Technology Knows No Age: Voices of Elderly Persons Receiving Mobile-Enabled SAGE Cash Transfers in Uganda

by Julius Okello  

This blog reflects on the immediate impacts of the Senior Citizens Grant, a component of the Social Assistance Grant for Empowerment (SAGE) provided by the Government of Uganda. Digital payments geared toward changing the lives of elderly persons started with the SAGE pilot program in 2011. SAGE remits monthly stipend to beneficiaries aged 60 years and above through Mobile Telecommunication Network (MTN). Although mobile money services have existed for seven years in Uganda, they are still viewed as novel and mostly used by younger generations. With the mobile disbursement of SAGE, however, older persons in Uganda are gradually tapping into these electronic payment innovations. 

SAGE Beneficiaries guided by MTN agents to insert MTN yellow card into yellow easy talk phone 

Initially, when SAGE payments through mobile money were introduced, many of the elderly beneficiaries were very confused. Most of them did not even have a mobile phone, nor did they have any knowledge of how to operate one. Others wondered how they would receive money from a phone -- a machine! This was further coupled with concerns from the older persons and politicians about whether MTN could smoothly implement the program, given the corruption in Uganda that has derailed most government programs in the past as well as the fact that mobile money was still a new technology to reckon with for the “born before computer” (BCC) generation. Nonetheless, senior citizens grants (SCG) beneficiaries are now encountering the reality of mobile money services. Payments to beneficiaries’ mobile money accounts are made through an instant e-money transfer service and are converted into cash by an MTN agent at designated pay points. All beneficiaries are given a five-digit Personal Identification Number (PIN) by MTN and also receive an identification card issued by the SAGE programme that MTN agents use for identity verification. This enables registered MTN subscribers to access their money through authorized MTN mobile money agents in their district. After verification, the recipient’s MTN card is inserted into the yellow talk machine to verify the balance on the mobile money account before paying out the stipulated amounts. While some beneficiaries do not necessarily grasp the entire process of effecting payment, they are aware of the amount that they are supposed to receive. 

Why MTN mobile money for SAGE cash transfer? 

Given past experiences of corruption and mismanagement of government programs for the poor, the Ugandan Ministry of Gender Labour and Social Development felt that SAGE money should be handled by MTN for purposes of: 

• Extending services nearer to older persons.
• Minimizing transfer costs through banks.
• Creating an enabling environment for the elderly who are mostly unbanked.
• Reducing risks associated with handling cash within the ministries.
• Reducing load on management and its associated challenges.
• Minimizing leakage associated with handling cash.
• Guaranteeing transparency and accountability for SAGE funds.

The program was the first of its kind to be implemented by the government through MTN mobile money and it has been fairly effective and serves as a lesson for government, individuals, businesses and development partners.  

Overall, it has been observed that cash transfers through MTN mobile money has improved the nutrition of older persons and their families in Uganda. Over 90% of beneficiaries spend the largest portion of their cash transfer on food and the smallest proportion (10%) reported spending it on alcohol. Meals eaten by beneficiary households have greatly improved; unlike earlier older persons can now afford two reasonable meals per day for themselves and their families, particularly their grandchildren. A 69-year-old woman in Lwamata Sub County revealed, “Because of the availability of quality food, our grandchildren are now happy to go to school, are able to stay in school longer and learn better.” Another respondent in Kiboga town council said, "My grandchildren in lower primary can now carry food stuffs to school for at least three weeks from the time the payment is made by MTN, they are now willing to go and stay longer at school since they have packed food."

Another frequent use of SAGE cash transfers is for medical care. About 52% of the respondents reported having spent the money to pay for their medical bills and 40% used it to purchase prescription medicines. A 77-year-old man from Kibinga sub county, explained, “Before the SAGE cash transfer, I would hesitate to go to hospital because most government hospitals require us to buy medicine. But with the SAGE cash transfer I can easily afford paying for my prescriptions as I am waiting for my children’s assistance.” 

