents.
Direct delivery of cash or e-money to the agent
Several DFS providers globally are now developing “float runners” systems. In some cases, the DFS provider offers this service directly, and in other cases, they have partnered with external entities. In Uganda, Airtel Money partnered with 53 float runner entities, known locally as “aggregators”, who buy float from a super-agent or the official liquidity provider and deliver it to individual Airtel Money agents. Airtel defines a specific territory for each of its aggregators. One of the float runner companies, Blacknight, covers about 800 agents in different regions—mainly rural areas.
Adding functionality to the agent account to facilitate dual currency management while ensuring commission structures encourage transactions of both currencies
The highly successful mobile money provider, Telecom Zaad, from Somaliland has been using a dual currency platform for some time. It recently also added currency conversion functionality to its wallet service, allowing customers to convert Somaliland shillings to US dollars quickly.
Credit advances for agents
Airtel Uganda, in partnership with JUMO, uses alternative credit scoring methods to provide a digital micro-credit product to its agents—Wewole. Similar initiatives have also found use in the Philippines and Fiji.
Using data analytics to help predict liquidity requirements
Poor access to liquidity—both cash and electronic—is one of the primary reasons behind the low activity of agents and customer dissatisfaction in DRC, and has been leading to a proliferation of informal, risky rebalancing methods. As a result, we call on the local DFS providers to look closely at how they can better support their agents to manage their liquidity effectively.
Trustworthy, sustainable partnership agreements will be key to improving liquidity management for agents in DRC. Some local DFS providers have already started focusing on methods 1 and 2 from the liquidity management practices. These providers have been building partnerships between banks, telecoms providers, microfinance institutions (MFIs), and other cash-rich organizations to help increase the number of formal rebalancing points for agents. They have also been looking at ways to mobilize cash liquidity so that agents themselves do not have to travel the distance to meet their rebalancing needs.
Last year was filled with a refreshed interest in agents, and starting 2019 with a look ahead to their future can inspire a vision for how to build them into an industry that advances financial inclusion while boosting businesses targeting the base of the pyramid (BoP). At the World Bank Spring 2018 meetings, H.M. Queen Maxima of Netherlands and the then President of the World Bank, Jim Yong Kim emphasized the importance of mobile money agents. Queen Maxima noted how a business case needs to work for every player in the value chain to deliver services, including agents. Dr. Kim observed that only trusted agents can provide augmented services to include oral-only, illiterate, or innumerate customers.
For those eager for a faster path toward diversified digital financial services that meet the practical needs of the unbanked, it is time we start looking at networks of agents as the center of solutions that can “unstick” the status quo, as highlighted in The Clear Blue Water on the Other Side of the Digital Divide.
This blog series outlines potential next steps towards an augmented future, which visionaries in the industry could explore through the support of Agent Network Management Companies (ANMC).
The posts will focus the case on:
The need to disrupt the conventional approaches or actors to speed up the progress;
The unique positioning and potential advantages that make ANMCs deserving of support;
Six ideas worthy of experimentation;
How different institutions could use ANMCs to complement their current operations.
Relatively sophisticated sales agents who are usually dedicated and are exclusive to one brand. These agents are responsible for selling products, onboarding customers, and conducting transactions of larger value;
Basic transactional agents, who are usually non-dedicated and non-exclusive. These agents are responsible for conducting typically smaller cash-in and cash-out (CICO) transactions.
Improving on the status quo
The 2017 Global Findex report revealed much to celebrate for financial inclusion, and undeniable strides towards the provision of DFS, indicating a promising future. Those of us with a passion for the power of DFS to deliver real value to the poor want to see the future sooner—and without the growing digital divide that we currently see emerging. We can surely improve on the current 24% (30-day active) usage rates, offer a broader array of products, and find creative ways to overcome gender disparities.
While each country’s digital journey is different, there are some common denominators that can stifle the primary drivers of the efforts of both telcos and banks to serve the mass market through digital platforms.
If we are ever going to offer more sophisticated digital financial products, we will need to respect the need for trust and the role of face-to-face interaction to build that trust, particularly in oral and rural communities. In order to achieve this, we will need to develop and deploy models that can increase the value-add by agents rather than minimize them and continue to see agents as a regrettable cost.
Dr. Kim highlights that agents are required to provide a range of services upon which all of mobile money depends. Yet liquidity management, marketing, customer service, complaint management, and agent assistance with transactions are rarely, if ever, factored into their formal compensation. Agent commissions should be seen as part of mobile money’s “cost of goods sold”, plus sales incentives. Agents are fundamental to any mobile money service rather than merely a channel cost to be squeezed out of existence. Despite smartphone sales growth (accompanied by data or not), in most countries, low-income customers will want and often need a trusted person to explain the nuances of aspired-to, sophisticated products, to promote the benefits, and to provide the after-sales service.
To reach the mass market, telcos and banks, with their greater power, customer base, and balance sheets were the obvious first choices to back. However, the same scale can also create hurdles for reaching the low-income market with products that are tailored to meet their needs. These challenges include legacy systems, competing priorities, product-focus over customer segmentation, and more alluring, affluent markets.
