M-PESA Project in Northern Kenya

Using M-PESA as a payment system for Cash for Work activities in pastoral areas of Kenya

Télécoms Sans Frontières (TSF)In partnership with Vétérinaires Sans Frontières Germany (VSF-G)

Context

• Project area with Safaricom network and MPESA agents:

Laisamis, North Horr, Lokichokkio

• Project area without Safaricom network:

Merille and Logologo.• Project area without M-

PESA agents: Songot, Loteteleit

Total number of CfW beneficiaries: 2150Beneficiaries paid through Mpesa: 1050.

Objectives

• Explore the use of the mobile phone payment system called M-PESA in pastoralist areas as an alternative to the use of traditional direct cash payment.

• Conduct Cash For Work activities and remunerate some beneficiaries through the M-PESA system.

Factors in deciding on Payment System

• What security and corruption risks will be faced? Does this risk change depending on the option chosen?

• How long will it take to establish disbursement arrangements?

• How cost-efficient are the various options? What is the total cost of getting the cash into the hands of the recipients (including, for example, staff requirements and vehicles)?

• How far will recipients have to travel to reach the disbursement point?

Implementation strategy

• Mpesa beneficiaries selection:- Market analysis- Cell phone ownership- Literate- Mpesa registered• Forming groups of 5 beneficiaries:- Give 1 SIM card to every beneficiary- Give 1 cell phone and 1 solar panel to each group- 1 person in charge of equipment• Select Community assistants among Mpesa

beneficiaries

Implementation strategy

• Training:- Register beneficiaries to Mpesa- Provide a user guide to each beneficiary- Explain the use of cell phones and solar panels- Explain the use of Mpesa

• Checking phone numbers: Frontline SMS• Training reinforcement

Challenges

• Weak or no Safaricom network• Number of Mpesa agents and

distance from them• ID card ownership• Low literacy rate• Technical issues: Lost SIM cards,

Problems with battery or connectors

Lessons learnt

• Preparation: - Mpesa corporate account:

ANTICIPATE- Procurement- Data entry• Coordination:- Headquarter/Field- Field• Communication:- With M-PESA agents- With beneficiaries

Beneficiaries reactions

• User guide: Their kids read it for them.• Easy‘Mpesa is easier because you receive the money and withdraw when you want.

With direct cash payment, you have to queue’ Eunice• Secrecy‘With Mpesa the payment is more secret. Somebody can ask me if I withdrew

the money and I can say ‘no’’ Lokoile‘If paid by cash, I have relatives coming to get their share of the money’ Ntorno• Safety‘It is safe because when you are paid by cash, people know it and can rob us’

James Boru• Savings‘With Mpesa, I can withdraw less money like 1000 or 2000 to use it directly and

save the rest’ Bernard• Distance‘I can send money to my children at school’ Saiti

Comparison Cash vs MPESA

Description (Activity) Direct Cash M-PESA

Documents Review4 Man Hrs x 2 People(Field) 4 Man Hrs x 2 People(Field)

2 Man Hrs at HQ 2 Man Hrs at HQ

Payment Logistics

Required- on Day of Payment Initial Start Up Costs:

Car Hire 1. Equipment

Fuel costs 2. Trainings & Modules

Security Officers x 4

VSFG Paying Officers x 4

Comparison Cash vs MPESA

DescriptionDescription DirectDirect M-PESAM-PESA

Accountability

Working within Illiterate societies

Working within Illiterate societies

•No proper signatures by beneficiaries

•Documentation is in place- at HQ

•Thumb printing –forensic experts

•Print-outs - Safaricom

•Travelling hours to and fro the Payment Points

•No Staff Travels to Locations

•Easy to track record of payments

Risks1. Security : 1. Security : •Beneficiaries- direct payments are public

•Beneficiaries- access payments at own convenient time

•Paying Officers- exposed •Paying Officers- not visible

2. Money passing through many hands

2. Payments done at a click of a computer Button

3.Money in transit- Prone to robbery

3. Movement with Bulky amounts of Cash addressed

Cash vs MPESA

Description Direct Cash M-PESA

Advantages

• Convenient for very remote areas

• A range of benefits to the Recipients

• Direct conduct with recipients

• Recipients can access benefits when they choose

• Speedy of delivery• Certainty that the registered beneficiary will receive the assistance• Increased opportunity to save money• Limited Risk of Fraud

• Recipients do not necessarily have to carry large amounts of cash

Cash vs MPESA

Description Direct Cash M-PESA

Disadvantages

• Time is needed to prepare cash packets and count the cash into individual envelopes

• Proof of identity is required

• Prone to creation of fictitious clients.

• Mobile Network coverage

• Requires direct distribution to each recipient

• High initial /start up costs

• Increased planning & Physical monitoring

• Time consuming at preparation phase

Conclusion

• Good alternative for the organization• Mpesa Pilot project welcomed by beneficiaries

and Mpesa agents.

• Gaps for Improvement:

- Quality of network and delays with Mpesa- Transport (for beneficiaries living in non-covered

areas)- Technical equipment