Paying school fees is generally a major problem for most vulnerable families in rural areas. However, this is slowly changing with more efficient disbursement of SAGE cash transfers. According to older persons, with the little they get they are able to invest in school fees as well as buy scholastic materials for their grandchildren. This was confirmed by an 87-year-old woman who stated, “I have five grandchildren whose mothers died of HIV/AIDS. Each of them left children for whom school fees has to be paid. Through the SAGE cash transfer I have been able to educate three of the children up to primary six, senior one and four.” A head teacher was also quoted saying, “Most children in the SAGE households can now ably attend school. Their completion rate has greatly improved compared to before SAGE.” All of these findings are worthy of substantiation by future research.  

Elderly women’s participation in community affairs has also increased with the SAGE program resulting in greater self-esteem and empowerment. Female  beneficiaries feel less discriminated against in their communities; they feel more valued by their families on account of their ability to make social contributions within their families and community. For instance, an 82-year-old woman from Bukomero sub county was able to pay for the funeral of her neighbor's daughter. She said, “Recently my neighbor lost a daughter, there was a need to secure a coffin and other needs. I contributed four thousand, this happened when MTN agents had just paid me SAGE money.”   

SAGE beneficiary households also tend to invest the grant in increasing productivity of farming and agriculture and the establishing small businesses. An elderly woman in Kibiga Sub County stated, “I regularly save a portion of my grant to cover emergencies, cultivation, meeting the basic needs of my household as well as saving to hire day-laborers to open up idle agricultural land”. 20-30% of SAGE beneficiaries regularly invest in agricultural production by buying livestock and other agricultural inputs and hiring ox-ploughs and day-laborers.

While the mobile transfer of government assistance has contributed to the improved welfare of older persons and their families in Uganda, MTN has faced several challenges in the implementation of the SAGE program. Limited infrastructure and lack of a robust mechanism for controlling fraud has been a problem, particularly in Kole, Nebbi and Katakwi. In addition, there are only a few banks for mobile money operators to acquire the necessary floats for SAGE funds. Due to the large number of beneficiaries relative to MTN agents, elderly persons have to sometimes wait longer then anticipated to receive their funds and also face delays in the replacement of lost or faulty SAGE cards. 

Overall, however, the SAGE pilot program, remitting funds through MTN mobile money, has proved to compliment goals of ending hunger and poverty through financial inclusion of the unbanked. For more efficient delivery of services especially in rural areas, the SAGE programme has very good lessons to offer. Mobile money seems to be the most viable way to implement such programs and minimize the bureaucracy of government institutions and the resulting leakages and corruption that are common to many present governments in Africa. 

The views expressed in this blog are not necessarily those of the African Institute for Strategic Research Governance and Development.

For more details, read Julius Okello's Final Report. 

Leveraging conditional cash transfers to develop local mobile money ecosystems (part 3 of 3)

By IMTFI researcher Erwin A. Alampay

Understanding the potential impact of using mobile money for cash transfers to the poor requires understanding how beneficiaries make use of their money, and how their community ‘behaves’ as a result. For instance, do they consume all the transfers, or would they retain some as savings? How quickly do they spend their money, and for what? Are there gender issues with respect to decision-making regarding its use?

Market vendors tend to follow CCT
beneficiaries on day of CCT release

For instance, it has been observed how small markets/ local vendors appear near the places where you can obtain cash when Conditional Cash Transfers (CCTs) are being released. We noted how some of the items being sold were non-essentials (e.g. balloons) (see Picture 1). Gusto & Roque (2014) say that one advantage for entrepreneurial ventures such as this is convenience, saving them transportation expenses and time. However, they noted (like we observed) that some goods sold might be "unnecessary."

Roque & Gusto (2014) estimate that around half of conditional cash transfers are spent on food, a third on education, and about 6-10% on healthcare. If there were savings, they were usually reserved for education related purposes. At the same time, they noted that the more popular form of "savings" was "non-monetary" in form.

