Showing posts with label Nigeria. Show all posts
Showing posts with label Nigeria. Show all posts

Thursday, July 9, 2020

Electronic banking fraud in Nigeria: how it’s done, and what can be done to stop it

By IMTFI Fellow Oludayo Tade, University of Ibadan, in The Conversation

Stefan Heunis/AFP via Getty Images

Six years ago, a cashless policy became fully operational in Nigeria. The aim was to encourage electronic transactions with a view to reducing the amount of physical cash in the economy. The logic was that this would minimise the risk of cash-related crimes.

But a major downside of the policy has been pervasive electronic banking fraud (e-fraud). Although the cashless banking system was designed to foster transparency, curb corruption and drive financial inclusion, it’s threatened by the growing perpetration of fraud.

About N15.5 billion was lost to bank fraud in 2018. About 60% of the fraud was perpetrated online owing to available internet-based and tech-rated banking services.

Our research investigated dimensions of electronic fraud in Nigeria. We found three: internal fraud carried out by banking staff; external fraud carried out by ordinary Nigerians; and collaboration between fraudsters and banking staff.

We found that inefficient supervision, non-performance of oversight by regional heads of banks, and poor follow-up on customers’ addresses (Know Your Customer) accounted for the fraud that took place.

Our study provides the banking industry, banking public and investors with critical pointers on how to reduce fraud.

Read more about the different types of fraud and recommendations in the full post here: https://theconversation.com/electronic-banking-fraud-in-nigeria-how-its-done-and-what-can-be-done-to-stop-it-141141

Access research publication: "Dimensions of Electronic Fraud and Governance of Trust in Nigeria’s Cashless Ecosystem" by Oludayo Tade and Oluwatosin Adeniyi in the International Journal of Offender Therapy and Comparative Criminology (IJO).

Monday, September 18, 2017

How Nigerian ATM fraud victims are swindled


File 20170913 23162 f2971h
REUTERS/Akintunde Akinleye
IMTFI Fellow Oludayo Tade, University of Ibadan in The Conversation

It has been three years since the Central Bank of Nigeria introduced the Cashless Nigeria Policy. Its aim was to encourage the use of electronic systems for all monetary transactions.

The policy has yielded benefits: it makes many transactions simpler and safer for more people. But there has been an increase in fraud in the banking and payment systems. These crimes are carried out using the information and communications technology that has flourished in Nigeria since the early 2000s. A 2013 report by the Nigerian Deposit Insurance Corporation identified 14 types of electronic fraud (e-fraud). Automated teller machine (ATM) fraud was in prime position. It accounted for just under 10% of the total value of funds lost to e-fraud and 46.3% of the reported number of cases. The agency’s 2015 report points to an increase in the incidence of ATM fraud in Nigeria.

Despite the apparent importance of e-fraud, little scholarly attention has been paid to understanding how it affects the functioning of the financial system and its impact on victims. That’s why my colleagues and I carried out a study to examine the experiences of ATM fraud victims in south-west Nigeria. We focused on what made a person more likely to be a victim and on the fraudsters’ tactics.

Study results

We found that a number of factors predisposed people to being victims of fraud. These include illiteracy, health problems and issues of vulnerability.
An elderly illiterate man who was interviewed said:
I was given an ATM card and nobody told me how to use it. Outside the bank I gave it to a young man at the ATM to help me withdraw cash. He did it and returned my card to me. After a few days I noticed money had left my account, which I promptly reported to my bank. At the bank I was told that the young man had swapped my card.
Our study also showed that close family members sometimes exploit people’s trust to defraud them. One middle-aged man gave his son his ATM card to draw N5,000 (USD $31.25) ahead of returning to school. He later discovered that his son had instead drawn N10,000 (USD $62.50). “If my son could do that to me while I was trying to help him, who can one trust?” he lamented.

When people are ill, they can be vulnerable to ATM fraud. They depend on others because they can’t get around. A “trusted” person may take advantage.

The story of a young man interviewed during our study helps illustrate this. He was ill and gave his ATM card to a friend to help him buy medication. He was later “shocked” to discover that his friend had drawn an extra N70,000 (USD $237.50) from his account.

The coercion factor

Of course, friends and relatives are not to blame for all ATM frauds. Some occur through coercion, particularly physical attacks and armed robbery at ATMs.

One young woman told us:
I wanted to make a withdrawal on a Sunday evening. The ATM on my street was not working so I had to look for another ATM a few streets away. Unfortunately I was robbed by an armed gang. They made me insert my ATM card to confirm the PIN number and balance. They went away with my ATM card and PIN. I couldn’t do anything until Monday, by which time my account had been drained of N200,000 (USD $1,250). They took my phone so I could not even alert the bank and block withdrawals.
The success of online fraud depends on offenders choosing easy victims.

Stemming the tide

Reducing ATM fraud depends on making people less vulnerable.

For example, anti-fraud education campaigns must use indigenous languages and consider that some bank customers can’t read. Banks must show their customers how their cards work and how to get help when in trouble. Security officers who are not bank staff should not be allowed to deal with customers.

ATM users should be taught to change their passwords sometimes. They must also be cautious about when and where they withdraw money to reduce the risk of attacks.


This article was originally published on The Conversation by Oludayo Tade, Lecturer of Criminology, Victimology, Deviance and Social Problems, University of Ibadan
Read the original article.

Read his recently published article with Oluwatosin Adeniyi in Payments Strategy & Systems, "Automated teller machine fraud in south-west Nigeria: Victim typologies, victimisation strategies and fraud prevention"

Tuesday, March 14, 2017

My Smart Phone is a Love Trophy: On Boyfriend-Girlfriend Negotiations and the Tensions between Adults and Adolescent Girls in Digital Nigeria

By Jude Kenechi Onyima and Chinedu Francis Egbunike

Boyfriend wooing an adolescent girl with smart phone
at a bush path in Anambra Stateption
"….If you do not like him, why did you accept his friendship?’’ Chika’s friend asked her as they walked from school homeward. ‘‘I accepted because he bought me a Samsung smart phone," Chika replied.

Exchanges like the one above appeared in many of the stories we collected during our 12-month ethnographic research in Nigeria about the tensions between adults and adolescent girls regarding ownership and use of mobile phones. A majority of adults in our study agreed that feature phones (cheap phones meant for calls and text messaging) are appropriate for early adolescents, and that smart phones were acceptable for late adolescents, but with conditions. In contrast, a majority of girls felt that restricted access to mobile phones is an infringement on their autonomy and their quest to join the global community. Especially in Christian neighborhoods, adolescent girls have found allies in their boyfriends who provided girls with smart phones. This has connected adolescent girls, their boyfriends, and girls’ parents in an unexpected web of duplicity, interdependence and contradictions.

The intrigues that surround phone ownership and use by adolescent girls show how the mobile phone mediates how young people construct their identity, struggle for autonomy and their self-expression. It exemplifies how technology can create a new social culture. Smart phones, unlike feature phones, display symbolism which transcends economic or technological meaning. Apart from attracting prestige and the feeling of 'I have arrived,' they reveal emotional flows and connectedness.

