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New Trends in USAID ProcurementsThe transition towards e-Payments

April 9, 2013

What we will cover today

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1. Introductions

2. USAID’s Commitment to e-Payments

3. USAID Tanzania: Mission Perspective on e-Payments

4. Assessing viability of e-Payments

5. Practical Tips for Implementation

6. Q & A/Upcoming Events

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Agenda

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Introductions

Nandini Harihareswara Operations Director & Sr Partnerships Officer

Nya Kwai BoayueAcquisition and Assistance Specialist USAID/Tanzania

Hamilton McNuttProgram Manager, Payment Innovations

Anthony LattaTreasurer, Finance and Administration Svitlana Hall Operations Associate, Finance and Administration

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USAID’s Commitment to e-Payments

Why USAID Supports e-Payments

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Foster cost savings and improve aid efficiency

Increase transparency and reduce leakage and waste

Reduce security risks to program staff

Improve access to financial services for the poor and unbanked

Catalyze development of new and innovative financial products for the poor and unbanked

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USAID’s Commitment to e-Payments

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Encourage the transition to

electronic payments (including mobile money) in USAID

programs and operations where

appropriate

Direct funding and support to technical assistance programs and partnerships fostering the development of e-payments

E-payments incorporated into

project design, procurement language and

existing measurement

systems.

Development of a system to track the

usage of electronic payments

Tools and trainings to

assist partners in choosing payment platforms

USAID Procurement Executive’s Bulletin

• Evaluate e-payment alternatives, Include e-payments use in concept papers, applications & proposals, if appropriate

• Examples of operational costs that can use e-payments:(1) temporary staff salaries; (2) vendor payments; (3) travel per-diems.

• Examples of program costs that can use e-payments: (1) cash for work; (2) payments to trainers; (3) intra-value-chain payments; (4) grants to beneficiaries.

• Missions can elect to make use of e-payments an evaluation factor in solicitation documents.

USAID PROCUREMENT EXECUTIVE’S BULLETIN NO.

2012-05 (7/12/2012)

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The Philippines

ALL SOLICITATIONS FROM THE MISSION ENCOURAGE THE CONSIDERATION OF ALTERNATIVE PAYMENT METHODS

• Request for Proposal No. SOL‐492‐12‐000033, Facilitating Public Investment (12/8/12):

L.5 ADDITIONAL INSTRUCTIONS TO OFFERORS(6) Electronic PaymentsUSAID encourages the Contractor to consider alternative methods of payment, especially electronic forms of payment, in place of cash payments when appropriate.

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Afghanistan

THE AFGHAN MISSION IS PROMOTING THE USE OF E-PAYMENTS IN PROCUREMENTS• Request for Proposal No. SOL-306-13-00002, Regional Agricultural Development

Program – South (#2) (1/22/13): This RFP includes

the use of electronic payments in the Statement of Objectives

the ability to address and implement key areas of the Statement of Objectives in the Technical Evaluation Criteria.

USAID, through the Financial Access for Investing in the Development of Afghanistan (FAIDA) program and other programs, has encouraged the use of electronic payments, including mobile money . . . The contractor should utilize these services to the greatest extent feasible within its company policy to strengthen the efficiency and security of financial transactions at all stages of value chain activities.

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Haiti

THE MISSION IN HAITI REMAINS A LEADING ADVOCATE OF MOBILE MONEY

• Request for Proposal No. SOL-521-12-000021, Haiti Feed the Future Partnership: Northern Corridor (2/14/12):

C.6.3.3 SUB RESULT 3.3: INCREASED ACCESS TO FINANCIAL PRODUCTS…The Contractor shall also explore the possibility of utilizing mobile money technology for

conducting financial transactions (payments for purchases, cash transfers, payroll, credit disbursements, credit repayments, etc.). 

• USAID/Haiti included language requiring support of mobile money in a solicitation in 2011:

The implementer shall support the Haiti Mobile Money Initiative, where feasible, including the payment of staff, the purchase and sale of goods and services associated with program implementation. The Mission will determine the range of allowable cost mobile money services utilized by the contractor/grantee.

