Kenya is moving towards emerging market status and the government’s focused strategy of creating an electronic payments economy is contributing to its growth. During a reception hosted by the Better Than Cash Alliance at the World Bank / IMF Spring Meetings, Better Than Cash Alliance Managing Director Dr. Ruth Goodwin-Groen asked Kenya’s Dr. Geoffrey Mwau, Economic Secretary, Ministry of Finance how they did it and what advice he would give to other governments.

Dr. Ruth Goodwin-Groen:  Dr. Mwau, what drove Kenya to deliberately move away from a cash-only economy and create a strategy to shift to an electronic payments economy?

Dr. Geoffrey Mwau:  Let me start by saying that when you look at all the benefits that can be realized for a government, economy, and citizens – particularly for women – any government would be prepared to do what it takes to move to electronic payments. In 2009, we began moving virtually all government payments from cash or cheques to electronic payments in regions that were accessible through the Central Bank electronic payment system. We also started making social transfers through mobile money systems. With the Integrated Financial Management Information System (IFMIS) now being rolled out across Kenya we will soon be in a position to integrate all electronic forms of payment throughout the country.  This has increased transparency and also saved the government money by increasing the efficiency with which we distribute payments. Even more importantly it has modernized our economic infrastructure and helped individuals and small businesses gain access to formal financial services.

Dr. Ruth Goodwin-Groen:  Which challenges did you expect and which challenges surprised you?

Dr. Geoffrey Mwau:  There are barriers and challenges to overcome to achieve these benefits and Kenya has been fortunate to have had leadership that is courageous and tenacious in addressing them.

We always expected opposition from people who benefited from the cash-only economy. Some individuals and even agencies profited from the non-transparent distribution of high volumes of cash. Electronic payment systems bring the full light of day to government operations by providing an electronic footprint. We knew there would be some who benefited from the status quo who would fight hard to challenge or delay the shift.

However, the challenge that was more surprising was the need to build trust among the population. It was so clear to us how recipients would benefit that it was, admittedly, a bit unexpected how much we had to invest in education and engagement. For example on January 24, 2009 the Permanent Secretary of the Ministry of Finance, Joseph Kinyua, publicly posted the Ministry of Finance’s Audit Findings on M-Pesa Money Transfer Services as a way to build trust and creditability in the banking sector and mobile accounts. This reassured the Kenyan people that these mobile accounts had the backing of the Government and that their money would not be stolen. This is just one example of the robust outreach to the public.

The close collaboration across the Ministry of Finance, Ministry of Information and the Central Bank enabled us to overcome these challenges. It was remarkable how each agency had leaders and senior officials who were able to work together and provide a united front against vested interests for the benefit of the people. Without this collaborative leadership, Kenya would not be where it is today.

Dr. Ruth Goodwin-Groen:  Dr. Mwau, you mentioned earlier the benefits to the government and economy of Kenya. What are the biggest benefits to the Kenyan people from the shift to electronic payments?

Dr. Geoffrey Mwau:  Using electronic accounts means that payments and transfers to recipients arrive on time, wherever they are, with a transparent electronic record of the payment. In the past, delays in cash payments could mean no food or necessitate a loan until the cash arrived, so this speed and reliability is a dramatic turnaround.  Electronic payment also eliminates the illegal practice of ‘facilitation’ fee demands by those who delivered the cash.

Additionally, recipients do not fear theft or loss. Even with a mobile phone account people feel safe because if the phone is stolen, their loaded SIM card is typically kept in a private place. Beyond being safe, the account is easily accessible for immediate use.

The longest-lasting benefit comes from the reduced transactions costs which allows us to reach millions of poor and vulnerable Kenyans—especially women—who were hitherto unbanked. This has contributed significantly to advancing financial inclusion. Just to illustrate this, a street vendor can borrow US$ 50 from a Micro Finance Institution (MFI) which might look very small to others, but she can buy merchandise, sell it and repay within a day or two. She doesn’t have to travel to get the loan or to repay and as a result repayments rates have been very high. More importantly, the MFIs can track the risk profile of each of borrower and thereby determine the amount and cost of future loans. The recipients now have a financial account. Instead of trying to save money under the mattress where it is in danger of discovery, fire or financial pressures, many more Kenyans can safely save and begin to build assets. This account is also open to others. Mothers with sick or injured children could quickly request a transfer to their account from a relative and more quickly access a clinic and save their child’s life. Many Kenyans in the United States of America get such requests from family at home and can transfer funds cheaply and immediately.