How might mobile money alter this? An experiment in Niger showed that there was greater diversity in goods purchased among beneficiaries who received their cash transfers through mobile money (Aker, et. al. 2011). They speculate that this may be the result of greater "privacy" which in turn affects intra-household dynamics in decision-making concerning how money is used.

At the IMTFI annual conference held last December, our group speculated on how such a scenario might play out (see Photo 2). One can also assume that if carried out in the Philippines a similar change could arise, especially if the space for transfers becomes "virtual." It would then be less public (and more private), and hence there would be no physical space for the local community’s vendors to congregate.

At present, there are some system "losses" in terms of use of money for "non-essentials" (see Photo 2). Not only is the release of the transfer known to the households, but the entire community is aware of the event. On the other hand, if the transaction is purely electronic, then there is a stronger possibility for such goods being used primarily for more targeted and developmentally beneficial use.

It should be mentioned that early on one of the potential benefits people considered in the use of m-money was a reduction in reliance on cash as a transactional medium (Porteous 2006). Indeed, this would be beneficial in the delivery of CCTs if a larger share of the transfers could be kept in m-money form, since this would reduce the amounts that need to be cashed out. This would simplify CCT logistics, reduce the need to transport huge amounts, and provide for a more secure way of saving money, while also expanding the network of people who would be more willing to accept or undertake m-money based transactions.

Output from the IMTFI workshop
illustrating expense “losses”

This brings me to two points: First, we can work only with merchants (especially the ones that provide basic goods and services) that most beneficiaries would buy from (e.g. rice vendors; hospitals, schools; vegetable/meat/fish vendors) to make these transactions convenient and easier. This would require working with retailers in the area to build their capacity to transact with mobile money. Second, one can view restrictions on CCTs through spending in m-money-only transactions as potentially beneficial, since this could encourage saving by reducing the possibility of spending the money on frivolous (unnecessary) goods.

This way, making it easier to use m-money to transact with certain merchants can be helpful in directing consumption towards more development-oriented uses and complementing the primary objective of conditionality. It will reduce the need for cashing out, and at the same time stimulate the local economy through the consumption of local goods and services.

We need to recognize, however, that this kind of change is not easy. There should also be incentives for both beneficiaries to encourage adoption of non-cash based transactions. For beneficiaries, for instance, the consumable value for m-money based transactions can be higher than the actual value (e.g. extra credit; discounted services). For the merchants, the volume of money channeled to CCT beneficiaries on a regular basis hopefully will be enough incentive for retailers to get interested and sustain the change.

However, limiting how CCTs can be consumed also poses a danger of reducing people’s freedoms and creating "unwarranted" or false demand on certain commodities that beneficiaries do not consider crucial, thereby affecting local prices. To address this, a system can be designed where the "savings" (m-money unconsumed over a period of time) are freed up for use on any other consumer product, encouraging/incentivizing savings among CCT beneficiaries.

As such, the volume of conditional cash transfers, and more recently cash transfers flowing in for rehabilitation efforts for Typhoon Haiyan, can provide a rare opportunity to get away from what Mas and Radcliffe (2011) call a "sub-scale" trap, by providing a rare opportunity to increase membership in the network of m-money users. This can attract merchants because of the large number of customers and actual funds in the system. Hopefully, its increased use will develop greater trust in the system of m-money commerce and sustain its use in the local ecosystems.

Read the first post, "Use of m-money for conditional cash transfers in the Philippines: Part 1 of 3," and the second post, "Conditional Cash Transfers in the Philippines."

Conditional Cash Transfers in the Philippines (part 2 of 3)

By IMTFI researcher Erwin A. Alampay

According to the Department of Social Welfare and Development (DSWD), only 20% of the population receiving conditional cash transfers (CCTS) are operationally problematic. The constraints offer some clue as to how the use of m-money might be unfeasible in these locations. In particular, it will be unfeasible for m-money to work in areas where there are no cellular signals, which likely accounts for part of the difficult to reach 20%. Nonetheless, would it still be beneficial to consider the implementation of m-money in other areas?

