Published on September 21st, 2011 | by Arsalan Mir2
Mobile Money to Assist Flood Affectees – Potentials and Challenges
The floods due to heavy rains have made it again this year. According to an estimate 5.4 million people are affected by flooding in Sindh and Baluchistan, around 1 million homes are reported to be destroyed and more than 70% per cent of crops have been lost in the area. Worst hit is the Sindh province, where 22 out of 23 districts have been flooded, and 16 need particularly urgent assistance.
During the floods of 2010, we did a guest post which discussed how Mobile Money can play a role to assist flood affectees. An excerpt from the post discusses mobile money used in circumstances of natural disasters:
While mobile platforms have been used by aid agencies to distribute electronic vouchers redeemable for cash or food, such as the UN World Food Programme’s (WFP) pilot project for Iraqi refugees in Syria, mobile money is still relatively new in this field. Aid agencies are, however, coming to realize the cost effectiveness, speed, and resilience that mobile money payments can provide in emergency situations.
One such agency is Concern Worldwide. In response to the Kenyan post-election violence in 2008, Concern and its local partner the Catholic Diocese of Eldoret implemented a cash transfer pilot in the Kerio Valley (KVCTP). This programme sought to alleviate the food security problems that affected communities faced after the violence by piloting the use of Safaricom’s M-Pesa to distribute payments of affected households. Once beneficiaries (the matriarch of each household) received this electronic value, they could redeem it for cash with any M-Pesa agent and use it to buy the food they needed.
An evaluation of the KVCTP found that, subject to a few conditions, using mobile payments is preferential to food distribution when providing post-crisis support. The pilot highlighted that using the M-pesa system was faster (i.e. overcoming logistical challenges), safer, cheaper, and offered immediate relief to a wider reach of beneficiaries. An added advantage was that beneficiaries stimulated the local food market. The evaluation also found that the mobile phones distributed as part of the project helped to empower members of the community. Following this pilot, Concern is implementing a similar emergency cash transfer programme in Niger in partnership with ZAIN’s mobile money platform, ZAP.
Another example of use of Mobile Money in wake of natural disaster comes from post-quake Haiti where mobile phones became debit cards for making payments to retailers.
Going back to our earlier guest post let’s take a look at what challenges local Mobile Money venture Easypaisa comes across:
Given the size of Pakistan’s displaced population, her damaged infrastructure, the tenuous security situation, and perceived levels of corruption within the government, it is worth assessing the potential of monetary aid via mobile money.
A mobile money platform already exists in Pakistan—Telenor’s easypaisa, which offers the functionality to send money from one side of the country to another. Could aid agencies distribute monetary aid via easypaisa? When we caught up recently with the Telenor Pakistan team, they told us that the answer is yes, but noted a few key challenges:
- KYC requirements: a number of displaced families have lost all their belongings, including identification, so how do you make sure payments are getting to the right people?
- Distribution footprint: what happens when there is no local agent to serve affected communities?
- Liquidity: Unless retailers are willing to accept electronic value for payment of goods, customers will want to cash-out their payments, so how do you supply agents in affected areas with cash?
If these challenges are overcome, mobile money can come out to be both cost and time effective and can help play a role in the relief and rebuilding efforts in Pakistan.