As we observed in our study, boyfriends’ purchase of smart phones for their girlfriends consolidated boyfriend-girlfriend relationships in a unique way. As seen in Chika’s story above, a girls’ acceptance of a phone means acceptance of a relationship. By purchasing a smart phone, a boy extends his influence and control over a girl. In another example, Edna, a 16-year-old student, returned a Techno mobile phone to her boyfriend after six weeks when she heard that he purchased another phone for another girl. Similarly, Arinze insisted that Sandra must return the phone he bought for her when they broke off their friendship. Phone ownership among adolescent girls and their boyfriends therefore represents a new form of creating visibility, attachment and identity.

When Amaka, a 17-year-old caregiver, lost her phone, her worry was not about the phone but the strain that the loss would put on her relationship with her boyfriend Chidi, who could not afford to buy a new phone for her. For Amaka, accepting another guy’s gift of a phone entails shifting her allegiance away from Chidi. For boyfriends, providing a smart phone to a girl is a symbol of conquest over other potential intruders. A smart phone is a love trophy. Whose phone a girl accepts and also uses draws the boundary between those whose intimacy is desirable and those whose is not. The smart phone in the context of a boyfriend-girlfriend relationship is more than a technological innovation. Mobile phones acquire new meanings as they become embedded in relations of accountability, reciprocity and secrecy.

Adolescent girls comparing phones at high school
graduation party in Enugu State, Nigeria
A smart phone in the hand of an adolescent girl signifies the autonomy, empowerment and strength of her opposite sex friendship. In our study, over 87 percent of adolescent girls were using smart phones they did not purchase but were given to them. Most girls do not enjoy using feature phones and usually turn down men who could not acquire smart phones for them. Mobile phones could be given as birthday gifts, graduation gifts, lovers’ day gifts, appreciation gifts and gifts brought back from long distance trips. In contrast, feature phones and old phones do not evoke the same symbolism with regard to the quality of opposite sex friendship. Ninety-nine percent of phones bought from abroad were smart phones and they are highly symbolic. They show where a girls’ attachment lies and where her affection flows ‘’…I cannot put my phone in a bag except where I am not proud of it.” Mercy, a 16-year-old apprentice replied during one of our interviews:

 “…As you know, we girls compare a lot when we meet one other. In the past, we discretely compared shoes, jewelry, hairstyles and handbags. Today, it is our mobile phone. I flaunt it [the phone] to intimidate other girls and make my boyfriend proud….”.

Surprisingly, girls are not much interested in how the money is raised for acquiring the phone, or what lengths boyfriends go to in order to give phones to their girlfriends. Obinna, a 17-year-old student could not sit for his Senior School Certificate Examination because he used the money for his examination fee to buy a smart phone for his girlfriend who, incidentally, was his classmate. “…I did not want to lose her love to other men….” Obinna pleaded, in response to his parents and school authority’s queries about what happened to the money. Boyfriends do not take lightly the privileges conferred on them by purchasing smart phones for their girlfriends. They always check up on how the girls are using their phones. Adaobi, a 17-year-old hawker, fought with her boyfriend over access to the phone, refusing to tell him the new password and denying him access to it. Just like the phone that was smashed during their fight, so, too, was their friendship broken: “…Someone who did not bring money to repair the phone he bought earlier does not have the right to question what I do with the phone. He lost his privileges when another man gave me money to repair it, ”Adaobi retorted, as she justified her behavior.

Smart phones purchased by boyfriends have therefore become instruments of accountability and availability, as Erin Kenny observed in her research with Tanzanian University students (2016). Boyfriends expect explanations of what their girls do with their mobile phone. “….Nothing worries my boyfriend like seeing ‘user busy’ when he calls me. He expects me to put all other calls on hold and answer him first. He also monitors how long I spend on calls and with whom…” a 17-year-old female university student in our study narrated during an interview. Buying smart phones for adolescent girls gives boyfriends a special place in the lives of their girls. It shifts accountability for a girl’s phone life away from her parents and on to her boyfriend. When Aisha Mammud, our female researcher asked 17-year-old Fatima how frequently her parent accesses her phone, her response was immediate: “…I will not let them touch my phone at all.” However Fatima allowed her boyfriend access to her password and he goes through her contacts and phone logs for monitoring purposes.

A veteran pharmacist in one of the communities we studied insisted that her daughter must finish high school before she could use a smart phone. She was shocked to discover that her daughter was already using a smart phone for over six months - bought for her by her boyfriend. Just like other girls in our study, the daughter left her phone with her friend and sometimes hid it in the house. I had a similar experience of shock the day that I gave one thousand Naira (about $3) in airtime to three students in a Christian neighborhood, thinking that it was only one of them who owned a mobile phone. One of the students privately unzipped a section of her clothing to reveal a phone hidden in her underwear, while another ran towards her friend’s bag to pick up her phone that she had been hiding there.

Eighty-five percent of adults we interviewed did not want adolescent girls to use smart phones without first meeting parents’ requirements that girls first graduate from high school or reach age 18. Adults believed that smart phone use could work against girls’ concentration and learning as well as give access to unsafe knowledge. "Phones connected online are dangerous in the hands of adolescent girls...," a 54-year-old mother of three burst out at one school debate. Most adults, especially in Christian neighborhoods, believed that smart phones could drive girls into uncharted life adventures, what Mizuko Ito and her research team refer to as, "geeking out" (page 28), and thereby diminishing adults’ control. As one community leader with three grandchildren explained to us:

“…Any mobile phone not purchased by a known relative should be confiscated or returned. Early ownership of smart phones offers unchecked autonomy to adolescent girls; this is malignant due to their age. It makes them gullible to treacherous habits. A number of high school girls have died seeking after the promises of people they met through the phone…”

Sadiq, who purchased a feature phone for her daughter in order to prevent her from accepting a smart phone from a boyfriend, discovered that her daughter willfully damaged the feature phone in order to make room for a smart phone. The daughter changed the casing on the new smart phone her boyfriend bought for her to an old one and lied that it was a spoilt old phone she got from the outgoing school principal. In another case, a 52-year-old female teacher who insisted that her daughter should return the smart phone bought by her daughter’s boyfriend discovered nine months later that said phone had been hidden by her daughter and not returned after all.

An adult querying an adolescent girl over the source 
of the smart phone she was caught using.
Our in-depth interviews with adolescent girls and adults provided justification for why most parents frown on boyfriends’ smart phone gifts. There are incessant phone-related misunderstandings, violence, and battering. Men tend to take their privileges to the extreme. Girls who out of naivety accepted the offer from a boyfriend did not find it easy to exit the relationship when they became uncomfortable. A 19-year-old school dropout told us that she was raped by the man who bought her smart phone: “…Men do not believe in a free lunch; any kindness they show is an investment of which no pleading can deter them from raping.” She continued, “Many of us who accepted guys because of phone reasons regret the act and wished we were smarter." Some men insist that their smart phone should be returned to them whenever the relationship collapses and such tensions have generated issues involving police and community leaders. “…He has slapped me for allowing another man to use the phone he bought for me. He had seized the smart phone from me many times and had uninstalled whatsapp services in it to avoid my interaction with other men,” Amaka, an 18-year-old fashion apprentice revealed to us. When we inquired why some girls accept smart phones from men knowing these potential consequences, Muna, a 17-year-old university student, shared her views:“…They accept because it is a ‘smart phone’. It gives them identity, smart phones is freedom and reputation. It shows that you have arrived. A smart phone is a girl's best friend - it cures loneliness.”

