- $15.5 million in transaction value processed over our system (1,100% increase from 2009)
- 100,000 consumer money transfers
- 250,000 electronic voucher transactions across 30 districts with the World Food Programme, Food and Agriculture Organisation, and Conservation Farming Unit
- $1.7 million of Dunavant cotton farmer payments
- $500,000 in unbanked microfinance loan disbursements paid out through our agents
- $1.5 million in banked payments
- 9 Champion Agents successfully launched
- 272 active agents (up from 69 at the end of December 2009)
- Successful launch of our supplier payments product with two milling companies and a dozen retail agents
- Translation of our voucher system into Portuguese for roll-out with WFP Mozambique
Tuesday, December 21, 2010
Wednesday, December 15, 2010
Next Retail Limited made a donation of US$142,600 from the sale of its "Dare To Care" cotton range to the development/marketing costs associated with Mobile Transactions Zambia Limited (MTZL) in its Rural Community Individual Transaction Accounts and Payment Accounts in rural Zambia.
The overall objective of the project is as follows:
Small scale cotton farmers in Zambia improve their livelihoods using the Mobile Transactions Payment Services and MaKwacha Account Transaction services facilitated by Mobile Transaction Agents.
To this end, MTZL has been working with Dunavant Zambia Limited to provide improved payment and transaction services to their 70,000 outgrowing cotton farmers.
Dunavant’s outgrower management system was initially developed by MTZL and is currently in use as their core agricultural management system. Within one agricultural season, the Dunavant outgrower system moved from decentralised Microsoft Access databases at each of their nine agricultural offices to a centralised web based platform hosted within their Geneva head office.
Now, these agricultural offices and rural sheds (with laptops powered by solar charged car batteries that can connect to the internet via mobile GPRS modems) can capture real time data into a centralised system.
In 2009, MTZL and Dunavant began to develop a system that interfaces with the outgrower management system to pay farmers electronically. At the end of the 2009 buying season (September to December), a trial was done with payments made to Dunavant’s distributors.
During the 2010 buying season, an MTZL team was dedicated to developing a scalable implementation model in Katete to find ways to pay Dunavant’s farmers faster using this payment system.
This report summarizes the work that was done in 2010 and describes some of the highlights.
MTZL’s farmer payment system has one overall objective: To pay farmers faster. Dunavant’s current cotton buying process is a manual one and takes a great deal of time to turn around. This process was expedited when lap-tops that are connected to Dunavant’s central database were introduced in the field, allowing farmers to be paid in as little as three days. However, this is still far too long for most farmers to wait, for reasons that are described below. In a competitive season, farmers can be tempted to sell to other companies that offer on-the-spot payment.
Thus, Dunavant’s goal is to simply pay farmers faster. MTZL’s system offers two of doing this:
- MTZL built an online payment interface that can be accessed using a mobile phone and that allows Dunavant’s paymasters to pay farmers in less than one day. Since most farmers do not have phones themselves, this is an excellent payment option. And for Dunavant, it decreases the chance for fraud.
- MTZL also built a payment system that allows farmers with mobile phones to be paid into their MaKwacha Account the instant their Crop Receipt Voucher (CRV) is processed. Dunavant believes this is the future of farmer payment and that it benefits both the company and the farmer greatly.
These two payment options are contrasted to the current, manual process in the diagram below.
During the 2010 buying season, the MTZL team trained 6 sheds in Katete, 2 in Chipata, and an MTZL Agent in Monze to offer the online payment option. Trial payments were also made in all these locations. The system offers a drastically different way to pay farmers, thus a great deal of time and effort was spent on adapting the system for specific field realities and in communicating the change to Dunavant’s field staff. As the system is scaled up, this will remain an important part of the process.
In developing a model to implement this new system, we learned several things:
1. The process and system should be ready earlier in the year, as during the buying season (April to August), Dunavant staff and farmers are incredibly busy.
2. The field-based accountants require a great deal of technical support in adopting the new system thus resources should be allocated to this during scale-up.
3. The main lag in time is in collecting the CRV’s from the buyers and verifying them at the shed. During the 2010 season, many Shed Area Managers (SAMs) spent a great deal of time on this. Since they are responsible for other duties as well, it may be wise to develop an alternative method for collection.
4. The more competitive the area, the harder it is to adopt this system. People have less time to learn how to use a new system when there is cotton that needs to be bought and transported. In less competitive areas like Monze, the payment system was easy to use and staff were quick to learn. In either case, the earlier staff gets training, the better.