Photo 1: Enumerators prepare tokens for the survey respondents

At present, there are various modalities for delivering conditional cash transfers to their intended beneficiaries. These different modes consider the availability of Landbank branches, or in its absence, possible partner rural banks, and postal services (PhilPost). The expense for the DSWD vary per option. For those using Landbank/cash cards, there is no additional costs except for the initial cost of providing cash cards. For partner rural banks, the rates vary between 22 to 40 pesos (about US$.50 - $.91). Using Philpost, a government-owned corporation, the cost is 50 pesos. If none of these are feasible, then other groups bid to provide the service. By bidding this out, the cost of using other private conduits has gone down from Php75 initially to only Php42.

In terms of using m-money as an alternative, the question is whether it can deliver to beneficiaries at a cost less than other modalities in areas not serviced by Landbank/cashcards, but where access to mobile services are present.

We considered the technical and financial feasibility question, by visiting an area where GRemit has operated, San Jose, Mindoro Oriental.  In the past two years, at least half of CCT funds that have been distributed there were delivered through GRemit, albeit not through a “pure m-money model.’ There is also operational m-money infrastructure in the area (e.g. GCash and Smart Money/Padala).

Technical feasibility

We surveyed CCT beneficiaries that GRemit was already servicing and asked about their interest, access, and previous experience in using m-money through cellphones. The majority of respondents (71% of 307 respondents) expressed interest in receiving CCT through the mobile phone. Relative distance to known claim/redemption centers for mobile money was significant with regards their willingness to do this. Those who were closer to a known cash-out center were also more willing.

In terms of mobile phone ownership, almost half (49%) of the respondents owned a mobile phone, and a majority subscribed to SMART (90%). Interestingly, ownership of a mobile phone was not statistically significant as to whether they were interested in m-money for CCT. This suggests that even those who currently do not possess a mobile phone are open to this option. This also means, that if this is to be universally rolled out, then the cost of providing mobile phones to the beneficiaries must be considered in design implementation.

Photo 2: Beneficiaries wait for their names to be validated.
In the background mobile stalls sell toys, clothes and food.

Overall, a third (34%) reported knowledge of receiving money via the mobile phone. People’s pre-existing knowledge of the use of m-Money was also statistically significant with regard to willingness to use it as a transfer conduit. Those who knew how to use m-money were more willing to have CCTs delivered through their mobile phone. Furthermore, those who had previous experience using mobile money were also those who reported interest in receiving their CCT in this manner. More of them were familiar with and had experience transacting with SMART Padala centers than with GCash merchant partners.  Partly this was because more of them were SMART subscribers, and there was a greater presence of such outlets in the area (see Photo 2). A third had already experienced using SMART Padala, and only 1.5% had used GCash. Although training non-users would be still be needed for implementation of CCT thru m-money, the existing experience in the community can be helpful in its acceptance. 

Financial feasibility 

To be financially feasible, cost efficiencies and potential savings (for both the government and the beneficiaries) should be demonstrable. The DSWD expressed preference for more frequent CCT releases at smaller amounts. However, if this is done, the operational costs would be greater because of manpower costs and expenses directly connected to its distribution and compliance monitoring. 

Would m-money provide a financially viable option in such a case? At current market rates, it was calculated that at smaller increments (cash transfers lower than Php2000), both GCash and SMART Money can be delivered at a rate lower than what is currently being charged by DSWD’s conduits (i.e. MLhuillier or GRemit). SMARTMoney charges for the sender are also lower than what GCash charges (Php10 vs Php40 respectively).  With amounts larger than Php2000 (about US$46), GCash becomes less viable, whereas SMART Money continues to be a viable alternative. At present, the maximum benefit provided on a bi-monthly release is Php2800.  This would cost Php15 for the sender if coursed through SMART Money, and Php60 if coursed through GCash.

Photo 3: Merchants hand out money to beneficiaries.
Barangay Central and San Agustin.

