Mobile Money in Afghanistan

January 24, 2012

Building on Success: Leveraging the Mobile Network

to Transform Afghanistan’s Financial Sector

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Leveraging the Mobile Network

Using the Mobile Network to Bridge the Infrastructure, Security and Illiteracy Gaps

• Less than 5% of Afghans have bank accounts. This number is not projected to grow significantly.

• 55% of Afghans (over 13 million) use mobile phones. This number is projected to rise to 70% by 2014 (Transition).

• 85% of Afghans already live in areas covered by the four mobile telephone companies.

• Government salaries could be delivered on time and in full, improving governance by instilling transparency.

• Interactive Voice Response technology allows mobile banking to bridge the illiteracy gap.

• A nationwide mobile banking platform would provide a traceable alternative to cash payments.

The areas shaded red are the population covered by the existing mobile network.

The circles represent the main concentrations of the approximately 266 brick-and-mortar bank outlets, which are limited almost exclusively to urban areas.

How does mobile money work?

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Bank

Clie

nt

Agent bank account linked to Mobile Money Service Provider for cash and commission transfer

Cash out from agent to client

Electronic value sent to client’s mobile wallet (salary, family)Ag

ent

1

2

3

- Agent account debited

Client account credited +4

Client opens mobile money account via agent

Mobile Money Service Provider Bank Accounts (Pooled funds from all clients in at least four banks to diversify risk)

Building Momentum in 2011

• On March 29 in Kabul, over 150 delegates attend the mMoney Stakeholder Summit.

• Association of Mobile Money Operators of Afghanistan formed.

• On April 25, Afghan Central Bank issues first Electronic Money Institution License to Roshan’s M-Paisa service

• On August 24 in Kabul, Administrator Shah and the Minister of Education and Minister of Communications and IT highlight importance of mobile money.

• Etisalat and MTN launch mobile money services in November 2011 followed by AWCC in 2012.

• USAID’s Financial Access for Investing in the Development of Afghanistan (FAIDA) program:

– Providing technical assistance to government agencies and mobile network operators;

– Supported eight person Afghan Government delegation to the GSM Assoc. Mobile Money Summit in Singapore at the end of June;

– Managing $5 million Mobile Money Innovation Grant Fund.

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Aiming for over 100,000 Active Users in 2012

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PARTNER ORGANIZATION MNO MOBILE MONEY APPLICATIONS USAID GRANT COVERAGE EXPECTED RESULTS

1 Mutahid Microfinance Institution

Roshan Loan Payments and Disbursements $362,000 Grant approved 5 Provinces 15,000 borrowers

2 Da Afghanistan Breshna Sherkat - Electricity Utility

Etisalat Electricity bill payments $717,000 Grant approved Kandahar 50,000 utility customers

3 Ministry of Education MTN-A Teachers’ salary payments $957,000 Grant approved 10 Provinces 20,000 school teachers

4Association of Mobile Money Operators of Afghanistan

ALLUniversity Contest for Students (Freshman-Senior)

$ 80,000 Grant approved 18 Provinces 8 Top Applications

5Agricultural Development Fund (USAID-funded)

Roshan Farmers’ loan repayments Not Required 3 Provinces 500 Farmers

PROJECTS IN PIPELINE

6Farm Service Center Alliance (USAID-funded)

MTN-A Farmers’ loan repayments $250,000 estimated Grant 4 Provinces 10,000 Farmers

7 Ministry of Women’s Affairs EtisalatWomen’s Garden business opportunities

$500,000 estimated Grant 4 Provinces 20,000 Women

8Afghan Payment System(with World Bank funding)

ALL National Payment Switch $650,000 estimated GrantBanks and MNOs

Interoperability of Banks & MNOs

9 Afghan Public Protection Force TBD APPF Salary payments $500,000 estimated Grant TBD 10,000 Personnel and Families

10 World Food Program (partially USAID-funded)

Roshan Distribution of Food Vouchers $400,000 estimated Grant 4 Provinces 50,000 Families

11 Capacity Building Team ALL Seconded Project Managers to MNOs $400,000 estimated Grant NationalEffective management of mobile money projects

12 Integrated Agent Network ALL Single Agent Network for all MNOs $250,000 estimated Grant National Effective agent deployment

13IDLG/District Delivery Program (USAID-funded)

ALL Payment of top-ups Not Required 45 Districts 3,500 GIRoA Officials

14 Afghan Civilian Assistance Program II (USAID-funded)

ALL Civilian Casualties Payments Not RequiredKinetic Provinces

1,000 families