This is a guest blog by Loretta Michaels, an independent consultant who has worked on mobile money implementations in Afghanistan and Haiti, among other places.   

A mobile money user in Afghanistan

As everyone who reads this blog knows, there’s been a great deal of excitement over the last few years regarding the potential for mobile money to solve a host of development problems. And as we’ve all learned over that same period of time, it’s not as easy as it looks, or at least as easy as Kenya made it look. Countries like Afghanistan, Iraq, Haiti, the Democratic Republic of the Congo, even the newly minted South Sudan are all experimenting with or thinking about mobile money implementations. In addition to the normal issues and challenges facing policymakers and service providers, post-conflict and post-disaster countries face additional problems that merely serve to exacerbate the overall challenges with mobile money.

Skilled resources are scarce commodities in a post-conflict region. Finding experienced staff that can implement and/or regulate mobile money services is hard enough in most places, but finding those people and convincing them to go live and work in high-risk locations is proving almost impossible for service providers, governments and donors alike. Recruitment and hiring can take many months, and even when good people are found, at high cost, many leave early, deeming the stress, danger and distance from family not worth the price. What usually results is a procession of short-term consultants (like me) coming in to dispense advice but not sticking around to help get it implemented, meaning things take twice as long to do and often achieve half as much. Introducing innovative mobile financial services in a country that is struggling to form a stable government can embroil a new market in larger coordination problems, especially when private enterprise and government services are both involved. Mobile money is a new area of regulation and may require coordination between different parts of government, which can be hard in markets where governments are newly formed or struggling to manage disaster recovery. In the absence of clear direction, you could end up with situations where regulators act hastily and unilaterally, which may lead to turf battles with other ministries. For example, in a couple of markets, the telecommunications ministry has demanded – and charged a fee for – a “letter of no objection” for a mobile operator to offer mobile money services. In others, the regulator will ask for a specific identification document for account opening when another part of the government is still struggling to even implement such identification. Haiti is a good example of this where many people either never had particular identification documents or they lost them in last year’s earthquake. Post-conflict countries are the focus of a lot of donor interest, which can be challenging because often the goals and time horizons of donors and countries don’t match. It’s easy for a recipient country to find itself in the middle of competing donor interests, either between different donors or even from different parts of a single donor government. An example of this would be the US government, where USAID is trying to promote the use of mobile money in post-conflict countries, and the US Treasury is understandably trying to ensure that nascent financial sectors put in place effective measures to combat money laundering and terrorist financing. Central bankers and providers can find themselves in the middle of a USG internal debate over what is the best mobile money policy. 

So how should stakeholders begin to move forward when developing a mobile money sector in a post-conflict region? First, policy objectives need to be clear and aligned, both in the recipient government and at the donor level. If a government says it supports mobile money, then it needs to back that up by, say, allowing mobile government payments (G2P) across all its various ministries, such as rural teachers’ salaries and welfare payments. In Afghanistan, for example, the Ministry of Interior has been paying some of its policemen with mobile money, but the Ministry of Finance is opposed to expanding the system to other government workers. And if donors feel strongly about promoting mobile money and G2P, then they should set an example and start paying their own field staff with the same system, as USAID says it will be doing.   

Second, donors need to ask what the recipient country wants to do and where it needs help; this sounds like a simplistically obvious statement, but it’s surprising how rarely it really happens in the world of aid. An all too common modus operandi is for a donor to decide what its own development priorities are first, then go looking for places to implement them, whether they’re wanted or not. A prime example of this in recent years is the attempt by some donors and vendors to call for a centralized solution or “interoperability” in a mobile money market that’s just starting. Top-down mandates just don’t have a very good track record for purposes of trying to promote “innovation.”

Finally, it’s critical that everyone involved communicate and have realistic expectations about how mobile money will evolve on the ground, and be willing to adjust expectations and approaches as needed. Flexibility and letting the market drive outcomes can be virtues at times in chaotic markets.

- Loretta Michaels

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