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USAID Tanzania: Mission Perspective on e-Payments

Tanzania’s Mobile Industry by the numbers

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46.6 million people

76% GSM coverage

23.4 million connections

50% mobile penetration

2012

Source: World Bank/GSMA 2011

Mobile Phones vs. Bank Penetration in Tanzania

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2004 2005 2006 2007 2008 2009 2010 20110

5000000

10000000

15000000

20000000

25000000

30000000

35000000

Mobile Telephone vs. Bank Penetration in Tanzania

Depositers with Commercial Banks Mobile Cellular Subscriptions

21.5 million

Tanzania: Bank Branches vs. Mobile Money Agents

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20120

2000

4000

6000

8000

10000

12000

14000

16000

18000

ATMsBank BranchesMobile Money Agents

17,000Interviews*

594*Work Bank

Source: World Bank 2010/TDY Interviews 2012

*Projected bank branch growth

* Estimation combines agents who serve more than one MNO

1608*Work Bank

Mobile Money Products Available in Tanzania?

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Areas Of Action

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Integrating language encouraging e-payments into

future solicitations

Integrating the use of e-payments in long term

development programs, (e.g., Feed the Future, Maternal

Health, Health Systems Strengthening, etc)

The Mission is focused on moving away from the use of cash for the following reasons: • Safety. Program staff holding large amounts of cash going to the field are at risk for

theft or other acts of violence.

• Transparency & Leakages. A high level of cash based payments in programs can lead to a higher level of leakages. E-payments provides a paper trail.

• Efficiency. By using e-payments, program staff can focus on programmatic work and Finance/Administrative staff can be more effective with the use of e-payments.

• Scale. Programs, if successful, can be scaled up quickly when using e-payments.

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Areas Of Interest

Operations and Finance

Capacity building activities

Agriculture and Health

Programs

Working with implementing partners to encourage use of e-payments in the payment of per diems, travel advances, and other payments made to program staff that normally occur in cash

Encouraging programs conducting intensive capacity building activities to assess and implement alternative payment methods for per diem and travel cost reimbursement disbursed to training attendees

Work with program technical teams to examine key payment streams within health or agricultural value chains that experience pain points with cash management

Current Program Integration

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Program Objectives Use of e-paymentsTanzania Staples Value Chain- NAFAKA (ACDI/VOCA)

Improve smallholder farmer productivity and profitability within the maize and rice value chains

Beginning to evaluate how to facilitate mobile payments between small holder farmers and agricultural input companies.

Community Health Workers-Pathfinder

Builds community health systems in 35 districts in Tanzania in order to support a range of health challenges from HIV/AIDs to family planning.

Uses M-Pesa to disburse monthly stipends to 3,500 community health workers throughout the country.

The following programs have already begun exploring ways to integrate mobile money into their programs and operations…

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Assessing Viability of e-Payments: Costing Utility Tool

Process for making an informed decision and the tools to help you get there

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1) Where is cash used in my program and my operations, and is it a problem? Available Resource: Cash Scoping Survey

2) Does the country I work in have appropriate electronic payment infrastructure and regulatory policy? Upcoming Resource: Country Wide e payment due diligence guidance

3) Assess provider capabilities and get a better understanding of products offered. Available Resource: e-Payment service provider due diligence guidance

4) Analyze the costs associated with cash management vs. a transition toward e-Payments Available Resource: Cashing Utility Analytical Tool

5) If you do find provider capabilities and clear benefits to your program, develop an implementation plan and implement the transition. Upcoming Resource: Standard operating procedure guidance

Costing Utility Tool Example

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Practical Tips for Implementation: Chemonics

Establish Internal and External Needs

• Accounting systems• Record keeping (audit trail) • Operation procedures

Internal

• Mobile Network Operator vs. Bank

• Selecting a provider • Access to payment system

External

MNOs vs. Banks

Country context

Mobile money vs. mobile wallet

Geographic distribution

Example from the field:

Philippines

Internal – Accounting system

• Ensure accounting system is ready

• Start small and with your staff

Internal – Audit trail

Internal – Operating procedure Mobile Money vs. Checks

Mobile request

Approval

Upload

Payment approval

Payment Release

Payment confirmation

Check request

Approval

Prepare check

Sign check

Release check payment

Copy check

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Questions and Answers

Upcoming Events

April 11 April 25 April 23 May 2

Ask the expert Twitter Session with USAID Mobile Solutions Division (11am-noon EST); Info: nandini@usaid.gov

CRS Webinar on their experiences with electronic voucher systems in Haiti (11am-noon); Info: fredrik.winsnes@nethope.org

NetHope/USAID Webinar on lessons from Tanzania and Uganda in electronic payments(8am EST); info: JChen@qedgroupllc.com

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Replay of the Trends in USAID Procurements for audiences in East Africa and South East Asia (8 am EST); info: hamilton.mcnutt@nethope.org