Finally, our study revealed that phone-related quarrels occur every 72 hours in homes where there are adolescent girls. Adults have reservations about adolescent girls’ use of smart phones. Many felt uncomfortable, threatened, even perplexed, while others are resigned to the fact of girls using smart phones. Adults shy away from the task of preparing adolescent girls for the responsibilities entailed in the digital revolution. Meanwhile, girls have not relented in a bid to outmaneuver adults and their roadblocks. Highly religious people feel more threatened by adolescent girls’ use of smart phones and as a result, create more roadblocks to uptake. However, Christian adolescent girls have more opportunities to acquire smart phones from boyfriends than do their Muslim counterparts. Yet tensions appear to be greater in Christian homes. Tensions are also higher among urban than among rural poor.

The digital revolution has indeed altered adults and adolescent girls’ social identities and created a new social space mediated by smart phones. This change is common in Christian-dominant Southern Nigeria. Our study shows that under these circumstances, adults who can play a “midwifery role” in ushering girls into the digital age could achieve better results in ‘redeeming adolescent girls’ from irresponsible use than those who play resistant roles in restricting girls’ smart phone use. The peculiar role of smart phones in boyfriend-girlfriend relations is still evolving. What has become clear for many of our study participants, is that a new culture of juggling identities in this social space is here to stay. But for those participants who are not comfortable with the identity the digital revolution has assigned them, there is still much room for negotiation.

Read Jude Kenechi Onyima and Chinedu Francis Egbunike's final report here
        
References
Kenny. E (2016) “Phones means lies”: Secrets, Sexuality and the Subjectivity of Mobile Phone in Tanzania.  Economic Anthropology 3: 254-265. http://onlinelibrary.wiley.com/doi/10.1002/sea2.12062/abstract

Ito. M, Horst. H, Butanti. M, Boyd.D, Herr-Stephenson. B, Lange.P, Pascoe. C and Robinson. L (2008) Living and Learning with new Media: Summary of Findings from Digital Youth Projects. The John. D and Catherine. T MacArthur Foundation Reports on Digital Media and Learning. (November) http://digitalyouth.ischool.berkeley.edu/files/report/digitalyouth-WhitePaper.pdf

Sunday, November 20, 2016

Diverse Strategies of Banking Fraud in Nigeria

By IMTFI Fellows Oludayo Tade and Oluwatosin Adeniyi

A major snag since the introduction of Nigeria’s cashless policy is pervasive electronic banking fraud (e-fraud). Although the policy was aimed at encouraging electronic transactions, reducing physical cash in the economy and thereby reducing the risk of cash related crimes, fostering transparency, curbing corruption/leakages and driving financial inclusion, the perpetration of fraud threatens the cashless ecosystem. The implications of rampant e-fraud are enormous, not only for the banked population adopting e-banking as a secure platform but also for the obstacles it poses to effectively capture the unbanked populace. Initial investigations show that with the prevalence of fraud and subscriber victimization, there is a growing fear of migrating to and using electronic banking, while those defrauded are altogether opting out of e-banking. The Nigeria Deposit Insurance Corporation (NDIC) annual report stated a total of 3,756 fraud cases in 2013 involving N21.79billion, which represented a 21 percent increase from 2012. Curiously, about half of the actual loss occurred within the first three months of 2013. Looking between these aggregate pictures, the NDIC 2013 report also offers an elaborate list of fourteen major fraud channels - automated teller machine (ATM) fraud being the leading source. In a climate of mounting complaints from e-banking customers/subscribers, we investigated the dimensions of e-fraud in Nigeria’s cashless ecosystem. We collected data in Oyo, Ogun and Lagos States and employed qualitative methods of in-depth and key informant interviews with fraud victims, bank officials and fraud investigators at the Economic and Financial Crimes Commission (EFCC).



Opportunistic Kith and Kin

ATM fraud has continued unabated due to the breach of trust between account holders and fraudsters. Most ATM fraud was carried out by persons very close to the victim including spouses, boyfriends, and friends (Tade and Adeniyi, 2016). Often, online fraud is successful through selective identification and exploitation of victims’ vulnerabilities by dexterous and savvy offenders. In a case reported to us at a new generation bank in Nigeria of a lady and her fiancée, the man had taken the lady’s ATM card and made a withdrawal of about N300, 000. Getting the ‘surprise debit alert’, the lady lodged a complaint with the bank. The ATM custodian at the bank informed us that the lady threatened legal action against the bank. When the fraud alert was subject to internal scrutiny, it was found, through the Close Circuit Camera Television (CCTV) footage that it was actually her husband-to-be who made the withdrawal without her consent. According to the ATM custodian:

She was shocked seeing her man making the withdrawal. Her countenance changed and she felt sorry for raising her voice in the banking hall. She later left the banking hall to reconcile with her fiancée.

ATM withdrawals
In some instances, bank staff collaborates with fraudsters outside the bank. Outside fraudsters recruit people who have access and occupy sensitive positions within the bank such as sweepers and those in the Information Communication and Technology (ICT) unit. Not all participants are fully aware of their role or final purpose of their assignment. A fraud investigator we interviewed at the EFCC summarized a case as follows:

This fraud was huge. It involved the moving of about N400million ($2,010,050) naira from the account of the bank. It involved some bank staff in the ICT unit and those in the regular banking hall. They got a woman who sweeps the office of the branch manager and gave her a key-logger to insert in the computer to extract the necessary data they needed and security information. Through this, they were able to access the banks account and moved the money into about forty different accounts. They were strategic about their fraud. They waited for the day there was public holiday and then moved all the money and almost immediately withdrew from the different bank accounts. Before they could be stopped they had used more than three-quarter of the money to buy things online. It was the sweeper that eventually sold them out because as she claimed, she did not know that the things they gave her were to defraud the bank. 

Un-credited Lodgment

Un-credited lodgment is another type of fraud perpetrated by bank staff using their knowledge of banking operations and technicalities. We found that the compromised bank staff in the cashier section would collect cash lodgment but would deliberately fail to credit the customer’s account and later divert the money for personal business. This strategy was successful unless the account owner lodged a complaint for not receiving an alert regarding the payment he/she made. It should be noted that not all account holders subscribe to account transaction alerts that give them information about any transaction on their account. People often don’t want any deductions to be made on their account for subscribing to this service. Fraudsters, therefore, prey on this loophole.

A PhD candidate who shared his victimization experience on un-credited lodgment stated:

I had a nasty experience with this electronic banking. I went to make a lodgment of N50,000 ($251.2) into my bank account and I went back home. Two days later I did not receive a deposit alert.  I went to the Bank Manager to complain who asked me to come back. A lady cashier from the bank came to my house; apparently she traced the address through the Know Your Customer form I filled. She told me to come to the bank as I was the one who made mistake in the payment. I was angered by this and I told her what nonsense. She later told me she thought I was working with a businessman who benefits from uncredited lodgment which he uses to do a business for about two weeks and then payback before the account of the lodger of the funds will be credited. Two hours she left my house, I got the credit alert. 

This experience brings to the fore the issue of customer knowledge about banking operations and security features to help stop fraud. Those who do not subscribe to account alerts may have their monies un-credited and used for ‘arranged’ businesses by some compromised bank staff and their outsider accomplices.