While these benefits are universal, they are particularly important for women in Kenya who typically are responsible for feeding and caring for children and are also vulnerable to theft, lack of privacy or control of their money.

Dr. Ruth Goodwin-Groen:  If you could share one piece of advice with other governments who are today where Kenya was in 2009 when it began this journey, what would it be?

Dr. Geoffrey Mwau:  This journey began way before 2009 when we started to undertake reforms to liberalize, and create a regulatory environment in the ICT sector that supported participation and innovation. Therefore, my first piece of advice is that countries should have the requisite policy and regulatory environment to enable competition and innovation.

Second, strong leadership is crucial. Kenya has been fortunate to have courageous champions who are committed to this vision and who understand how it will shape Kenya’s future. For example, the Minister for Information Mr. Mutai Kagwe and the Permanent Secretary Dr. Bitange Ndemo who in 2004 took very bold decisions that completely transformed the ICT landscape in the country.  Another example is the implementation of Integrated Financial Management Information System(IFMIS). Similarly, a focused Finance Minister and strong political leadership have seen the implementation of a fully-fledged IFMIS at the national level and it’s presently being rolled out to county governments. IFMIS will fully automate all public financial management systems in government helping us to eliminate waste of public resources. As a result, we will have more money for priority expenditures. Bottom line? Leadership matters.

Third, expanding upon leadership issues, I can’t stress enough the importance of joint leadership of multiple agencies. Cross-agency leadership ensured policy and regulation that was balanced among all interests. For example, the banking sector was worried that this might challenge their business so we had to reassure them that in the very near term, it would be good for their business. It turns out we were right, as there are now over a billion extra shillings in bank savings accounts thanks to mobile phone accounts.

Fourth, it is important that a government undertakes some key investments in the early stages when the private sector is not ready and/or not sure of the policy direction. This is what we did when we invested in the first fibre optic cable to increase the speed, reliability, and capacity of Kenya’s internet and telecommunications sector. This, together with the reforms that we had undertaken to liberalize and deregulate the sector resulted in a drastic reduction in the cost of internet and therefore, communication. (Today, it costs much less to call from Kenya to the USA than from the USA to Kenya for example. People call the USA as if they are calling someone next door!) This investment sent a clear signal that the Government was serious. Slowly, over time and as the sector matures, the Government will be able to divest from this venture and focus more on regulation and promoting innovation.

Of course, other governments might want to make the journey faster than we did. So, my final piece of advice for governments is that they join the Better Than Cash Alliance to benefit from the knowledge, sharing, and collaboration of multiple governments, companies, and the development community.

Dr. Ruth Goodwin-Groen:  What is the next stage in the ongoing digitization of Kenya’s financial system?

Dr. Geoffrey Mwau:  Right now, we are working with our development partners to create a single electronic platform through which all cash transfers can be managed in accordance with our National Social Protection Policy.  Initially we will be able to transfer about US$ 100 million through this platform and this will further increase the efficiency of the system and the benefits for recipients. We are also continuing to pursue a policy direction that is supporting innovation by the private sector because they really are the leaders in this endeavour. And we are increasing our leading role as a facilitative government on this topic, in part through our work with the Better Than Cash Alliance. There is still much to be done, but we are now at the stage where this has evolved from a calculated risk to a transformative success. So now the politics are easier and we can place more focus on the operations and investments.

Dr. Ruth Goodwin-Groen: Thank you Dr Mwau for these inspiring insights!

The World Bank and the Committee on Payment and Settlement Systems (CPSS) recently hosted the Third Meeting of the CPSS – World Bank Retail Payments Forum in Perugia, Italy. I was invited by Forum Co-Chair Massimo Cirasino, who is Head of Payments Systems Development Group at the World Bank and one of BTCA’s Senior Advisors. I was keen to speak about the Better Than Cash Alliance at this event because the Heads of Payments at Central Banks and the CPSS are critically important to the transition to electronic payments.