Costs on the part of the cash transfer recipients can also be compared. For CCT beneficiaries, their primary concern is the travel expense. However, transactions using SMART Money has additional charges, whereas GCash does not. It was also noted that the different cash out centers we interviewed in San Jose were not consistent in their policy as far as cashing out was concerned. This implies, that if CCT is implemented in this way, then m-money merchants must be duly trained/informed; and beneficiaries taught the correct deductions, if any. For smaller cash transfers, GCash and SMART Money, even with their additional charges, are competitive and even better than the current amount DSWD pays for delivering the amount per beneficiary, particularly for transactions below Php2000. GCash is not viable with bigger transactions (higher than 2000), whereas SMART Money becomes less attractive once money transferred is higher that Php2700.  But, given the large volume of money possibly coursed through this system, the government may want to negotiate for reduced rates.

Nonetheless, there would still be limitations on m-money viability. It would be dependent on the scale of availability of these services, and accessibility of their cash out centers in the areas being served and the transportation costs for accessing them.

Conclusions: Implications on CCT program design

Even as mobile phone coverage increases, there will still be areas where access to mobile phones is not universal. As such, an important consideration for CCT implementors is whether to provide this option only to those with mobile phones, and/or to provide mobile phones to beneficiaries as well.

Rolling out this program would be easier to implement in areas where cash out centers already exist. There, existing knowledge and experience in receiving cash transfers through phones are more likely, and community knowledge can be leveraged to help convince and train non-users. 

Financially, an m-money based CCT can be viable, particularly for small and frequent transfers. Further, since there are two kinds of mobile money platforms in the Philippines, another consideration is to which existing networks the majority of beneficiaries in an area are subscribed and the ubiquity of partners/merchants present there.  This can reduce barriers to adoption and generate positive interest in the proposed modality.

However, would the existing number of m-money cash out centers be able to absorb huge single day demands for cashing out? Can cashing out be controlled or reduced by retaining CCT in a non-cash (m-money) form within a local ecosystem? This will be discussed in my next blog: “Leveraging CCT to develop stronger m-money eco-systems in local communities.”

Read the first post, "Use of m-money for conditional cash transfers in the Philippines: Part 1 of 3"

Use of m-money for conditional cash transfers in the Philippines: Part 1 of 3

By Erwin A. Alampay based upon his IMTFI funded research with Charlie Cabotaje

Design-Reality Gaps in the Use of M-money for Conditional Cash Transfers in the Philippines

Conditional cash transfers (CCTs) are programs that transfer cash to poor household beneficiaries on the condition that they regularly accomplish a set of human development tasks on a regular basis. These are often related to investments in the health and educational well-being of their children that are also monitored. Most CCT programs move transfers through the mother (Fiszbein & Schady 2009).

CCT Distribution by GRemit merchants in San Jose, Mindoro Oriental
Photo credit: Charlie E. Cabotaje

In the Philippines, the conditional cash transfer program is called the Pantawid Pamilyang Pilipino Program (4Ps) and is overseen by the Department of Social Welfare and Development (DSWD). It is a human development program that invests in the health and education of the poor, particularly those with children between 0-14 years of age. As of June 2013, the program had already enrolled 3.9 million households. The amount disbursed has also grown by 3300% in 5 years, to almost Php34B (about 753M US$) in 2013. Given the program’s scale, whereby beneficiaries are given cash grants of between Php1600-2800 (35-62US$) every two months, one of the main challenges is logistical, given the limited access to banking services in a country that is composed of more than 7000 islands.

Growth in funding allocated to CCT 2008-2013 (Source DSWD)

At present, DSWD uses various channels for sending the CCT. The basic design is through Landbank of the Philippines (LBP) and the use of cash cards. Ms. Antoinette Duero, from the DSWD’s Financial Management Service, estimates that around 40% use cash cards and the rest (60%) uses other conduits, like Philpost, GRemit, etc. They estimate that operationally, they only have around 20% with logistical problems overall (for example people may face significant costs in terms of transportation to get to the payout site, absence of alternative channels, etc.). The majority (80%), DSWD finds ‘manageable’.    

