Thoughts about Interoperability in Mobile Money

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Although I have worked and spoken to mobile money operators in many countries around the world, my last trip to Tanzania was the first time that I have heard one of these operators explicitly advocate for interoperability. In fact, he asked a room full of organizations to use their power as consumers to demand interoperability in mobile money in Tanzania.

In his argument, he implied that interoperability should happen at the mobile wallet level. In other words, that mobile money operators should agree to allow customers to send money from the mobile wallet account of one operator directly into the mobile wallet account of another operator, much as you can send a wire transfer directly from one bank account to another bank account. Currently in Tanzania, as is common in many countries dominated by the MNO-led model of mobile money, a customer can send money from their mobile wallet account to someone not registered with the same operator. However, this money is not sent to a mobile wallet, but it sent as a one-time use token, or a coupon, that can be redeemed in full at an agent location authorized by the sender’s mobile money operator. This is more analogous to a situation where I write you a check that you can only cash out at my bank, and that you cannot deposit directly into your own bank account.

The man mentioned previously was using the very broad term interoperability, as many people do in the mobile money industry, to describe this one specific type of interoperability, interconnecting at the mobile wallet level.

However, as the GSMA Mobile Money for the Unbanked Group has correctly pointed out, interoperability can happen at many different levels, and a more nuanced view of the term can help the industry in each country to find the optimal way to encourage interoperability to bring maximum benefit to both operators and customers. These levels include, but are not limited to:

  •  Individual Wallet – as described above
  •  Agent Network – the sharing of agents through non-exclusivity, as is the case in Tanzania (but not in other markets including Kenya)
  • Value-Added Services (VAS) – allowing 3rd-party, independent companies to build products that link to multiple operators at once.
A non-exclusive agent in Kenya.  Photo from nextbillion.net

A non-exclusive agent in Kenya. Photo from nextbillion.net

It is this last area that I think is most interesting and practical to discuss, especially at this point in time when mobile money operators are still, as the GSMA points out in the same report, young. I’ve argued for this before in Haiti, and I saw again in Tanzania how vital it is for services such as bulk payments. In order to pay people en masse for salaries, social welfare payments, bonuses, or any other type of payment, it is simply not practical to ask an organization to demand that all recipients use the same cell phone company to receive money. When they do, I’ve seen in countries from Afghanistan to Haiti that people simply replace their preferred SIM card with the SIM of the operator necessary to receive the transfer, at the specified time of transfer. When this is the [informal] solution, mobile money is no longer convenient to the consumer, and is not increasing the loyalty of that customer to the MNO (stickness), one of the main stated objectives of MNOs for promoting mobile money. It also increases the likeliness that the customer will not receive the transfer for multiple reasons: the SIM may have expired (if they haven’t used the voice functionality in a certain amount of time, as per the rules set by each MNO), they may not see the message if comes through at unpredictable time, or the token may expire before the person is able to redeem at an agent. These cause all sorts of operational issues for the sending organization, which could fill at least another blog post, so I will leave them to the reader’s imagination.

In Kenya, these problems have not presented as much of an issue because of the dominance of one MNO, Safaricom, in both the voice and mobile money markets. However, as other markets scale up mobile money services which have more competitive markets, MNOs are going to need to be much more open and creative about allowing 3rd parties to create VAS that link to all competitors, thereby promoting the entire ecosystem. Companies in Tanzania including Selcom and KopoKopo are already working with the MNOs to develop these types of services for bulk payments and merchant payments, respectively – which will require contractual and technical agreement. In fact, I would argue that this is the only way that these markets will successfully move beyond transfers and airtime purchases to more sophisticated products and services.

Could African Cities be Walkable?

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Jeff Speck recently published a fabulous new book entitled Walkable City: How Downtown Can Save America. I must put a disclaimer here that I have not, in fact, finished the book, but there are so many insights in the first few chapters that I couldn’t wait to write about the implications that these US-centered ideas can and should have on cities throughout the world. Couldn’t one write the same book on how necessary it is to build walkable cities in Lagos, Nairobi, or Port-au-Prince? I think anyone that has sat in the infamous traffic in any of these cities would agree with me when I say emphatically, yes.

lagos traffic

 

And we need to ask these questions now. As The Economist pointed out a few months ago, “Sometime in 2013, whether by a birth in the Makoko slum or a job-seeking migrant stepping off a minibus at the motor-park, Lagos will overtake Cairo to become Africa’s largest city.” And yet, even that article talks about the need for better public transportation, without mentioning the simulatenous need for cities to both have public transport and to be walkable.

Why walkable? As Speck describes in detail, walkable cities make people healthier, happier, more productive, and wealthier. Literally. Just a few examples:

  • Wealthier: Almost 85% of money spent on cars and gas leaves the local economy.
  • More Productive: In Europe, you can have 5 meetings in different locations. In Nairobi, 2? If you’re lucky? This leads to measurable differences in productivity when comparing Portland, Oregon (very walkable) to Atlanta, Georgia (a city where most people drive.)
  • Healthier: One study found in San Diego that 60% of residents in a low-walkable neighborhood and only 35% in a nearby walkable neighborhood. During the Olympics in Atlanta in 1996, hospitializations for asthma attacks actually went down, despite a temporary doubling of the population, because people decided to walk or take public transporation rather than drive (due to fear of traffic because of the crowds.)