5. Farmers are understandably mistrustful of new companies and need time
to build trust with the system. They already have a great deal of trust with Dunavant, so it was important to make sure Dunavant was at the fore and that MTZL was seen as a partner and service provider. “Dunavant Pays Farmers Fast…Powered by Mobile Transactions.”
6. In future, as described in the diagram above, it would be best if Dunavant’s buyers are made into "MaKwacha Buyers" that can use phones to pre-process payments before the CRV's are verified.
The field team also trained and advertized to several hundred farmers and other people in Katete, Chipata, and Monze. MTZL’s overall presence in rural Zambia is quite low, making the overall knowledge and trust of MTZL small as well; however, our brand credibility is spreading by word of mouth. Many people are testing the system right now by buying talk time and depositing K100,000 (£14)into MaKwacha Accounts and withdrawing small amounts to make sure it works properly.
MTZL Agents connect the end users – the farmers – to the system we’ve described above. In developing an implementation model in Katete, we learned that there is a need for three kinds of Agents:
- The Champion Agent – the Champion Agent is a franchised operator of MTZL and offers all of MTZL’s products and services. By working directly with Dunavant, the champaion becomes a guaranteed point of service for Dunavant’s farmers and casual workers for withdrawing or depositing money from and to their MaKwacha Accounts.
- Sheds as Agents – Dunavant’s sheds are distributed deep in Zambia’s rural areas and can reach customers than no other Agent can. Therefore, the team trained the SAMs – who essentially manage the business – and stocks clerks at each shed in Katete and Chipata to act as MTZL Agents. Now, eight sheds are successfully operating as Agents, four in Katete region and four in Chipata region.
The SAMs are willing and proud the support the sheds as Agents because they feel it increases face time with their farmers, builds “field presence”, relationships and trust, and does not pose a hindrance to their work.
At the sheds, farmers have a reliable way to save money (instead of buying animals as savings) for essential farming costs (e.g., planting and weeding). Farmers, and not just Dunavant’s, are also coming into sheds to receive money (before the marketing season) and send it (during the marketing season).
3. Schools and Co-operatives – The field team’s first objective in setting up Agents was to “follow the money”, to see where and what farmers spend their money on. There were two overwhelming responses: Farmers spend money on school fees and fertilizers.
Accordingly, the team approached schools in Katete to see if they would receive payment using MTZL’s system and offer other products and services as an Agent. The team set up 3 schools as Agnets, two in Katete and one in Msoro.
The remotest boarding school is now a high performing Agent. Boarding schools, especially remote ones, have the biggest incentive to be Agents and the most resources making them the best Agents.
The team also approached several local farmers‘ co-operatives, as farmers are able to access subsidized fertilizer through membership in them. Co-operatives use the Agents to deposit money into their bank account. The season for fertilizer purchases has not yet come, but we are keen to see how this will pan out.
As it stands now, engaging schools and co-operatives to offer MTZL’s services allows both MTZL and Dunavant to build relationships with farmers, which is an invaluable asset in Zambia. It also is a great way to attract other rural customers for MTZL because these are institutions which people can trust.
A farmer in Msoro used to ride his bike 6-8hrs round trip to pay his school fees, but now he can just send them from Dunavant’s Msoro shed. Boniface Mwale used to travel to Petauke to pay his K150,000 (£20) school fees, spending K150,000 on transport along the way, but now he can send money to his child for a K8,000 (£1) fee.
Charity Tembo (Below) is not with Dunavant but still deposited k900,000 (£120) into a MaKwacha account for safekeeping after selling a bull. She withdrew half to buy a calf and pay school fees 3 months later. Ganizani Chilumbu (left) is a 22 year old farmer/buyer who is using his MaKwacha account to save for his future.
In July 2010, Bernice Leppard (left)) and Pamela Batty (Right) of NEXT Retail Limited visited the project.
Wednesday, November 24, 2010
Before I start let me introduce myself. My name is Brett Magrath and I am one of the co-founders of Mobile Transactions. Today my position is Chief Technology Officer as well as being part of the senior management team focused on the strategic direction of the business and general management. As the last member of the senior management team to post a blog the pressure is definitely on and hopefully I can provide some interesting insights into what is definitely an interesting industry.
