Tuesday, December 21, 2010

A Year in Review

Dear all,

I would like to congratulate everyone on a year of big achievements at Mobile Transactions. Some key highlights include:

  • $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
These achievements should be celebrated as they did not come easily. It took a tremendous amount of hard work from everyone on the Mobile Transactions team in the face of adversity and very limited cash flow.

In addition, we added key members of our team over the course of 2010, including Keith Davies (Operations and Finance), Hans Hesse (Vouchers and IT Integration), Jon-David Steffen (IT Developer), Dave Vosburg (Finance), Bronwyn Baker (Financial Analyst), Hope Okoronkwo (Bulk Payments), Gertrude Makando (Supplier Payments), Tasira Nkhata (Customer Care), Michael Bwalya (Agents), Chris Mwaba (Vouchers) and Patrina Mwila (Admin).

Sadly, Claudius Fundi, one of our first employees, will be moving on in the new year. We wish Claudius all the best as he tackles the next challenge and the Mobile Transactions door will always be open.

We also received some great consultancy work, starting with Leanne Viviers, an Oxford MBA graduate who stayed on after a 2 month pro-bono consultancy by a team of 4 Oxford students (Santiago Alvarez, Natalie Miller, and Simon Jebreel). Engineers Without Borders Canada contributed a volunteer, Ben Campbell, to lead our Dunavant farmer payments project based out in Katete, Grassroots Business Fund pitched in with Sarah Taylor (legal), and PROFIT funded a regulatory consultant (Loretta Michaels). All of these individuals and organisational partnerships have added tremendous value to our business.

Finally, I would personally like to thank John Schroeder and Christine Phillpotts (GBF) for spearheading our advisory board, and Patrick Pichette for the personal mentorship and support. We are very humbled at Mobile Transactions to have such a great network to fall back on.

I am very confident 2011 will be a break-out year for Mobile Transactions. As the World Food Programme winds down their e-voucher project in January as part of their normal funding cycle we will focus on filling the gap with a boost in transaction volume from our very promising supplier payment product. Thulasy Balasubramaniam will be re-joining us to manage our Supplier Payments division, and there couldn't be a better person at a better time.

Our big target for 2011 is to close a Series A investment round to secure the necessary financial resources and investment partners to realise our full potential in Zambia and beyond. We are very excited by the interest investors have already shown, and if we can continue to grow and demonstrate our capability as a team, I have no doubt we are on the path to success.

On behalf of the Mobile Transactions team, I wish everyone the happiest of holidays and look forward to an even bigger year in 2011.


Mike Quinn

Wednesday, December 15, 2010

MTZL and NEXT year end highlights

1. Introduction

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.

2. Project Summary

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:

  1. 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.
  2. 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:

  1. 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.

  1. 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.

3. Highlights

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.