Mobile Money to Deliver Cash Aid: Believe the Hype?
Friday, January 13, 2012
In the two years since the earthquake, several nongovernmental organizations (NGOs) have used Haiti’s nascent mobile money services to deliver cash to people in need. These programs have been among only a handful of global examples (14 were identified worldwide) of cash distribution using mobile money and represent an important opportunity to learn. Early research suggests that mobile distribution had some tangible benefits for recipients of aid, but they also carried costs that could exceed those of traditional physical and voucher-based transfers. We’ve put together a set of recommendations that can help NGOs to get the most out of this exciting new platform.
As NGOs in Haiti adopted mobile money, they were aware that this was also new territory and an opportunity to establish some evidence about its usefulness. Two of them actually put parallel aid programs into effect that delivered the same transfers to two groups of people, one using traditional physical or voucher-based distribution methods, and the other using mobile money. They found that mobile money could be faster and safer, but its usefulness as a tool for expanding financial inclusion was less clear.
On the other side of the ledger, using the mobile money platform came with big start-up costs. As a result, the first deployments of cash distribution programs using mobile money carried higher costs than traditional distribution methods. But in the “steady state”-when all one-time costs have been paid-mobile money may yet turn out to be cheaper. And if the use of mobile money spreads among consumers, fees to transfer cash will likely drop as well, further lowering the cost of the platform.