Within this blog I am going to provide some thoughts into the following:
- M-Pesa – The industry leader causing a confusing theoretical standard
- So where did our strategy and IT approach come from
- Find a source and follow it…as many times as possible
- Where to from here
M-PESA: THE INDUSTRY LEADER CAUSING A CONFUSING THEORETICAL STANDARD
The question around how do you compare to M-Pesa always comes up and therefore I thought before jumping into too much around Mobile Transactions that there would be value in making a few comments on M-Pesa. Firstly, the success of M-Pesa has been amazing and I am in awe of what has been achieved. This said before anyone considers trying to “copy” M-Pesa or believe that their strategy should be the industry standard it is important to assess some of the reasons for the M-Pesa success.
There a probably a million articles on this on the web and the below certainly does not catch them all, but my opinion is that the below are the key components:
- The Kenyan people
- Full buy-in from senior management
- Understanding that mobile money is a service rather then a product
- A strong and trusted brand
- The market share of Safaricom
- Initial donor support
- Management team
These dynamics make for a challenging or near impossible industry standard to try and replicate.
Having been educated in South Africa, rugby is in my blood and I love watching rugby and any sport for that matter. The reality though is that my playing days are long gone and I have settled in nicely to the world of the armchair critic. As an industry mobile money is still very young. The potential mobile money has in terms of social and economic returns are great, but one down side of this is it has lead to a large number of very inexperienced purely theoretical based armchair critics.
My concern is that this combination of the massive success of M-Pesa with the large number of theorists commenting or driving the industry direction is leading to a situation where much of the most creative and real value added services are not being focused on as many people have been brainwashed into believing the only route to success in mobile money is following or trying to be an M-Pesa.
As more and more solutions and models are implemented and more in field knowledge of different models come to life this mindset with start to shift. The challenge will be for those supporting or investing in this space and companies like Mobile Transactions who are involved in implementing services to always reference the successes achieved in other markets, but to focus on building strategies and business plans applicable to what their markets are telling them.
From the Mobile Transactions perspective our views on this remain as they have from day one. Don’t over complicate the strategy, listen to the market, understand the needs of the market and build solutions that meet these needs, then listen and learn some more to evolve and improve our product offering and importantly make sure it is the correct offering. The approach has always been a simple one and one you can only learn from implementation. I would strongly recommend any company looking to launch within this sector to understand what M-Pesa has achieved, but to build a model that is based on market requirements not the M-Pesa effect.
SO WHERE DID THE STRATEGY AND IT APPROACH COME FROM
BANGLADESH NOVEMBER 2004
My original experiences in mobile money started in Bangladesh in November 2004. At the time we were involved in a project to implement a SMS based electronic airtime distribution system. We had implemented the system in a few African markets and through a connection to Telekom Malaysia via Telekom Networks
In essence we build a money transfer service where the sole purpose of the solution was to sell airtime. The main take out of this for me was the amazing potential a market like Bangladesh has. Within a few months the system was processing 500,000 airtime sales per day.
ZAMBIA PILOT JULY 2007
From Bangladesh it was back to Zambia where we were approached by PROFIT a USAID funded organisation to implement an electronic payment system to pay rural cotton farmers in July 2007. Instead of spending time and effort trying to build a system to do this we utilised the same SMS based airtime system from Bangladesh. Yes SMS is not overly secure, but for a pilot in the far Eastern parts of Zambia it worked perfectly and provided a bunch of insights in terms of where we needed to take our technology and the kinds of services we needed to offer. Some of the key findings were linked to providing the ability for Money Transfers whereby employees working in the areas near the ginneries were able to transfer funds to their family back home. Based on this we developed our money transfer service which has growth successfully since the commercial launch last year. Other developments obviously included moving away from unsecured SMS to now offer a Mobile and PC based Internet interface, Java mobile application and soon to be implemented USSD interface.
COMMERCIAL LAUNCH MARCH 2009
Based on the success of the pilot and the progress being made with the Money Transfer service PROFIT again approached Mobile Transactions with the dynamic of the Zambian fertilizer support programme. This is an existing government programme that distributes fertilizer support to rural farmers. Again the IT approach was driven by a business / market requirement and the solution to how best to support this is what has today become our successful voucher solution. Any IT solution we provide we try to make it as generic as possible to support multiple industries and multiple uses. With the voucher product we achieved this and we were able to very quickly launch a slightly adjusted version of the fertilizer solution for the World Food Programme. Last month we handled nearly 40k vouchers and transacted over $1.4m dollars in value.
To summarise our IT approach to date it has been built on the following foundations:
- Listen to the market and develop solutions to requirements
- Solutions win the day not technology – don’t over engineer the solution or put too much effort into the solution until you know it is the correct one
- There must be an IT vision for scalability, but vital this is always kept in check with the realities of what is happening on the ground and relevant to the market
FIND THE SOURCE AND FOLLOW IT…AS MANY TIMES AS POSSIBLE
Core to the success of any mobile money business is getting electronic funds into the system.