ANMCs are specialists in developing face-to-face, commission-based networks on behalf of brands through a focus on recruiting, training, equipping, and quality control or performance management. In contrast to telcos or banks, tackling change through ANMCs offers the following advantages:
A. A sole focuson agents and no need to compete with numerous internal alternatives that face larger corporations puts them in a better position to optimize agent performance. Boosting the value-add of frontline sales and basic transaction agents is a different business from the retail work of banks or MNOs. So it would help to have specialists build out this human resource-based business. To date, ANMCs have been sidelined in relation to other financial inclusion influencers, but it could, and indeed should play a bigger role.
B. The smaller size of ANMCs means that they have less entrenched business practices, which could make it easier to gain and hold their attention on creative approaches to optimizing their agent networks for both profitability and social impact (or value addition).
C. ANMCs are not weighed down by legacy systems. These make it harder for established industries to find new ways to track and boost agent performance or even report internally on agents’ sales volumes or customer satisfaction for more refined segmentation. So ANMCs could pioneer data-driven decision making, as shown in the example of Zoona.
It is our belief that proponents of financial inclusion need to also foster ANMCs with the same philanthropic or social-technical support that banks or telcos have received. Some options are highlighted in the next post.
Although some have been initially instrumental in the rapid build-up of networks (as Top Image did for M-PESA), ANMCs have not proliferated or realized their full potential, since telcos and banks typically persist with in-house agent management. Telcos and banks have so far seen opportunities to secure competitive advantage through owning and managing their agent networks. This will be eroded as markets move towards shared agents and agent-level interoperability. Thereafter telcos, if not banks, will likely begin to think more carefully about the potential economies of shared and third-party managed agent networks governed by key performance indicators. While telco agents have so far been raised up to offer predominantly a transactional, basic CICO service, bank agents have shown that you can start operations with sales agents, who offer a range of relatively complex financial services.
As markets shift and some telcos find themselves selling off assets, starving their mobile money investments, consolidating, or facing non-exclusivity of agents, they may seek stronger ANMCs. These third-party service providers could alleviate distractions from the core business and reduce the costs of running agent networks by offering shared services. Here we propose six paths that warrant experimentation in order to build an industry of ANMCs that are positioned to advance financial inclusion and profits for all.
To foster new, stronger, diversified, or shared agent networks, proponents of financial inclusion could support an “incubator” for:
ANMCs by catalyzing startups or bolstering smaller players;
Last-mile sales networks to augment their offerings as providers of a range of digital services;
DFS products by incorporating R&D specialists within the daily operations of an owned network;
Joint ventures through brokers that form and run shared agent networks;
ANMC associations to tackle shared problems and proliferate the increased value-add brought by their industry;
Franchise services company that spreads expertise and investments for ANMC owners to not have to learn the best practices on their own.
We will discuss these six approaches in our next blog.
The population of the DRC is extremely dispersed in a country with low levels of education, a history of financial shocks, conflict and poor infrastructure. A recent study has shown that, even excluding the population in deep rural areas, only 2.3 million (12%) of the adult population have a bank account [1] . Despite these challenges, the number of mobile money subscribers has increased significantly over the last decade, from 4.9 million in 2007 to 29.3 million in 2017, an average annual growth rate of 20 %, with a single subscriber penetration rate, which went from 8.2% to 35.5% over the same period [2]. This offers strong arguments for mobile money, given the potentially large user base for the country’s total population of about 77.2 million. Nearly 40% of people own a mobile phone [3] while only one in 100 000 has access to a bank or an ATM (ABM) [4] .
Payments and remittances are essential for individuals to manage risk and consume regularly. Agents play a central role in acquiring and managing clients, but they need to be properly trained and paid. With additional investments, made in a long-term perspective, and effective support of agents in carrying out their activities, better access to affordable and relevant financial services is likely to facilitate the growth of businesses and businesses. personal savings, which will help increase the income of the target population.
Twenty years ago, we were born in the heart of Africa in Uganda as the MicroSave project. The year was 1998. The microfinance industry at the time was focused almost exclusively on microcredit, and as the name suggests, MicroSave came into being to resolve this issue.
As a first step, we drew influences from Stuart Rutherford, as well as approaches developed in the Philippines. We conducted market research with the aim to understand opportunities and problems from the customers’ perspective. This marked the start of our signature “market-led approach” to consulting, and unmasked significant problems underlying the microcredit model then prevalent in Uganda—that we set about fixing.
Until the year 2000, MicroSave focused on demand-side market research in East and Southern Africa. We trained hundreds of people from across the globe in our Market Research for MicroFinance (MR4MF) approach—a precursor to what is now known as human-centered design. After the first mid-term review, our work evolved to include both demand- and supply-sides. We worked with industry leaders to develop toolkits and training content on 35 different aspects of managing MFIs and banks.
We worked with nearly 20 leading financial service providers in East and Southern Africa to refocus their business towards a customer-centric or “market-led” approach. We helped Equity Building Society grow from 109,000 customers in Kenya into Equity Bank. The bank was listed on the stock exchange and currently serves 12 million customers across East Africa. Building on our growing work on digital finance, we also sat on Equity’s steering committee and helped with the initial testing of M-Pesa.