Bank officials are also often associated with dormant account fraud (DAF). When an account has remained inactive for about 6-months, it is categorized as dormant until the account owner applies for its re-activation. In Nigeria, when a person dies it is difficult for dependents to access the bank accounts of their benefactors owing to many legal/institutional obstacles that can take months or even years to be resolved. Some family members are oblivious to the fact that the deceased even had a bank account. As a result, when the account holder dies, their funds become targets for bank official fraudsters, with insider knowledge, that then reactivate and withdraw money from the account.

'Kolo'- a trusted indigenous saving object being used to highlight fraud in the cashless ecosystem 

Weak Governance Structure in the Cashless Ecosystem


We also found that weak governance structure is responsible for electronic fraud in Nigeria’s cashless ecosystem. This weak governance is at the level of both banking institutions and regulating agencies. Our data indicated that there was poor supervision at the branch, regional and zonal levels of some banks where fraud, get perpetrated. A bank staff person stated:

There was a fund transfer fraud in which the best man we had for that job was involved in but rather than punishing him and sending the report to the regional head, the Branch manager decided to make it an in-house thing. They forced the man to fill a loan form where they were deducting the money he fraudulently made from customers account. They also moved him to another unit within the bank where he did not have direct access to money. The matter was resolved internally within the branch.

Such fraud neutralization strategies were adopted to cover the tracks of inefficient supervision, which kept compromised personnel within the banking system creating a weak governance and accountability structure. The Committee of Chief Compliance officers of Banks in Nigeria (CCCOBIN) at their meeting of October 29, 2015 also noted:

Banks in a bid to cut cost and increase profitability recruit contract staff and assign them to very sensitive areas of the Bank’s operations and because these categories of employees are poorly remunerated they are susceptible to all sort of vices, including fraud.

Due to increasingly neoliberal policies being adopted in banking operations, the majority of bank staff is not full-time but casualised and the NDIC’s 2014 fraud report stated that contract/casual staff perpetrated 64% percent of frauds committed in banks.

The strategies used in perpetrating fraud, such as un-credited lodgment, fake job scam, ATM card swapping and compromise, fund transfer fraud, phishing emails/BVN fraud, and dormant account fraud among others, indicate that fraudsters are exploiting the loopholes of the cashless ecosystem. The results of this study point to the need for financial literacy education in Nigeria and improvements in the security infrastructure with a view to building confidence in the formal banking sector as well as e-banking. Furthermore, banking products/services should be designed with security features that take into consideration the peculiar characteristics and vulnerabilities of their customers.

All names of banks, institutions and participants are pseudonyms as they were assured of their anonymity when they agreed to participate in the research. 

Reference
Oludayo Tade  and Oluwatosin Adeniyi (2016), "On the limits of trust: characterising automated teller machine fraudsters in southwest Nigeria", Journal of Financial Crime, (2016) Vol. 23 Iss: 4.

Read more in Oludayo Tade and Oluwatosin Adeniyi's Final Report.

Friday, April 22, 2016

Trust Funds: Session Four of the 2016 Conference



"In _____We Trust: The Contingencies of Social and Financial Protection" with discussant Kate McKee of Consultative Group to Assist the Poor (CGAP) began the session by polling participants about their trust relationships with banks, insurance companies, credit card companies, and spouses. She also built on earlier discussions about the differences between "knowing how" and "knowing whether" by pointing to issues about lack of choice, the disconnect among clients with efficiency discourses from industry, the "layering" of digital effects, and the understanding that the continuing "role of the state is quite important" as an entity that can "drive" efforts.

The role of mobile money in social protection networks in two rural areas of Colombia" by Maria Elisa Balen and Andrea Beltrán from the Universidad Externado de Colombia started with an explanation of how sixty years of conflict had produced over six million internally displaced people. Using the analytical triad of market, state and family, the research team focused on "social protection practices" in two field sites: Montes de María in the north and Putumayo in the south. The northern region has been suffering from a decline of tobacco production, and in the south the ups and down of illegal coca crops have been disruptive. Thus the family has to "reconfigure over a large distance." Two additional features are significant: "the state has become more present," and "mobile money becomes an interesting object of study."

The methodology of the study, which used snowballing ("someone who knows someone") and different entry points, avoided "normative perspectives of what family is" and was structured around "two decentralizations." Researchers looked at practices from a past-present-future perspective (including accounting for "how they think the future will be" and "how they want the future to be") and viewed money with "an approach allowing for diversity in conflict zones" and in the context of "other goods and services." The research team used tools like storytelling, drawing (including family maps), and workshop participation.

Participants faced a number of challenges in an environment in which regulation is designed to protect a platform being open to everyone but has yet to be enforced. Often bank intermediaries change very often, and the distribution of cash transfers also changes. When populations in those environments "don't know who they are dealing with and what they have to do to be more stable," the resulting volatility can be very relevant. Regional differences matter as well. For example, in the north the availability of cash transfers for two or three years has shaped uptake patterns. Researchers also looked at how participants treated different amounts of money differently. Among their major findings, researchers found 1) the amount of money in circulation changed in both directions, 2) money is often part of a wider web of exchange, and 3) mobile phones are present in family practices but don't appear to be influencing "technological spillover."



"Dimensions of Electronic fraud and Governance of Trust in Nigeria’s Cashless Ecosystem" by Oludayo Tade of University of Ibadan and Oluwatosin Adeniyi of University of Ibadan looked at "what trust means" and "how trust-building can be done" by examining financial fraud in the digital sector and how it might be facilitated by the trust fostered by intimate ties. They also observed a generational dimension in opportunities for deviant behavior in this "peculiar ecosystem," because of the existence of a "huge population of young people" that is "also dynamic" in which Nigerian youth may "deploy their energies" for "the right and wrong reasons." In considering the dimensions of e-fraud and how trust issues may stymie adoption of new technologies, they reminded the audience that the "internal dimension" in which a conspiracy by staff of the bank may compromise the data of the bank or improperly use technical know-how to make cash transfers. With 21.69 billion lost to 3,756 fraud cases in 2013 alone, policies pushing cashlessness can stimulate greater anxiety. Wen "trust underlies customer-bank relations," breaches cause avoidance behaviors and disrupt financial ecosystems. Fraud strategies may also involve love/fiancee, wife/husband, and son/father dyads, although transaction alerts can foil schemes, particularly for ATM card withdrawal fraud.

At this stage of the primarily qualitative study, content analysis has been done and crime narratives have been analyzed. For example, they presented The Eatery Case as an instance of "un-credited lodgment." Many scams promise to return money in two weeks time and are facilitated through text messages. They also note the "other side" of fraud in terms of governance, and how from the side of business and government, access to subscription services can be compromised

In the question and answer session the team emphasized the importance of specific context in "what you mean when you think about the unbanked." Insights from the field indicated that people were deeply invested in formal banking, and that the rhythms of life in "normal local markets" were still structured around the informal collection of daily contributions from traders. They noted that in making trade-offs, an incentive for becoming banked might be to avoid being susceptible to "increased physical attacks" and "robbery at home," in which victims would lose not only their property but also their lives. Transferring risks to a formal banking center could limit this danger. Additionally, they pointed to the affordances of existing programs for students to open accounts, which "enables you to receive money from home." They also observed that as people travel "we need to design packages that addresses customer characterizations."