Nearly 100 central bank officials and private sector payments experts participated in the Forum, representing dozens of developed and emerging economies. I was impressed by this incredible interest from the world’s leading financial regulators in payments systems that particularly matter for emerging and developing economies.

The CPSS is one of the five global financial system standard-setting bodies (SSBs)¹ of greatest relevance to financial inclusion. Its objectives are to contribute to the strengthening of financial market infrastructure by promoting sound and efficient payment and settlement systems; and to monitor and analyze developments in domestic payment, settlement and clearing systems as well as in cross-border and multi-currency settlement schemes. In 2012 it issued a report on Innovation in Retail Payments and it is now working on Non-Banks in Retail Payments.

Keeping in close touch with standard setters and payments overseers is important for the Better Than Cash Alliance, because well-designed, proportionate regulation is essential to providing retail consumers access to appropriate, affordable, retail payment services. The G20’s Global Partnership for Financial Inclusion (GPFI) explained that “Together, the normative standards and advisory guidance of the SSBs have significant influence on how many poor households get access to what range and quality of formal financial services and at what cost.” ²

My three big takeaways from the Forum:

1. The explosion in retail payment systems will reduce costs for clients

As Edgar Dunn & Company and others explained, there has been an incredible proliferation in the payment choices available to consumers in both developed and emerging economies. Some of the new retail payments systems in emerging economies cited by Jason Lamb from the Bill & Melinda Gates Foundation include M-PESA, Finsphere, Lianlian Pay, Dwolla, and M-KOPA.

While many new kinds of payments are developing, Lamb presented cross-country research (soon to be released by the Gates Foundation) showing that digital channels consistently had the lowest transaction costs for consumers among the countries studied – and therefore offer the greatest potential for advancing financial inclusion. If you have a moment to read this presentation it is well worth it! This research further validates the Better Than Cash Alliance’s work to support the transition to electronic payments.

Even though the total value of retail payment transactions is small in a given country (even post-M-PESA Kenya), because the number of users is growing so fast in many markets, SSBs have recognized that retail payments may have greater systemic significance than traditionally thought, so they are paying greater attention.

2. The importance of peer-to-peer learning for overseers of payments systems  

The Forum also provided exciting opportunities for peer-to-peer learning, allowing those responsible for payments systems at Central Banks to share good practices for overseeing this rapid expansion in retail payment options. I saw a great example of this at the Forum when two leading central banks from emerging markets shared their experience on how to promote the safe and sound expansion of mobile money schemes. The experience of the Better Than Cash Alliance is that knowledge sharing among researchers, regulators, and practitioners is essential to integrating new innovations into the payments system.

3. The Better Than Cash Alliance goals are aligned with prudent payments system oversight

The most important takeaway from the Forum for me was the widespread agreement that promoting the shift from cash payments to electronic payments advances both the Alliance’s goal of expanding transparency and financial inclusion, and also the Central Bankers’ and CPSS’ goals of ensuring sound and efficient payment systems.

Massimo is often quoted saying that “payments are the plumbing of the financial system.” Households that are currently excluded from that “plumbing” have no option but to operate with cash and are vulnerable to higher costs (including facilitation payments) and risks. It became clear that the CPSS’ goal of expanding the availability of retail payment services means prudently supporting innovations in retail payments to “tapping and extending the plumbing.” I look forward to working with the World Bank and the CPSS Secretariat toward this goal.

Thank you to the WB and the CPSS Secretariat for including the Better Than Cash Alliance in this important Forum.

¹ There are five major SSBs with influence over financial inclusion globally: the Basel Committee on Banking Supervision (BCBS), the Committee on Payment and Settlement Systems (CPSS), the Financial Action Task Force (FATF), the International Association of Deposit Insurers (IADI), and the International Association of Insurance Supervisors (IAIS).

² “Global Standard-Setting Bodies and Financial Inclusion for the Poor—Toward Proportionate Standards and Guidance,” [PDF] The Consultative Group to Assist the Poor (CGAP), 2011 (A joint World Bank – CGAP team led by Tim Lyman authored this paper.)

By Matt Renaud, Chief Financial Officer, ACDI/VOCA

At ACDI/VOCA we see firsthand how technological innovations are revolutionizing approaches to global economic development. This is particularly true for electronic payments. Around 2.5 billion people around the world are “unbanked.” Without access to financial services, they can’t save for the future, build assets or get credit. For those who do have access, the services are often rudimentary and inefficient. Electronic payments open doors and create lasting benefits for this underserved population by providing access to robust, modern financial services.