In 2006, the next big spurt in our growth arrived when we brought our lessons and success from Africa to India. In the next two years, we had expanded to Sri Lanka, Bangladesh, the Philippines, Indonesia, and Nepal. We added country after country to our list. We widened the scope of our cutting-edge knowledge and advice to a diverse set of players. In the years to follow, we opened new sectors and services to include digital financial services, finance for energy, housing, water and sanitation, among others—all with a focus on low-income people.
From 2013, MicroSave started shaping digital inclusion, government to person (G2P) payments and social inclusion landscape in India. We started by preparing an approach to assess the readiness of districts for delivering G2P payments. This helped the government in prioritizing the launch of G2P programs. We worked on the rural employment guarantee program (MGNREGA), social pension programs, LPG subsidy, food subsidy, kerosene subsidy, fertilizer subsidy, among others.
Our work over the years benefits about 850 million people, with an annual subsidy outflow of about USD 71 billion. We also worked on the largest financial inclusion program in the world—PMJDY—and worked on the harmonization of the know-your-customer (KYC) process to enhance financial inclusion. Through this, we gained expertise in public policy design, digital identity, digital technologies, pilot testing of social programs, and KYC.
In 2016, we took these learnings to Indonesia. We helped in the pilot of a new cash-based subsidy program called Bantuan Pangan Non Tunai (BPNT). We are now assisting the expansion of this program. We have also been helping conduct a pilot to leverage the digital identity system (NIK) in Indonesia for e-KYC to enhance the pace of financial inclusion.
Today, we still pride ourselves on our authentic insights led by a thorough understanding of the socio-cultural and business contexts of our markets. However, we are no longer the niche research firm that started out many years ago in a small shared office in Uganda. We have grown into an organization that finds wide recognition in the international development community. The MicroSave name has come to represent the vast wealth of knowledge we have amassed on the lives of low-income people. Now it is time to pause, reflect on the journey across two decades, and step up our game, as a lot remains to be done.
The world of development that we inhabit has been in a state of constant change. MicroSave needs to be better prepared in this ever-changing environment. Our horizons have widened, and it is time we set our sights higher. There is a need for stronger and more consistent branding, especially when the teams are expanding across locations. It is time to relook at our identity. The new identity would leverage the time-tested MicroSave name, yet we must showcase our formidable expertise that we continue to garner in the development sector.
Enter MicroSave’s new avatar—MSC—or MicroSave Consulting. We explored a number of options but MSC was the natural choice, forging a deep connect with our staff. The MSC brand lets us retain our legacy while providing a wider canvas for us to connect with a more diverse base. We prefer to use the acronym form—MSC over MicroSave Consulting as it promises instant recall.
Our transformation into MSC kick-starts various other changes—our brand colors, design principles, and our language guidelines. The new color swatches reflect quality delivery, an empathetic mindset, creativity, and a deep desire to realize our mission.
With these changes, MSC aims to reach multiple milestones. We would consolidate our identity as a young, multi-directional, multi-sectorial consulting company. We would like to take the concept of “market-led” to all aspects of the lives of low-income people. Our work now focuses on education, health, livelihoods, climate change, water, sanitation, energy, gender, youth, and refugees, among others.
The new identity reflects our emergence as an avant-garde consulting partner that offers divergent thinking, passion, diverse expertise, and insights from different cultures. As a result, we will reinforce our identity as “the world’s local expert in financial inclusion”. We seek your continued support as patrons and well-wishers. Join us, as we chart new directions in our journey as MSC!
MSC is a boutique consulting company that partners with participants in financial services ecosystems to achieve sustainable performance improvements and unlock enduring value. We have been at the center of the digital finance revolution since we supported the M-PESA pilot-tests and advised Equity Bank on strategy, products, agent networks and bulk payments. Today, we work with governments and leading banks, telcos, and third-party service providers across Asia and Africa.
At MSC, we offer strategic and operational advice that allows our partners to innovate and succeed in a rapidly evolving market. We help you gain a deep understanding of your clients, their needs, perception, aspirations, and behavior. With our support, you can seize the digital opportunity, address the mass market, and future-proof your company.
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Dr. Kim highlights that agents are required to provide a range of services upon which all of mobile money depends. Yet liquidity management, marketing, customer service, complaint management, and agent assistance with transactions are rarely, if ever, factored into their formal compensation. Agent commissions should be seen as part of mobile money’s “cost of goods sold”, plus sales incentives. Agents are fundamental to any mobile money service rather than merely a channel cost to be squeezed out of existence. Despite smartphone sales growth (accompanied by data or not), in most countries, low-income customers will want and often need a trusted person to explain the nuances of aspired-to, sophisticated products, to promote the benefits, and to provide the after-sales service.
It is our belief that proponents of financial inclusion need to also foster ANMCs with the same philanthropic or social-technical support that banks or telcos have received. Some options are highlighted in the next post.