"Intermediaries, Cash Economies, and Technological Change in Myanmar and India" by Janaki Srinivasan of the International Institute of Information Technology Bangalore (IIITB) and Elisa Oreglia of SOAS at the University of London examined why intermediaries might be valuable rather than vilified.

"We have most of our fieldwork ahead of us," Oreglia admitted and expressed her enthusiasm for IMTFI critique, because she and Srinivasan were "looking for feedback." She began with a story of a tea trader from the northern part of Myanmar. "In many ways she is the kind of intermediary who is portrayed as the 'bad guy' in markets." Enthusiasts for disintermediation might see her as taking "advantage of farmers who may be ignorant of prices or unable to travel" and morally compromised by her assumptions that "farmers are really dumb." In a system in which traders may "give money and clothes" that create obligations from farmers who "have to sell to us because they are indebted to us" she appears as a suspect character. But Oreglia argued that the story is "much more complicated," particularly when "cash persists as do intermediaries" despite the potential "escape" offered by mobile money. Yet "even when the same operation would be cheaper and faster" if done directly by the farmer himself, many prefer existing social, cultural, and economic norms.

Srinivasan noted how "markets that are dominated by cash" raise interesting questions about the role of intermediaries and "what value are they bringing to the market," "what value do these transactions brings to the idea of value as situated in a place," and "what constitutes value in two different places." She emphasized the importance of how different countries manifest different patterns of adoption: "mobile money is about to take off in Myanmar," but in India "mobile phones has been around for a while, but mobile money is relatively recent." Although she granted it can be challenging to map how intermediaries are able to add value or disrupt value in a summer of fieldwork, she will be looking at a site that she has worked at previously in in Kerala in a study "which is itself a revisit" of an influential study by Robert Jensen who did survey work over the course of five years. (IMTFI blog readers can peruse the article for themselves from this link to "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector and read an account of Srinivasan's first IMTFI presentation with Jenna Burrell and Richa Kumar here

Srinivasan believes that terms like "producer" or "seller" may actually be more complicated categories characterized by differences of investment, size of fishing crafts and operational costs, and even various types of fish. Thus "the story of a sardine" may be different from the story of another fish. In particular, the role of the auctioneer may be important as well as issues of religion and gender that differentiate Janaki's field site in the Christian south and Jensen's in the Muslim north. Although the middleman is "the person that everyone wants to remove," she asserts that collective organizations can have more benefits than autonomous entrepreneurs and that the rise of co-ops in the sixties and seventies had undermined the power of the previous"fairly exploitive relationship." Using an auctioneer who was paid by the co-op was often valued "to get the best prices for the fish," although a system of transparent auctioning facilitated that, because it was "a system that people have come to recognize and trust." In asking "what does this have to do with technology," she noted that "the auctioneer always had a mobile phone." Accounts were settled daily and sometimes settled weekly. Of course, in 2012 there was "no mobile money to speak of," so Srinivasan was looking forward to revisiting to "see how the intermediary deals with" the new platform.

Oreglia noted three previous financial crises in Myanmar and instances of demonetization. She explained that the field site was in an area of ethnic minorities and small market towns with Burmese-Chinese and Burmese-Indian residents, as well as tribal people, so ethnicity could also play a role not only in trust but in loyalty. The region might "trade with the rest of the country," as well as with China and Thailand, using its economic base in agricultural products. In the illustration above she shared the roughness of field notes, in trying to map out how money travels, including on bus networks. and the many financial movements of small traders who tended to borrow money from financial traders. Unlike the Kerala case, co-ops were used mostly by women traders. Goldsmiths who were all around the market and tended to be Chinese, Those of Chinese ethnicity "did business with everyone," although she emphasized the fact that "loyalty is not necessarily trust." Her tea traders relied on farmers not having many choices, but the technology that has proved to be most transformative is not mobile money. Rather she claimed that cheap motorbikes from China were offering now access to other lines of credit, because farmers could travel to other villages much more easily. Nonetheless most "still rely on these traders," and "ethnic ties have big part to play."

Bothe researchers said they strove to "rescue intermediaries from distain" and the "contempt they are held in." To learn more about the disintermediation debate, you can visit this profile of Janaki Srinivasan to read an extended interview with her and see images from her Kerala field site.

Wednesday, April 20, 2016

The Double Gold Standard: Session One of the 2016 Conference


In director Bill Maurer's opening remarks for the annual IMTFI conference, he reviewed the history of the organization and how the interests of this unique interdisciplinary scholarly community had evolved over time in attempting to comprehend how digital or mobile payment might have "something to do with poverty alleviation."  His account began with a focus on the repayment of microfinance loans, with the assumption that ubiquitous digital tools might serve as a means to "keep track and repay" in a relatively narrow sector of the economy.  Maurer explained how the ideas about the interfaces of technology, money, and financial inclusion had "morphed" during the course of development of a scholarly community.  He also admitted that "payment is weird" and "arcane," because it requires explorations of obscure networks and "portals and rails of infrastructure," as in the case of mapping a Visa transaction.

For Maurer, "payment in relation to poverty" invites even more inquiry into complexity.  Thinking about payment platforms also may involve partnering with people from "government and industry" and addressing issues of risk and liability around access, fees, safety and security.  By supporting the "ground-level perspective" and giving attention to "voices from the field and the village," research about religion, ritual, belief, and social hierarchies has also become critical to IMTFI scholarship, since there may be occasions around payment mapping where "it matters what your elders are saying," or the existence of "people of high rank endorsing a service" may be critical.  Thus ritual specialists and oracles might be important in understanding uptake of new financial services.  He emphasized the need for scholars to "push the debate in industry and policy," which shaped the "insight and impact" theme of the conference.

As an illustration of how adopting new technologies is never easy, even in developed economies, he chuckled about the attempted rollout of EMV cards in the United States, which is now hitting its six-month anniversary.  He pointed out that at this point only about 20% of the readers needed were available, and he observed that the slow adoption at merchants' terminals could be attributed to many factors in behavior change from patterns developed over  30+ years of swiping cards.  Now that one must "put the chip in . . . and wait and wait . . . about that long," users may indulge in many forms of magical thinking, particularly since "the terminal has never spoken to you before," and conspiracy theorists might worry about invisible entities "stealing all your information" during the time lag.  Rather than seeing adoption as a friction-free switch ("just flip the lights on"), Maurer described it as "a lumpy process" and invited his fellow participants to critical thinking by urging that they "investigate those lumps."

The first panel on "The Sharing Economy? Women and Girls and their Ties and Tensions" chaired by Erin McDonald of Women's World Banking addressed what she called the "tensions that women experience" to "access resources," as they might be very broadly defined.  In many ways this panel proved to be as much about the very definitions of "success" and "value" in social as well as economic terms as much about the dynamics of gender.


Carol Chan of the University of Pittsburgh led off the discussion with her presentation on "To Send or to Carry? Gendered Evaluations of Formal and Informal Remittance Practices in Migrant-Origin Villages in Central Java, Indonesia."  By talking about "migrants and their money," Chan investigated how "meanings of migrant money" might not only be gendered but also indicative of the presence or absence of practices that mark how they use and earn their money in culturally important ways.  When grappling with such a high volume of transactions constituted by 8.55 billion dollars from 6 million temporary laborers, Chan had to develop a research methodology that addressed many types of volatility in returns, including "underpayment and nonpayment by employers" and susceptibility to "many risks and perpetrators" including customs officials.