And for us development practitioners, electronic payments are equally game-changing. They’re an instrument for financial inclusion that brings our products and services right into rural poor households. Beyond their efficacy for those we work with, electronic payments also make sense for our own organizational operations—they’re more transparent and efficient, and safer than cash.

The Better Than Cash Alliance understands this potential. We joined the Alliance to be part of the network of governments, development organizations and private sector companies spearheading the use of electronic payments to empower those in emerging economies. Institutionally, we’ve already made the decision to reduce dependence on cash. But some countries we work in have better platforms for electronic payments than others. Being a member of the Alliance will give us an opportunity to learn and to share knowledge with governments, organizations and the private sector to make the shift to electronic payments effective and efficient.

We’re exploring creative ways to use electronic payments to help the rural poor reach new markets. In Indonesia, for example, we’ve brought together a commercial bank, suppliers of inputs (e.g., seeds and fertilizer) and a large cocoa buyer to help smallholder cocoa farmers access high-quality inputs via bank loans through mobile money. The bank distributes a loan so that the farmer can buy inputs. At harvest, the farmer delivers cocoa to the buyer, and when accounts are reconciled, the profit above the initial loan amount is electronically transferred to the farmer’s mobile wallet account with the bank. If you’ve ever waited for hours in a series of lines in a small developing country bank just to make a withdrawal or complete another simple transaction, you know that the above scheme is an almost miraculous breakthrough.

The Better Than Cash Alliance will provide policy, technical and financial assistance to maximize the benefits of transitioning to electronic payments. This assistance will be valuable to members like us who are implementing electronic payments at all levels of our operations, within our projects or within the organizations, companies and even countries at large with which we deal. At ACDI/VOCA we commit to promoting awareness of and increasing the comfort level around electronic payments to bring this cost-effective and scalable tool to the rural poor. We’re excited to be part of an impressive movement working toward this aim.

At the World Economic Forum Annual Meeting in Davos, Switzerland, this morning, the Better Than Cash Alliance hosted a roundtable discussion with Juan Jiménez Mayor, Prime Minister, Republic of Peru; Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia; and Florencio B. Abad, Secretary of Budget and Management, Republic of the Philippines.

The room was full of over 65 thought leaders from the government, banking, information technology, NGO, agriculture and consumer industries discussing the exciting global movement to shift the world away from cash to electronic payments.

The rich roundtable discussion led by The Economist’s Economics Editor, Zanny Minton Beddoes, introduced powerful themes on the benefits of shifting to electronic payments including transparency, cost reduction and inclusion in the formal sector in addition to the challenges such as infrastructure, financial education and regulation.

“Electronic payments are a powerful tool in development,” said Prime Minister Mayor. Currently four million Peruvians receive government payments and the government has pledged that by 2016, one million people will be included in the formal sector through electronic payments and financial education.

Secretary Abad added that “digitization of government promotes transparency.” One reason the Philippine government has maintained over 70 percent approval rating is because people see the benefit of directly receiving salaries and other government payments electronically and see how it reduces corruption. In 2010, the Philippines government had 800,000 social protection clients and now has over 3.9 million clients all receiving payments electronically.

Insightful thoughts about the benefits and challenges of making this transition were also shared by Ertharin Cousin, Executive Director, United Nations World Food Programme; Neal Keny-Guyer, Chief Executive Officer, Mercy Corps; Yawar Shah, Chairman of the Board of Directors, SWIFT; Marc Bichler, Executive Secretary, UNCDF; Robert Annibale, Global Director of Microfinance, Citi; Bill Sheedy, Group President of the Americas, Visa Inc.; and many others.

In response to an audience question about the role of governments in accelerating the pace of change, Dr. Cárdenas said, “Sometimes governments get in the way,” and shared Colombia’s plan to reduce financial transaction taxes for 1.5 million people who now receive social protection payments electronically which increases transparency and efficiency and decreases corruption.

We know that partnerships are critical to our success. Together, with our founding organizations, the Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, UNCDF, USAID and Visa Inc., we are pleased to welcome even more partners to the Alliance that are dedicated to making this transition a reality.