For M-Pesa this source is agents putting cash into electronic and then individual customers doing cash deposits to get this electronic and then transacting off this. For Mobile Transactions when we launched our core product was our agent to agent money transfer service. The source was similar to M-Pesa in that it first came from the agents, was transferred to the money transfer then moved to the agent who did a send to bank and the electronic was gone.
There were a few issues with this:
- Getting the source from the agents is difficult – For a new company providing a new service to get agents to put funds into a product that is not their core business is a challenge and although something we achieved it took a lot more time and effort then we imagined. I think even for networks they will find this more of a challenge then they expect.
- Once we had created this the product we were offering meant the source came in was transacted as a money transfer and then quickly moved out.
- Because the source came from the agents the working capital amount of this source was not sufficient to add additional transactions and products to this amount
- The source was a value added service to the agent so the amount of working capital they invested was always competing against the working capital the agents invested in their core business offering
Once our voucher system was launched we were able to create a new source. This time it came from the voucher project companies who put in funds to distribute vouchers. The dynamics of this electronic source was very different:
- The electronic put into the system was towards their core business or strategy or distributing vouchers
- The source was being used to add real value to this core business
- The working capital of this source was enough to look to start to add new products that transacted of the original electronic source therefore increasing the number of times we could transact on the source
- The voucher source created a pool of electronic at our agents through the agents selling products that were core to their business
What was also interesting is our next product we launched was our bulk payment solution whereby companies could pay both banked and unbanked customers via our system. I am going to focus this discussion on the banked side rather then the unbanked as they has different dynamics. On the banked side there is a market inefficiency whereby cross bank transactions are very expensive and our strategy was to offer a lower cost bank payment solution to any bank at one lower rate whereby we then switch between the different banks. Logical yes, but the issue is we needed to create a new source of electronic. Referencing the points above we were trying to create a new source that did not add real value to the companies core business and the real benefit was a cost saving. As we have taken the product to market we have learnt similar lessons to our money transfer product in that getting this source into the system is often more of a challenge then expected. And again once the source is in if it is used for banked payments is departs very quickly. Again similar to our agent to agent money transfers service. Like money transfers I am fully confident that our bulk payment product will turn the corner and achieve the growth we have seen in our other products, but the error we made was focusing on a new source rather then following an existing source.
So with lessons learnt about following the source in early December we will be launching our latest product called our ordering system. The beauty of this product is we are not creating an electronic source as it already exists. Our voucher agents have electronic funds and they have a need for an improved and more efficient ordering process from suppliers. The suppliers too have a need for a more efficient ordering system meaning we are offering a product that adds real value to the company’s core business and we are following the source of the electronic funds we are creating and facilitating multiple transactions off the original source.
What will be interesting to follow is that as we get this electronic to move from the agent to the supplier will our bulk payment solution become more desirable once we have overcome the core challenge of getting in the electronic source.
WHERE TO FROM HERE
In any new industry to make any widespread comments about where Mobile Transactions will go is a bit of an unknown.
What I can say is that the direction will we go will be focussed on a few keys areas:
- Listening to our customers and markets and taking our solutions towards the direction the feedback we get wants to take us
- As we grow as an organisation be in the more privileged position where we can start to analysis the directions we are drawn into to determine which are the best routes for our company
The other component I would add into this is that although the current strategy focuses on following the source and transacting off this I believe future strategies will evolve that focus on analysing the data that we are obtaining. I don’t understand the Micro Finance sector, but I find it fascinating how an industry can boasts about a +97% repayment on loans when the interest rates they are charging are so high. I understand there are large costs involved, what I don’t understand is why they are needed. Is it a lack of financial transaction knowledge of the customers to make sound lending decisions or is it a lack of a low cost payment and repayment solution. As highlighted this lending space is a big unknown to me, but something I look forward to applying my mind to in the future but I guess if I fall back on what I have written in this blog only when the market pulls me into this direction.