Chan noted the moralistic tone of documents such as "99 tips" for how to be a successful migrant.  Such official messages might ignore the challenges of "the material contexts in which people live" in "culturally specific ways," because money can serve "as a religious and moral issue" and an expression of a good "Javanese-Musim" identity.  In an environment of constant social surveillance in which women might be evaluated more harshly, Chan was interested in addressing tensions.  For example, for migrants building houses, members of the community might question "who do they build it for?" and "where do they build it?" Furthermore, gendered moral ideas may be supported by many kinds of institutional discourses, including projections of piety in how they dress.  In pointing out that ideas about financial inclusion "are very gendered," even in supposedly neutral financial programs, Chan probed unexamined biases.  She emphasized that gendered and moral aspects were expressed in how women were "mainly addressed as wives and mothers who have to put their families before themselves" and challenged assumptions about families that took as a premise that women's incomes were to be seen as supplementary.

Chan described a range of forces at work, from religious ideas about Halal-permitted uses and the worldview that "money is a gift from god" to family expectations.  Often she recounted stereotypes in which male migrants were viewed as "more responsible" and "less flirtatious/rebellious." For example, despite the rigors of life for women who work in Tawain in factories, they might be viewed much more critically than male plantation workers in Malaysia.  Many transactions were formal Western Union-style transactions, but migrants might also carry large amounts of cash across great distances, from one thousand to five thousand US dollars at a time.  She found women were more harshly judged for not bringing money home, while men were pitied and excused for spending funds on seeming luxuries like cigarettes or energy drinks.  Often bias was justified by assumptions that women would be domestic laborers with free lodging and food, but men also benefited from the fact that men's wealth was taken for granted.  If women brought money home it might also be viewed suspiciously as a potential benefit from extramarital relationships or even sex work.

Investing in material goods was seen as less risky by the population she studied than saving, because land costs were rising and the currency was unstable.  With amusement she provided a survey of local attitudes about "which houses were funded by which currencies," including how houses built with money from Hong Kong, Korea, Saudi Arabia, and Singapore might be differentiated.  Even though "the houses look alike," gossips also kept track of how much individual siblings might have contributed to particular structures, as though it was a feature of the architectural design. In an environment of gossip, discussion, and judgment, "the materiality of what money can buy," as well as ideas about bad luck and divine retribution, seemed to shape the dynamics of a no-win situation for women who must fend off gossip and project hard work.  In contrast men "might be shamed but also excused."  Even good female providers faced "accusations of being bad mothers and wives," as they struggled with "fulfilling those expectations" and negotiating financial and moral risks.


"Group versus Individual Strategies: Dynamic Social Networks of Mobile Money among Unbanked Women in Western Kenya" by IMTFI veteran researcher Sibel Kusimba of American University used techniques of social network analysis and information visualization as a way to formulate research questions, present evidence, and point to new directions for inquiry.  (Readers should check out my previous blog stories about Kusimba's work here and here.)  She began with a sociogram of Edward, a man receiving remittances from children and recirculating them to other family members in his social graph such as siblings and mothers.  She showed how drawing network graphs might allow us to see central nodes.  However, she was dissatisfied with the fact that graphs did not indicate time and didn't deal adequately in economic complexity.  By using interactions with informants at regular intervals over time, which encompassed both persistent and variant transactions in dynamic social networks, she hoped to learn more about how transactions shape social ties and vice versa.

Kusimba had many reasons to invest research efforts in data from financial diaries, which would be complemented by questionnaires and observations. Such diaries allow researchers to understand cash flows and financial instruments and perceive a more diverse range of financial tools.  Thus it is more likely to see where new products could support existing needs. She cited the work of Daryl Collins of Portfolios of the Poor on how poor people manage money and manage positive value over time and compensate seasonal events and shocks.  For example, she noted how from participating in a maturity ceremony for adolescent boys (in research presented at a previous IMTFI conference), her informants managed changes in their non-cash assets, such as livestock.

Her methodology focused on 20 women in Western Kenya and represented their social roles in their  networks by mapping cash money, in-kind gifts, mobile money, and other assets.  She initiated visiting in December and visited women every two weeks.  Her subjects ranged in age from 23 to 74 and were mostly combining farming with many entrepreneurial activities including proprietorship of a "beauty saloon."  She laughed about the accident of having "captured the one percent," given the rarity of owning a car. Researchers had to have considerable discipline, because "the women are very busy; most of the time they are not home."

She showed the intricacies of the networks of Robai, a potter who was 500 meters from nearest M-PESA agent and provided a view of her home and the floorplan of household relations that demonstrated her proximity to the homes of two co-wives' houses.  Rather than use older models of kinship maps, she deployed visualizations of the independent strategies to understand "how people make decisions" and situate themselves in relationship to flows of "incoming and outgoing money." Such visualization techniques with the tools of network theory also made it possible to observe centripetal and centrifugal patterns of the flow of money, resources, and relationships.  This economy might include the secret places of a beer brewer or the uses of food plants by a woman. Wealth might be produced with her mobile phone, as well as with face-to-face interaction.

She also introduced the theme of the problems of mistranslation, carried over from nuclear family norms in the US.  In particular she argued that "seeing the household as a separate unit" was deeply problematic, at the most basic level because men might rear children at multiple domiciles. Moreover possible words for the "household" didn't always reflect the same social and economic grouping. She observed that there was actually no adequate word, because larger groupings like "Ekholo" (clan) were less slippery than "Mungo," which depended on a gendered. Because different words for family don't gloss for household, it was possible to commit communicative blunders when trying to translate words.

Furthermore, she asserted that a purely economic view of success was too limited, which charting the relationship between money and time could broaden.  Thus a woman's transactions might seem to show a pattern of negative cash flow but not be associated with impoverishment, because she had acquired considerable wealth in social capital during the process. By looking at how her economic capital might get traded into social capital, Kusimba argues we get a more capacious view.  In closing she cited the work of Ananya Roy on "bottom billion capitalism."


"Generational Tensions in the Uptake of Digital Financial Services: Adolescent Girls and Adults in Nigeria" by Jude Kenechi Onyima of Nnamdi Azikiwe University explored how financial adoption might be influenced not only be the issue of trust, which is common in elders, but also by generational conflicts.  Anemia lamented the fact that too frequently the 32 million adolescent girls in Nigeria were "lumped together with adult population.  The methods of his study focused on four communities -- half Christian and half Muslim -- with a focus on 120 randomly selected girls.  In gathering data he wanted to include informants from both northern and southern regions and from both urban slums and rural areas.  96% own feature phone, and 70% own both feature and smart phones. 78% of smart phones were bought by friends as birthday or lovers’ day gifts. "Adolescent girls use their phones basically for fun, peer-based learning, networking and occasionally for financial transactions." He reported that the average adolescent girl spends 4.5 hours daily on mobile phone.