Our newest partner is the government of Afghanistan who will join the governments of Colombia, Kenya, Peru and the Philippines, along with development organizations USAID, the United Nations Development Programme, the World Food Programme, Mercy Corps, CARE USA, Chemonics International and Concern Worldwide in a commitment to transition from cash to electronic payments. We hope many of our colleagues from the World Economic Forum will join us too.

Sharing the mission of the Better Than Cash Alliance with many of the attendees at the World Economic Forum has created even more momentum behind the movement to transition to electronic payments. With 2.5 billion adults—more than a third of the world’s population—excluded from the formal financial sector, we are determined to quickly move this transition forward making real progress in the year ahead.

Images from the event:

Over 65 thought leaders listened to a panel moderated by Zanny Minton Beddoes, Economics Editor from The Economist, to learn about the transition from cash to electronic payments.		Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia and Juan Jiménez Mayor, Prime Minister, Republic of Peru.
Florencio B. Abad, Secretary of Budget and Management, Republic of the Philippines, Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia and Juan Jiménez Mayor, Prime Minister, Republic of Peru speak about the transition from cash to electronic payments.		Ertharin Cousin, Executive Director, World Food Programme, Florencio B. Abad, Secretary of Budget and Management, Republic of the Philippines and Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia discuss the global movement by governments, the private sector and the development community to shift from cash to electronic payments.
Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia and Juan Jiménez Mayor, Prime Minister, Republic of Peru.

NEW YORK, November 27, 2012 — The Better Than Cash Alliance, founded by the Bill & Melinda Gates Foundation, Citi (NYSE: C), Ford Foundation, Omidyar Network, the U.N. Capital Development Fund (UNCDF), U.S. Agency for International Development (USAID), and Visa Inc. (NYSE: V), today named Ruth Goodwin-Groen as Managing Director. The Better Than Cash Alliance initiative, launched in late-September, aims to empower people and grow emerging economies by supporting the shift from cash to electronic payments.

“I have been a longtime advocate of the importance of inclusive financial systems for addressing poverty. It is a privilege to lead the Better Than Cash Alliance and work to catalyze change that will achieve greater transparency, efficiency and cost savings for governments, development organizations and companies and benefit those who are currently financially excluded,” said Ruth Goodwin-Groen, the new Managing Director of the Alliance.

Goodwin-Groen will lead the Better Than Cash Alliance efforts to accelerate the global shift from cash to electronic payments by calling on governments, private sector leaders, multilateral and bilateral donors, U.N. agencies and non-governmental organizations that are committed to a transformational shift from cash to electronic payments. In addition to the governments of Colombia, Kenya, Peru, and the Philippines, along with development organizations USAID, the United Nations Development Programme, the World Food Programme, Mercy Corps, CARE USA and Concern Worldwide, Goodwin-Groen will continue to encourage others to commit to digitize their disbursements and payments to people living in poverty and lead the effort to support their transition.

“Ms. Goodwin-Groen’s dynamic leadership and experience will help ensure the visionary mission of the Better Than Cash Alliance will come to fruition,” said Christine Roth, Deputy Executive Secretary of the U.N. Capital Development Fund, which serves as the secretariat for the Better Than Cash Alliance.

Goodwin-Groen is the former AusAID Adviser on Financial Services for the Poor and the Financial Inclusion Adviser to the Australian Co-Chair of the G20 Financial Inclusion Experts Group. Goodwin-Groen has 15 years’ of technical consulting experience in microfinance and financial inclusion in Eastern Europe, Africa, Asia and the Pacific. Clients have included the Consultative Group to Assist the Poor, the World Bank, the Soros Foundation, UK Department for International Development, FinMark Trust (South Africa), German Technical Cooperation, Women’s World Banking and Cambridge University. She is also a Board member of Microfinance Investment Support Facility for Afghanistan. Goodwin-Groen holds an MBA (Distinction) from Harvard Business School, a B.Sc. Hons I from the University of Western Australia and is a doctoral candidate at the University of Bath, writing a thesis on the Development of Inclusive Financial Markets.

About Better Than Cash Alliance
The Better Than Cash Alliance partners with governments, the development community and the private sector to empower people by shifting from cash to electronic payments. The Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, USAID, and Visa Inc. are the founders and the U.N. Capital Development Fund serves as the secretariat. To learn more, visit http://www.BetterThanCash.org and follow @BetterThan_Cash.