In fact, he echoes many social scientists before him who have highlighted the evil impacts of suburbanization to an extent that makes you want to send policy makers from the 1950s onward to the International Criminal Court for crimes against humanity (ok, maybe that’s just me.) There are many examples of how policies have pushed suburbization over vibrant, walkable downtowns. One recent study, for example, shows how federal government support is skewed towards single-family homes, rather than multi-family developments (aka, apartment buildings that are prominent in condensed, urban areas. ) This is just one of many examples of active policy and financial support for sprawl from local, state, and federal governments for at least the past 60 years.

The good news? In the United States, the housing crisis has created an unprecedented opportunity for the market to shift, as people are ditching their big houses in the suburbs for small homes with shorter commutes – a trend highlighted by Brookings Fellow Christopher Leinberger. There is organic, bottom-up, market demand that is breaking through entrenched car and oil lobbies to finally encouraged real change to the way that we build cities in America. People now will pay a premium to live in walkable cities. As evidence a home with a high score on the popular website Walk Score can sell for 5 to 10 percent more than a similar house with a lower score (Speck 26.)  So demand works both ways – yes, many people want to live in big house with yards, but many people will choose a option that allows them to drive less, if given the chance.

The question then becomes, is the demand present in Lagos and Nairobi? I don’t think we know. There is an inverse relationship between wealth and demand for cars: the poorest people in any city or country desire to own cars because they are status symbols, while the richest people in these same cities reach a point where hours of traffic lead them in the opposite direction, wanting to live in areas where they can walk or bike to work. Another way to put this, quoting the blog This Big City, is that poor citizens in African cities “walk despite the un-walkable urban environment, not because of it.”

So how do we build on the organic demand for walkable cities driven by the wealthy in each city, while still ensuring that the benefits of walkability are available to all segments of the population? A contributor the magazine Intelligent Life recently asked this question to one of the world’s leading architects, Simon Foster. While Foster has done very little work in Africa, he did note that development of Africa slums require ‘a very different approach to the design-profession response to wipe it clean and superimpose another order, which completely disregards the fact that, notwithstanding the horrific deprivation, there is an underlying social order and an organic response to needs.’ Well said.  We need a better understanding of how bottom-up demand and consumer preferences can drive the creation of healthy, vibrant, and movable downtowns across income levels.

There are certainly policies that can both avoid top-down vast urban improvement projects while avoiding the temptation to actually support urban sprawl, thereby creating the vehicular nightmare that is getting worse by the day in cities around the world, especially those in Africa. Many of these policies may simply be the lack of policies – letting cities develop organically through the efforts of innovators and entrepreneurs. In perhaps one of my favorite books ever, Arrival City, Doug Sanders describes some of these policies through a poetic worldwide tour of urban migration. For example, ensuring that ‘slums’ include multi-use buildings where new arrivals can easily set up a shop or small restaurant, rather than high-rise apartment buildings with strict zoning restrictions, is one way to support entrepreneurship and keep cities walkable and economically vibrant – even in areas labeled as slums.

There is so much more to write and I’m not even half through Walkable City. What do you think are specific policies that can improve African cities?

 

Reflections for a New Year: Keeping it Real

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In an early work experience in development, I spent 4 months at a civil society organization in Tanzania, Twaweza. The founder of Twaweza, Rakesh Rajani, has many years of experience in advocacy in Tanzania. He started this new organization in order to focus on what is dynamic at the citizen level, meaning those things that are part of the lived reality and not aid-driven. This term, lived reality, struck me as a brilliantly simple way to frame what we all know can so often be wrong with aid: it is rooted in the assumptions, goals, and reality of the donors and aid organizations, rather than those people we are trying to help.

I try to come back to this idea every so often as a way to check in on my own career: is my work still sitting within that lived reality? It is really driven by the every day needs of the people we work with?

When I was at Twaweza, Rakesh higlighted 4 aspects of life that tend to part of this lived reality in Tanzania and elsewhere, including media, such as radio, TV, newspapers, and mobile phones; religion; consumer good networks such as Coca-Cola and soap; and teachers, who exist in almost every community

.Lived Reality Blog

I was reflecting on this, because I honestly worry sometimes that the area of our industry that I focus on, mobile technology, has become overhyped, a “darling of the aid community” that is driven more by the desire to be sexy and innovative by the reality on the ground. I originally decided to focus on mobile technology because I thought it was empowering: putting the ability to communicate and to instantly receive information in the hand of every individual, no matter how geographically, socially, or economically marginalized…what could be more powerful than that? However, with donor-driven projects and goals of scale pushing mobiles for the sake of innovation, rather than empowerment, I started to wonder if technology-enabled development still fit into the lived reality (while never doubted that cell phone themselves definitely do.)

During my recent trip to Uganda with USAID, we interviewed many implementing partners about how they might use mobile money. Many of the Cheif of Party’s and Finance directors we spoke to about the possibility of using mobile payments to improve programmatic or operational goals were skeptical. One agricultural COP in particular said “sure, we’ll use it someday, but the farmers, and my staff, just aren’t ready for it.” In our following meeting, we met his 2 Ugandan project managers, who told us that, on the contrary, the staff and the farmers were already using mobile payments regularly in their work, since it is simply the cheapest and most convenient way to send money and to purchase goods from the capital.

This is indeed an ancedote but it’s one that reminds why we got excited about mobile technology in the first place: it just works for people.  It’s simple, fast, and cheap.  Our programs should make it more so, not less, and should focus on how people are already using mobile phones, not how we think they should.  It also reminds me that I can continue to this role of connecting aid agencies to tools and processes that people are already using in their every day lives.  I’d love to hear your stories about how you ensure that your work fits into the lived reality of the everyday lives of the people we hope to support.