He found adults were "not comfortable with adolescent girls using financial services short video phone and peer-based learning," because adults were annoyed with adolescent girls’ use of phones for a variety of causes, such as the  time spent with the phone, financial reasons, and the development of unauthorized relationships with unapproved males. Adults insisted on "no smart phone for early adolescent girls" and "monitoring: for late adolescents.  Adults also expressed concerns about "poor interpersonal relationship" skills, compromised status, talking more with strangers than with family relations, distraction, road accidents, secretive lifestyles, increased flirting, and the abandonment of  household chores

They identified three key areas of concern

- Social reasons: More pressure from opposite sex, can be cajoled into unwholesome behavior, poor interpersonal relationship especially with relatives, cyber bullying, cultural extinction, distractions from academic activities, spreading of gossips, road accident.

- Family reasons: abandon house chores, conflicting moral values(increases tendency to tell lies), conflict with family members, need to get money to buy data.

- Health reasons: snacking while pinging(obesity), less time for exercise, poor sleeping pattern owing to night chatting, postural disorder, vulnerable to internet use gaming disorder(aggressiveness & attention deficit).

Because teens saw their digital identities as part of their global citizenship and contemporary literacy, they resisted the strategies of control from their elders, and even learned to make their phones difficult to use.  Adults also needed to be ingenious and restricted adolescent girls to specific services and sites.  His research team also saw the nature of gifts received from opposite sex being transformed.  New gifts included airtime/data bundles, digital money, online purchases, customized gifts, videos, and electronic gadgets. Adults bemoaned increased flirting, a tendency to tell lies, and perceived materiality among girls.

He argued that it was important to resist broad generalizations, however. Christian girls might have more chances for uptake more than their Muslim counterpart, but the resulting tensions in Christian homes might also be an inhibiting factor. Tensions are also higher among urban poor than among the rural poor, where access might also be enhanced. Unfortunately the arguments/counter arguments about whether adolescent girls shall use digital innovations and norms about when to use them and how to use them were not considered in designing marketing campaigns by DFS (digital financial services) operators. Only 3% of adults were likely to encourage uptake of DFS among adolescent girls. "This represents a huge roadblock to adoption," he argues.

In discussion participants noted the importance of rapid change and how interactions are "very much in flux."  Their research on gender also encompassed different ages and education levels.  The theme of the importance of translation and the problem of lack of discussion of men and boys in panels on gender was also raised.  In closing, the value of comparison facilitated by IMTFI was lauded, as was their emphasis on a "monetary ecology" approach.


Tuesday, February 23, 2016

Final Report - Mobile Money Utility & Financial Inclusion: Insights from Unbanked Poor End-Users in Nigeria and Ghana

The comparative report from Lite J. Nartey and Olayinka David-West exploring dynamics of mobile money utility amongst poor unbanked users in Nigeria and Ghana has just been released. Filled with analyses, research tools, and informative wordles, and colorful infographics. View the full report here.

Ghana: Non-User General Trust Perceptions of Banks Vs. Telcos


Nigeria: Detailed Non-User Trust Perceptions of Banks vs. Telcos

Sample of concluding insights:
• The mobile money services offered are basic and ranked at the bottom of the hierarchy of consumer financial needs.
• Although the mobile money services offered are supported by a myriad of value creation and delivery processes, the low adoption levels are indicative of additional efforts in the value delivery activities like market development and segmentation.
• Direct marketing is a useful tool to encouraging both awareness and a better understanding of the product. However, more needs to be done to increase base awareness and actually encourage users to try to these platforms.
• In Nigeria, the relatively low adoption and utility rates do not support innovative uses by the targeted users.
• In Ghana, despite the low adoption rate, the service is highly favored amongst those that actually do use it.
• The use of informal savings schemes like susu or ajo that provide savers with a pool of funds to facilitate substantial payments are a popular and preferred savings method. The use of transportation services is a substitute for remittance services; however, the transfer and resale of mobile airtime are also employed for small amounts.

Read
blogpost summarizing key findings.

Sunday, November 15, 2015

Mobile Money Utility & Financial Inclusion: Insights from Unbanked Poor End-Users in Nigeria and Ghana

by Lite J. Nartey and Olayinka David-West

Cross-section of Nigerian focus group
Mobile money is a unique service comprising the convergence of two industries—banking and telecommunications. Still in its nascent stages, the industry is making a significant impact on financial inclusion and transforming the lives of the poor. Indeed, mobile money “represents the biggest opportunity to increase financial inclusion in emerging markets” (GSMA MMU Annual Report 2012)There is, however, more room for penetration and access of mobile money globally. Access to financial services (financial transactions, credit, savings etc.) is important for individuals to financially manage, structure and plan livelihoods for themselves and their families. It is worth noting that 50% of adults worldwide (more than 2.5 billion people) do not have access to formal banking services, and 59% of adults in developing economies are unbanked poor (Demirguc-Kunt and Klapper, 2012).

Mobile money as a solution for financial inclusion has been relatively successful in East African countries like Kenya and Tanzania. The project titled “Mobile Money Utility and Financial Inclusion: Insights from Unbanked Poor End-Users”, examined Western African practices—Ghana and Nigeria in particular. This mixed-methods study examined mobile money utility, the understanding of the products offered to the poor and how these products are utilized. From talking to mobile money providers and other researchers, we understood the range of services provided. The consumer study, comprising of focus group discussions and surveys highlighted the utility of mobile communications and financial services (savings, contributions, mobile money) by the unbanked poor in Ghana and Nigeria. The telecommunications growth in sub-Saharan Africa has significantly improved access to mobile telephony; teledensity estimates exceed 100 percent in both Ghana and Nigeria. However, our findings reveal that mobile money services have been developed around formal services and hence adoption is relatively low amongst the financially excluded.

Mobile Money Utility in Nigeria
Cross-section of Nigerian focus group

In Nigeria, banks and informal groups are providing financial services like money transfers, savings, and contributions that are commonly found economic practices amongst the poor. Mobile phones are  primarily utilized for basic telephony—voice calls and short message service (SMS). The convergence of voice, data and media that has led to the growth and popularity of smartphones is evident in the growing number of mobile data services such as Internet browsing and messaging. However, utility of mobiles for financial services is still very low.

In spite of the high institutional trust of both banks and telcos and perceived convenience, mobile money adoption is inhibited by factors such as low knowledge of operational protocols and product/services, network quality, and trust. Key improvement areas for Nigerians were service delivery and market development.

Ghana
Microfinance institutions, savings & loans companies, and cooperative/ joint saving schemes provide savings products in Ghana popularly known as “Susu.” Even with high levels of ownership, mobile phones are predominantly used for voice and SMS with data-oriented services trailing.  
In Ghana unlike the case in Nigeria, knowledge and adoption of mobile money appears significantly higher in insurance products and money transfer. However, inhibiting factors include transaction costs, agent/customer/merchant disputes or issues, and network quality.

Whilst Ghanaian respondents perceived telcos as more trustworthy than banks, areas of improvement included the extension of services supported on the platform. Mobile money improvement areas in the two countries under observation appear to be somewhat contradictory. Nigerians are desirous of enhanced service-delivery through more accessible channels and market development while Ghanaians seek service extensions derived from innovation.Whilst person-to-person remittances are well supported, complementary services that the customers value vary. In Ghana, for example, where telecommunications companies are licensed to provide mobile money operations, complementary services such as ATM withdrawal are not as prevalent as in Nigeria that operates on bank-led or independent consortia models. These models warrant different strategies and institutional processes to enhance value proposition, market development & education, and distribution. As such regulatory licensing models are important considerations for mobile money development and growth.

