Technology for economic growth: How mobile money expands financial inclusion in Malawi

Through the Mobile Money Accelerator Program, FHI 360 is working to increase the use of mobile money and to expand financial inclusion among populations who lack adequate access to formal financial institutions. MMAP is funded by the U.S. Agency for International Development (USAID).

Technology for economic growth: How mobile money expands financial inclusion in Malawi

What is mobile money?

Mobile money is currency stored on your mobile phone. Typically, a customer will bring cash to a local agent who deposits the cash onto the customer’s phone in the form of mobile money. Agents are also able to withdraw money from a customer’s phone and provide cash. These agents, often local shopkeepers, are selected and trained by mobile network operators.

Why is mobile money important?

An overwhelming majority of Malawi’s population lives in rural areas, where agriculture is the source of income for more than 85 percent of the population, according to the Food and Agriculture Organization (FAO). A 2009 FinScope Demand Survey found that 55 percent of Malawians do not have access to any type of financial institution, and only 19 percent of the total population uses a formal bank. Because bank accounts are so rare, mobile money offers an accessible alternative for safely depositing, withdrawing, transferring and even saving money.

Why has mobile money been adopted so quickly in Malawi?

FHI 360’s Mobile Money Accelerator Program has been working to create an environment that is ready to receive and adopt mobile money systems. We provide financial literacy trainings that help increase understanding and acceptance of mobile money.

The Government of Malawi has shown its support by signing and participating in the Better Than Cash Alliance, which aims to transition government cash payments to electronic payments in an effort to increase transparency and expand financial inclusion across the country.

What do you see as the greatest challenge for mobile money in Malawi?

The biggest challenges are to ensure that the network of agents is in place and accessible and that agents have the cash on hand to meet the demand of customers.

What else is the Mobile Money Accelerator Program trying to achieve in Malawi?

Here is one example: We’ve heard countless stories about teachers who are forced to spend time and money travelling to the nearest bank to collect their salaries, only to learn that their salaries haven’t been received yet. The Mobile Money Accelerator Program is coordinating with the Government of Malawi to transition traditional cash salary payments to electronic payments. This alternative will help to reduce government salary backlog and ensure that an individual’s entire salary is available when he or she arrives at the bank to collect it.

What is unique about the Mobile Money Accelerator Program?

The program has established a Mobile Money Coordinating Group of competing telecom networks, banks, key government actors and funders (such as the World Bank, United Nations Capital Development Fund and USAID). These stakeholders collaborate to review laws and bills that impact mobile money and ensure that mobile systems are interoperable, which means that money can be transferred between users of different service providers. This was not always possible. This structure is being used as a model of success for mobile money deployments in other countries.

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