Sunday, November 7, 2010
Monday, October 18, 2010
At the time of writing, I have been with Mobile Transactions for almost two weeks. So much has happened in this short time. I considered writing about my early experiences in this exciting company. But it has all gone by in such a blur and it is too early for me to put my thoughts in a coherent way. So instead I decided to write about why I made the decision to leave the cosiness of the corporate world for a young, growing company.The obvious question many people have asked me is why would I give that all up, pack up my life and join an early stage company? I can answer that question very easily with any of the standard clichés (which all happen to be true by the way):
· “I was looking for an exciting new challenge”
· “I wanted to get away from the politics and bureaucracy of a corporate”
· “I was bored of being pigeon-holed in a single function and wanted the variety that comes with being in a young business”
· “I was sick of having an anti-septic, throttling corporate culture imposed on me and wanted to be part of building something different”
· “I wanted to be able to wear jeans to work”
I could go on and on. But that is only the first part of the answer and is the far less interesting part. What is more pertinent is why Mobile Transactions? What is it about Mobile Transactions that made it stand out amongst all the other possibilities I was considering?
The easiest way I can explain it is by telling the story of how it came to be.
Mike (CEO) and I met whilst studying at Oxford a couple of years ago. He immediately struck me as a highly intelligent man with great integrity. Our friendship grew through what turned out to be an amazing year. He came to visit me in Johannesburg during the soccer World Cup in South Africa. One evening, we were out for dinner with his lovely wife Isabelle. I was ranting (as is my wont) about my frustration with all the points mentioned in bullets above (and a few others I have no doubt). When eventually I stopped my self-indulgent diatribe, I asked him more about what he was doing. When he told me he was helping to run an exciting new mobile transactions business, my immediate thought was: “oh no, not another one”. For several months up to that point I had been leading a team investigating the possibility of opening a retail presence in Africa for the bank I was working for. A key part of this investigation was whether we could use mobile to deliver our strategy. I had been to several conferences and presentations on the topic. Although the promise mobile banking held was palpable, nothing I had seen got me particularly excited.
In an effort to be polite, I asked him more about it. During his enthusiastic description, my scepticism slowly changed to interest and ultimately to an incredible sense that I was at last hearing something different. The subtle tweak in the way in which Mobile Transactions was approaching this market all of a sudden made so much sense. (Feedback from Mike on his recent whirlwind trip the UK and USA indicates that scepticism, evolving to gradual awakening, culminating in that Aha! moment is a common reaction from people who hear about the business for the first time.)
With an increasingly affluent and growing population almost the size of India’s, the consumer opportunity in Africa is huge. But consumers are too heterogeneous and too widely dispersed across too many borders to be viewed as a single market. Contrary to what many people think, this is not the United States of Africa! What is common and spans borders however is Africa’s continued reliance on foreign flows (remittances, donor funding/NGO’s, micro-financing, multinational corporatesetc) and the massive role of the State within these economies. Fail to understand that, and you fail to understand Africa as it stands. Mobile Transactions acknowledges this and has set about trying to capture the consumer opportunity by first trying to capture the institutions for which the vast majority of consumers rely on in their day-to-day lives. That is the Aha!of Mobile Transactions to me and what sets them apart from all the other companies clambering for a piece of this very big, meaty pie.
Joining a business you wholeheartedly believe in comes with an increased responsibility to help make sure you do your bit to ensure it reaches its potential. Our recent good results are proof of how Mike, Brad, Brett and the rest of the team have the ability to make the business grow as fast as it can. But all great businesses are built on complimentary skills. So for the time being, I see my role as ensuring that while we grow as fast as we can, we also grow as slowly as we need to. Making sure the right processes, structures and systems are in place to de-risk the business to allow us to grow our markets and products in a controlled and deliberate way. This I hope will allow the rest of the team to focus on what they’re good at without worrying about being capsized by an internal or external black swan that inevitably comes from growing too quickly.
My concluding remarks are aimed at Mobile Transactions employees.
Upon leaving the aforementioned bank a couple of months ago, the consistently predictable counter-offer followed soon thereafter. I was offered the position of heading up what will become a retail presence in Africa for the bank. Whilst the offer was interesting (more for the timing than its substance), I didn’t consider it for longer than it took for me to explain to them that the place I am going to will be part of making theestablished financial model redundant. Our continued success in this space will render the incumbents that fail to adapt irrelevant. Why would I take a horse and cart into battle when there is an armoured tank in the garage?
Through our platform, we have the unique opportunity to change the transactional landscape forever in a very real and significant way. The best part of all this, is that we get to do all this whilst making a positive difference to the lives of the people who most need it. As employees of Mobile Transactions, we need to cherish that privilege and feel the weight of responsibility to ensure that it is nurtured. This is big stuff!
I thoroughly look forward to meeting the rest of the team in Zambia when I head up from Cape Town in a few days.