Results 
The key insights drawn from these two West African countries are summarized below.

  • Firstly, awareness in Nigeria is somewhat lower than Ghana despite the former having more providers. The notion voiced by one of the members of the focus group participants that mobile money is for the rich may be indicative of inadequate communications.
Figure 1: Expression of mobile money curiosity from Ghanaian non-users

  • Secondly, access limitations were evident in both countries where the lion’s share of consumer transactions are conducted in open (informal) markets using cash. The expanse of the mobile money ecosystem is evident in the exclusion of the open markets tradesmen, transportation providers, hawkers, and other informal services that are utilized by a large proportion of the population may explain the low adoption rates. These adoption rates are particularly low in Nigeria (3 percent adoption amongst survey participants), a country promoting Cashless and Financial Inclusion Strategies.


Figure 2: Nigeria-Perceived Usefulness of Mobile Money 
Figure 3:Ghana-Perceived Usefulness of Mobile Money


  • Finally, the financial nature of mobile money transactions mandates higher levels of trust, especially amongst the unbanked poor. In spite of the institutional trust ascribed to both telecommunications operators and banks in both the countries, network quality and sustained functionality undermines the entire service.

Conclusion
Key mobile money insights from unbanked poor users in Ghana and Nigeria suggest that providers of these services need enhanced strategies in the following areas: awareness/communications, adoption, and trust. The service expansions sought by Ghanaian respondents warrant ecosystem development supported by a more open and inclusive platform. In all, the most crucial strategy will be the substitution of mobile money for cash in open markets where the majority of the population trade.
--
GSMA (2012). Mobile Money for the Unbanked poor, Annual Report, 2012, pg. 2
Demirguc-Kunt, Asli and Leora Klapper, 2012, “Measuring Financial Inclusion: The Global Findex Database,” World Bank Policy Research Paper 6025.


View the full report here.

Monday, August 3, 2015

Wealth without Currency: Social Money Usage in Rural Nigeria

By Onyima Jude Kenechi and Onugu Charles Uchenna

Girl child/ marriage in Umuchu
What is it like to live without currency in the 21st century? How could communities without legal tender and banking systems accumulate, store, and transfer wealth? Imagine possible mechanisms for managing wealth in a context where the social system is used in place of a financial system! That was our focus in this study. We explored the traditional non-cash modes of saving, storing, and transferring wealth in communities where social contracts have more prominence than cash. We analyzed the financial behaviors of people who live outside the conventional banking system, and how social contracts were used to manage wealth.

Social monies, as they are fondly called, are systems of shared obligations, rights, and relationships that entitle one party to perform an economic function for another. Values both economic and social are stored, saved, and transferred through social contracts, contributions, gifts, and donations to others which should be repaid in the future, probably through other means. Such social monies can be in the form of giving title, bride wealth exchange, contributions to ceremonies, giving of gifts during festivities, membership in clubs and groups, and land inheritance. As Sibel Kusimba (2013) and her team in their study on social networks and mobile money in Kenya observed, social relationships in rural African contexts are created through exchange of future values, debts, obligations, and a culture of entrustment in which future repayments are expected, especially during emergencies. Indeed, values worth millions of U.S dollars are exchanged daily in Africa using social monies despite the lack of formal currency.

Apprentices and their tutor in tailoring shop in
Amawbia, Anambra State
These non- cash modes of storing and transferring value are still popular because they have socio-cultural symbolism. Users are attached to them because they are convenient, relatively stable, and trustworthy. Since social monies usage is culturally ingrained, new financial innovations such as mobile money which makes remittances easier and faster ought to alter community dependence on them. In the light of this, we interviewed, observed and through listening to people’s stories sought to determine whether mobile money adoption in these communities could alter their social monies usage.

We sampled 512 women from 23 rural communities in Southeastern Nigeria who live on less than US$2 per day. Although 99% of them own mobile phones, only 3% of them have bank accounts. We interacted with these women and their community/cooperative society leaders as regards various traditional non-cash mechanisms of managing wealth and the possible effects of mobile money adoption on them. Interestingly, 7 popular non-cash modes of saving and transferring wealth were noted.


Banking with deities

Pictures of deities were not provided
because chief priests warned against it.
Even the diviners who sought the mind
of the gods said that the request for a
snapshot was turned down by the deities.
Deities are major sources of borrowing and saving wealth in the area we studied. The words of chief priests are sacrosanct in financial matters. They have helped to shape the financial behavior of adherents. Deities through their priests safeguard the valuables deposited at the shrine, and also lend money to borrowers. The awe and reverence the deities enjoy among their adherents makes it possible for them to perform some financial intermediation roles. This is similar to what Kenneth Omeje (2009) observed in his IMTFI-funded research, Borrowing from the Gods. These deities through their priests perform debt recovery functions, insurance, financial negotiation, factoring, verification of claims, advisory and guaranteeing services. In recent times, some priests have taken it upon themselves to scale their operations by imbibing some formal banking practices such as advertising and documentation.


Storing and transferring social and economic values simultaneously

Village shop and shopkeeper in Imezi-owa, Enugu State
Items that have only economic values can be conveniently stored and transferred in cash. However, items that have both social and economic values cannot be stored in cash; that is the relevance of social monies. They are the mechanisms for storing and transferring both economic and social values simultaneously, as seen in apprenticeship, marriage, and title taking. The following quotes address each of these issues:

Adanna, a 22 year-old apprentice, affirmed, “I do not have any money now, although I work. Since as an apprentice I would be settled with a new shop and a large sum of money in a few years to come, my toil for 4 years is not in vain. I have stored a fortune for myself.”

Ngozika, a 54 year-old mother of four noted, “No one here doubts the financial benefits of having a girl-child. My in-laws take care of my monthly upkeep and training of my two younger sons. My omugwo (post-natal visit) is fast approaching in two months time and I am sure my wardrobe will change. I pity women who do not have girl-children.”The following explanation from Mmasi, a 34 year-old single mother, was very insightful: “Emeka, the shopkeeper in the village square, is my bank. I keep the proceeds of my palm business every fortnight with him. This is how I grew the capital I used to buy assets. I trust him because he is reliable and his shop is big and well stocked……..Even if he uses my money, he can conveniently pay it back.”

“Our family’s three years of savings and income were put into my husband’s title taking,” Mama Nneka, a 46 year-old user of mobile money, commented. “It is an important achievement for the family. Apart from social relevance, it is a dependable residual income. He is paid to take part in ceremonies and in dispute resolution. His share of money is kept for him even in his absence by various community associations. The title will be transferred to my son when he dies. It has lifted us above poverty and lack.”The introduction of financial innovations like mobile money would not alter their usage. Instead, it would strengthen it. For example, the marriage relationship, although social in nature, has economic offshoots. As a result, economic terms alone cannot capture the essence.

Mobile money can only store and transfer economic values and as a result, communities will keep searching for mechanisms for storing and transferring both economic and social values. The major weakness of social monies is illiquidity and lack of general acceptability. They are not easily convertible to cash, and can only function where trust and prior relationship, exist. This understanding is critical for designing financial products, and it could assist operators in knowing what people in rural areas would use mobile money for, and what they would not use it for.