Around the world, 2.5 billion people lack access to formal finan­cial services. As a result, most poor households live almost entirely in a cash economy. Shifting to electronic distribution of social benefits, humanitarian aid or payroll can advance financial inclusion and help poor people build savings while achieving cost savings, efficiency and transparency.

The recent Better Than Cash Alliance launch event gathered together governments, the development community, and the private sector–all aligned around a common goal to shift the world from cash to electronic payments.

We took the opportunity to gather unique perspectives from global leaders tackling this important issue. The first set of perspectives come from members of the development community, including:

Mercy Corps CEO Neal Keny-Guyer

World Food Programme Executive Director Etharin Cousin

CARE CEO Dr. Helene Gayle

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]]> http://betterthancash.org/better-than-cash-alliance-perspectives-the-development-community/feed/ 0 http://betterthancash.org/better-than-cash-launch-event/?utm_source=rss&utm_medium=rss&utm_campaign=better-than-cash-launch-event http://betterthancash.org/better-than-cash-launch-event/#comments Tue, 02 Oct 2012 19:01:21 +0000 FH_admin http://betterthancash.org/?p=1180 On September 24, 2012 the Better Than Cash Alliance was launched at an event at the Ford Foundation in New York.

Watch the video from the event:

Program Agenda:

I.    Welcome by Luis Ubiñas, President, Ford Foundation

II.   Announcement of the Better Than Cash Alliance

• Rodger Voorhies, Director, Financial Services for the Poor, Global Development Program, Gates Foundation (on behalf of Alliance Founders)
• Christine Roth, Executive Secretary a.i., UN Capital Development Fund

III.  Announcement of Government Commitments

• Matt Bannick, Managing Partner, Omidyar Network
• Mariana Escobar, Department of Social Prosperity of the Government of Colombia (video)

IV.  The Journey for Governments: Shift Not Drift

• H.R.H. Princess Máxima of the Netherlands, United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development
• Carolina Trivelli, Minister, Development and Social Inclusion, Peru
• Florencio Abad, Budget Secretary, Department of Budget and Management, Philippines
• Dr. Geoffrey Mwau, Economic Secretary, Ministry of Finance, Kenya
• Moderated by Matthew Bishop, The Economist

V.   Announcement of Development Community Commitments

• Matt Bannick, Managing Partner, Omidyar Network
• Neal Keny-Guyer, CEO, Mercy Corps
• Ertharin Cousin, Executive Director, World Food Programme
• Recognition of Concern Worldwide commitment

VI.  The Global View: A Look at Multiple Markets

• Helen Clark, Administrator, UN Development Programme and Chair, UNDG
• Francesco Vanni d’Archirafi, CEO Transaction Services, Citi
• Dr. Helene Gayle, CEO, CARE
• Doug Michelman, Global Head of Corporate Relations, Visa Inc.
• Moderated by Rodger Voorhies, Director, Financial Services for the Poor, Global Development Program, Gates Foundation

VII. A Vision for Electronic Payments in Development

• Dr. Rajiv Shah, Administrator, USAID

Images from the event:

Christine Roth, Executive Secretary a.i., UN Capital Development Fund		The Journey for Governments: Shift Not Drift H.R.H. Princess Máxima of the Netherlands, United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development, Carolina Trivelli, Minister, Development and Social Inclusion, Peru, Florencio Abad, Budget Secretary, Department of Budget and Management, Philippines, Dr. Geoffrey Mwau, Economic Secretary, Ministry of Finance, Kenya, Moderated by Matthew Bishop, The Economist
Doug Michelman, Global Head of Corporate Relations, Visa Inc., Dr. Helene Gayle, CEO, CARE		Helen Clark, Administrator, UN Development Programme and Chair, UNDG, Francesco Vanni d’Archirafi, CEO Transaction Services, Citi
Dr. Rajiv Shah, Administrator, USAID		Better Than Cash Alliance demonstration bar
Rodger Voorhies, Director, Financial Services for the Poor, Global Development Program, Gates Foundation		Luis Ubinas, President, Ford Foundation

