The AFRACA Executive Committee 2007/2008

Mission

“Improve rural finance environment through promotion of appropriate policy framework, support member institutions, provide sustainable quality financial services to the rural population through introduction of appropriate rural banking practices and innovative products”

SUB SAHARA AFRICA

Innovations in Products to meet

new challenges

New Challenges and opportunities

Technology – Mobile phones

- Internet

Climate Change – e are not to blame

- Can we embrace opportunities arising out of issues coming out of this situation

- Long term view

Innovations in Technology

• Mobile Phones – Growth • Internet and connectivity• Hand computers for collecting data

– What are we committed to as an institution– Can we look for tools to help us meet our

objectives in a sustainable manner

Domestic Transfers

M-PESA is electronic value [e-money]

backed by real money in a conventional

bank account

Users can

• buy e-money for cash

• send it to others by SMS instruction

• sell e-money in exchange for cash

M-PESA has the Trust Account with the

real money

M-PESA records to whom that money

belongs

How does M-PESA work ?

• Users can

• buy e-money for cash

• send it to others by SMS instruction

• sell e-money in exchange for cash

How does M-PESA work ?

•M-PESA is electronic value [e-money] backed by real

money in a conventional bank account

•M-PESA has the Trust Account with the real money

• M-PESA records to whom that money belongs

Future M-PESA Services

Sending Money Home is just the start Many other services are being developed

Bulk Payments B2C [e.g. salary, Pension,

Kwachua]

Utility payments

International Money Transfers

Merchant payments

Facilitating Microfinance and Banking

services

Social Payments

Per transaction range in KshsAgent Commission –Withdrawals

Agent Commission -Deposits

100 - 2,500 15 10

2,501-5,000 25 10

5,001 - 10,000 35 15

10,001 - 20,000 60 20

20,001 - 35,000 75 40

M-PESA Registration KShs 80 per registration

SIM SWAPS KShs 70 per transaction

Revenue Sources –Agent Commissions/Transfers

Organizations can use the service for collecting payments for:

Utilities, e.g. Power & Water accountsE-TicketingMembership subscriptionsInsurance premium etc

In future this will be expanded to facilitate in-store payments for merchants

Utility Proposition –Bill Payment

To Consumers

– Convenience

– Speed of service

– Affordability

– ‘Pay as you go’ model

– Availability

– Safety

To Businesses

– Access to potential customers

– Cost effective means of revenue collection / funds disbursement

– Additional income & ‘feet through the door’ as Agent

– Complements other services as Agent

Benefits of M-PESA

Benefits to institution• Incremental Sales (foot print)

• Improves “Brand”

• Good PR

• Member engagement

• Staff engagement

Climate Change

Some Products

Key Questions:• What are the main drivers & trends behind green financial

product/service development?

• What is the current & potential demand for green products/services?

• What green financial products/services are currently being offered around the world?

• What best practices & lessons learned can be identified?

• What are some key opportunities to consider in terms of the development & marketing of green financial products/services?

Awareness“As environmental understanding and awareness grows in Africa, so does the demand for products and services that advance environmentally sustainable lives, livelihoods, and communities.”BarclayBreathe Card (BarclayCard)

Fleet Loan (Bank of America)

Home Equity Loan (New Resource Bank)

Climate Change Mortgage (VanCity)

Green Building Replacement and Upgrade Coverage (California Fireman’s Fund)

Recent Polls and Market Research

75% of Americans acknowledge their own behavior can help reduce global warming

81% of Americans feel it is their responsibility to take action against this environmental challenge.

75% of the US public is willing to purchase solar panels, and 67% would consider buying a hybrid vehicle.

63% of Americans believe that the US is in as much danger from environmental hazards….as it is from terrorists

According to a recent poll by

Yale University:

The Business Case

Improved market share Increased profitsCustomer acquisition and loyaltyHigher employee satisfaction and retentionReputational benefits (improved brand

image)Positive media attentionEnvironmental awareness and benefits Improved license to operateStrengthened relationships and partnerships

with external stakeholders

Green Retail Product Areas RETAIL BANKING

Green Loans Lower interest rates than market level for loans to purchase cars with low GHG intensity and high fuel efficiency, to purchase energy efficient appliances or solar, biomass and other renewable installations at homes

Green Mortgages Lower interest rates than market level for mortgages to purchase new energy efficient homes, invest in retrofits and energy efficient appliances

Green Cards, Sales, Accounts Deposit accounts and debit/credit cards linked to donations to environmental NGOs by the bank. Carbon neutral credit/debit cards (i.e. emissions due to production of the card are offset or emissions linked to the purchases made by the client are offset).

Green Leasing Leasing of environmental and GHG abating technology

Green Insurance Insurance premium differentiation on the basis of environmentally relevant characteristics.

Microfinance/micro-credits Microfinance in developing countries of emission reduction technologies, practices or projects

Retail Banking: Lessons Learned

• True innovation is not simply the introduction of new niche green products for retail clients, but the integration of environmental incentives into mainstream offerings.

• A number of product designs can transcend eco-areas. For instance, a climate product can be tweaked to encourage water conservation or waste reduction.

• The most successful products over the long-term will ensure the delivery of real and verifiable environmental benefits.

Emerging Opportunities

Achieve high levels of financial performance?

Attract a particularly large number of customers?

Last over time, and is re-launched year after year?

Raise the environmental awareness among all stakeholders?

Receive positive attention from the media and ENGOs?

Prompt the introduction of other eco-products and services?

Improve brand recognition and corporate image among stakeholders?

Emerging Opportunities

• Sun - Use of our abundant sunshine for solar power in cookers,

• Wind – wind power in wind mills for irrigation and water transportation

• Land - Land for planting woodlots and carbon sewers

• Biodiversity – Bio gas, fuel etc• Other opportunities for new products

• Be Innovative

• Embrace Environmental Leadership

• Ensure Environmental Integrity

• Educate & Motivate Stakeholders

• Collaborate with Stakeholders

• Be Consistent

Take Home Messages

Mercy/Regarde/Thank you

AFRACA

End