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]]> http://betterthancash.org/better-than-cash-launch-event/feed/ 0 http://betterthancash.org/citi-helps-launch-better-than-cash-alliance-accelerating-transition-to-e-payments/?utm_source=rss&utm_medium=rss&utm_campaign=citi-helps-launch-better-than-cash-alliance-accelerating-transition-to-e-payments http://betterthancash.org/citi-helps-launch-better-than-cash-alliance-accelerating-transition-to-e-payments/#comments Sat, 29 Sep 2012 00:16:06 +0000 FH_admin http://betterthancash.org/?p=1134 By: Bob Annibale

This week, Citi helped to launch the Better Than Cash Alliance, a coalition of public, private and NGO partners that will call on governments, the development community and the private sector to adopt the use of electronic payments for programs that support the underbanked — and provide resources to those who commit to make the transition.

According to a report commissioned by the Better Than Cash Alliance and released by specialist consultancy Bankable Frontier Associates, roughly 2.6 billion people live on less than $2 per day and 90 percent of them lack access to formal financial services, mainly operating in a cash-only economy that is vulnerable to theft, loss, lack of transparency, and inefficiencies.

Encouraging a global shift to electronic payments creates an opportunity for payees to move beyond cash, save for the future, build assets and move out of poverty – and the Better Than Cash Alliance knows that governments, the private sector and the development community can play a pivotal role in driving that transition. Instead of making billions of cash payments, including disbursements of salaries, payments to vendors, pensions, social welfare stipends, cash-for-work programs, and emergency relief payments, these large payers can tap into existing payment systems to move money electronically. In doing so, they not only will unlock access to financial services for millions of people, they will also realize increased cost savings, transparency, and security.

Already, the governments of Peru, Kenya, Colombia, and the Philippines, along with development organizations including the U.S. Agency for International Development (USAID), the United Nations Development Programme, the World Food Programme, Mercy Corps, CARE USA and Concern Worldwide, have committed to digitize their disbursements and payments to people living in poverty, thereby becoming eligible members for technical and financial support from the Better Than Cash Alliance.

Together with our other founding partners, including the U.N. Capital Development Fund, USAID, the Bill & Melinda Gates Foundation, the Ford Foundation, Omidyar Network, and Visa Inc., Citi is working to leverage its longtime global electronic payments leadership to move people into the financial mainstream and to create efficiencies for clients and customers. Follow our progress at betterthancash.org.

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]]> http://betterthancash.org/citi-helps-launch-better-than-cash-alliance-accelerating-transition-to-e-payments/feed/ 0 http://betterthancash.org/whats-better-than-cash/?utm_source=rss&utm_medium=rss&utm_campaign=whats-better-than-cash http://betterthancash.org/whats-better-than-cash/#comments Fri, 21 Sep 2012 17:44:23 +0000 FH_admin http://betterthancash.org/?p=1042 “We are excited to be joining our partners in announcing the Better than Cash Alliance today. Committed to moving the global community onto electronic payments in place of physical cash, the Alliance will help the world’s poorest families join the modern economy and realize the benefits of a more transparent, inclusive, cash-light world. I’m optimistic that this Alliance will help usher in a new era of opportunity for some of the most vulnerable people on earth.”

– USAID Administrator Raj Shah, September 19, 2012

 By: Priya Jaisinghani

As surprising as it may sound, physical cash can undercut many development objectives. From improving aid effectiveness to promoting transparency, cash gets in the way. That is why I am excited about the launch of the Better than Cash Alliance, a global public-private partnership dedicated to accelerating the use of electronic payments in place of physical cash. I am proud to have USAID stand alongside forward-thinking partners like the Bill & Melinda Gates Foundation, Citi, the Ford Foundation, Omidyar Network, Visa Inc., and the U.N Capital Development Fund to move the world toward a more transparent, efficient, inclusive, cash-light society.

This Alliance wouldn’t have been possible five or ten years ago.  But with the rapid rise of new technologies in the developing world, we can now leverage growing payment systems powered by electronic cards and mobile phones to reduce the presence of cash.

With electronic payments, people can store money safely and securely, a game-changer for the 2.5 billion people around the world without access to basic financial services.  With electronic payments, companies and governments alike can improve transparency in their operations.  You cannot track cash or see the hands it moves through, but it is possible to track how money flows when it is transferred electronically.

With electronic payments, organizations making payments or collecting fees can save money. Paying teachers their salaries or issuing social transfers is expensive. In some of the most distant areas of the world it requires couriers to lug big bags of cash around, and leakages are inevitable.  For example, a World Economic Forum says that developing country governments can realize more than a US$ 100 billion in economic benefits by 2015 by making major payment streams digital.

The benefits of electronic payments are widespread and underpin so many of our development objectives.  I’m not suggesting that it will be easy to realize a cash-light world. It won’t. Over the last year, USAID has worked tirelessly to use our payments and presence as a force for good by promoting the use of safe, accessible, affordable electronic payments systems in place of physical cash.

But we know that we cannot do it by ourselves.  This is a movement that should matter to all of us.  It should matter to any company or NGO trying to save money or protect their employees.  It should matter to any donor organization or government trying to improve the efficiency and effectiveness of development programs.  It should matter to anyone who cares about the plight of the poor.

This vision will take time.  But I’m excited about the steps we’ve taken and I wholeheartedly believe that we must do better than cash. We coined the term “Better Than Cash” because that’s actually what we believe – electronic payments, when introduced in a secure, equitable way, can offer enormous benefits for hundreds of millions of poor families trapped in a cash world.

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]]> http://betterthancash.org/whats-better-than-cash/feed/ 0 http://betterthancash.org/visa-joins-global-leaders-in-new-partnership/?utm_source=rss&utm_medium=rss&utm_campaign=visa-joins-global-leaders-in-new-partnership http://betterthancash.org/visa-joins-global-leaders-in-new-partnership/#comments Thu, 20 Sep 2012 18:54:31 +0000 FH_admin http://betterthancash.org/?p=1033 VISA JOINS GLOBAL LEADERS IN NEW PARTNERSHIP TO PROMOTE ELECTRONIC PAYMENTS AND IMPROVE LIVES

By: Doug Michelman

Today, Visa joins with six partners from government, the private sector and the international development community to launch the Better Than Cash Alliance. Working together with our other founding members – the United Nations Capital Development Fund, the U.S. Agency for International Development, Citi, the Bill & Melinda Gates Foundation, the Ford Foundation, and Omidyar Network – the Alliance will help bring many of the world’s 2.5 billion unbanked people into the financial mainstream by providing them with resources that are safer and more useful than physical cash.

Around the world, governments, the development community and the private sector are making billions of dollars in cash payments to the poor – in salaries, pensions, emergency relief, social aid and more. Making these payments in physical cash or in-kind goods costs poor people time and money and can be unsafe.

To begin with, people in developing countries often have to travel great distances just to collect cash payments. That can mean days away from work and their families and, worse, the risk of being robbed on the journey back. Delivering cash to poor recipients often involves several couriers – and if any of these intermediaries pocket part of the amount, cash is impossible to track.

For anyone without a bank account, cash also is hard to save. Shifting payments to electronic or mobile payments offers more security and convenience – and, more importantly, an onramp to financial inclusion by providing easier access to accounts they could use to save, get a loan or make payments of their own.[1]

At Visa, we are proud of the work we are doing already around the world to help governments enable the electronic delivery of social benefits and other disbursements. For example, in Mexico, Visa works with the government-owned Bank of National Savings and Financial Savings (Bansefi) to distribute social program benefits via Visa debit and prepaid cards to 6.5 million people, giving recipients opportunities to use financial services to save, budget and improve their lives.

In the Dominican Republic, Visa and the government teamed up to boost the national financial inclusion rate and address theft and delay issues of government benefits by distributing reloadable Visa Solidaridad cards. Today, more than 800,000 people in the Dominican Republic receive their aid via Visa card—which also helps provide customers for local merchants as those citizens use their cards to pay for food, fuel and medicines.

Through this innovative partnership, Visa and our partners in the Alliance aim to provide governments, the development community and the private sector with the inspiration, technical expertise and financial support to commit to making the transition to electronic payments and unleash new potential to reduce poverty and promote economic development.

Learn more by visiting the Better Than Cash Alliance website.

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[1] As referenced in “The Journey Toward ‘Cash Lite,’” a study by Bankable Frontier Associates and commissioned by the Better Than Cash Alliance.

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