GRemit as a conduit 

On November 5, 2010, DSWD and LBP engaged the services of Globe Telecom in the pilot implementation of the distribution of cash grants using the GCash Remit service, the telecommunications company’s cash pick-up service. Since the pilot, was considered a success, the DSWD decided to expand to more areas using the same service. By 2011, the service was serving about 300,000 beneficiaries and distributing approximately PhP 1 billion (22M US$) in cash grants to almost 70 areas in 16 remote districts in the country. This was said to have made the act of claiming grants more convenient for beneficiaries who used to spend money and time for their transportation to, and queuing up in banks and distribution centers but has also spurred local economic activities as the beneficiaries were more likely to spend their grants in their community (Bold, 2011).  

Design-Reality Gaps on mobile money use

GCash is the mobile money technology that Globe Telecom developed over a decade ago. Among the potential advantages of GCash, and mobile money in general, is its supposed efficiency and security features. In reality, however, the primary consideration for DSWD was to get a partner with a presence in the different areas and districts in the country where they needed to disburse the grants, particularly those where there is no Landbank present and no rural bank available to help disburse the grants. For instance in Balabac in Palawan where GRemit was first piloted, there were no rural banks, and GRemit was the only option they knew at the time. It was noted that initially, beneficiaries were made to travel to the next municipality of Bataraza (or Brooke’s Point) to claim their grants, however this posed security issues for the beneficiaries and significant transportation costs. According to DSWD's Regional Program Coordinator, Mr. Vincent Obcena, “We (initially) had to have the beneficiaries go to the nearest Landbank (in Brooke’s Point or Batarraza). This would cost the beneficiaries several hundred pesos, sometimes 300-500 pesos even.”

Bringing the bank to them

Photo credit: Charlie E. Cabotaje

Another option was to bring Landbank to the municipality through the use of land and air transportation. Mr. Obcena described the logistical challenge of implementing the distribution in 2009: “We even used a helicopter to bring the money, because it was risky for LandBank to transport it by public transportation and boat. That was a risk they did not want (to take on). However, it was also not always possible to have the money brought in by helicopter, and it was not sustainable because it was expensive."

It was noted that the design of its implementation never considered what mobile money technology had to offer. In Mr. Obcena’s words the m-money model does not apply in this case because: “there was no use of the technology by the beneficiary.”

It is worth paying closer attention to the way that money actually passed across the different groups involved in the transactions. To explain how it works, we have an extended quote from a DSWD regional staff member:

"There is no use of (mobile money or mobile phones) technology among the beneficiaries. Instead, beneficiaries are given transaction slips by DSWD with codes. They gave this to the GRemit merchant who will enter the code for verification before remitting the cash. It is only the merchant who has a GCash account in this arrangement. They put the code that DSWD generated at the central office, and texts this back to GRemit. They needed this then because they could not verify the GCash transfer without the code. This was done individually, and not in bulk, as a control measure in case the beneficiary did not appear on the day of the release for funds.  Merchants then get paid per transaction  by GRemit (per beneficiary who are able to collect their CCT) and GRemit, in turn is paid by LandBank of the Philippines."

Ms. Duero, from the DSWD central office, says this is a way for GRemit to monitor their merchants, considering also that these merchants are just accredited by GRemit and not really part of their company. The text sent by the merchant to GRemit is their way of monitoring if beneficiaries were paid and by how much. This is also important because GRemit and the merchant also have an internal fee sharing arrangement for each transaction. The argument (for the sharing) is that even as the merchant provides the manpower and direct field contact, Globe provides the technology and infrastructure. 

Photo credit: Charlie E. Cabotaje

Unfortunately, the design as stated, never really took into consideration how the mobile money technology can be more beneficial for cash transfers. Such a model has been demonstrated to be possible, as Aker, et. al  (2011) have documented in Niger. In the Philippines, the U.N. is also piloting a similar scheme, but this time, partnering with SMART Money as part of a cash for work program to rehabilitate communities affected by Typhoon Haiyan (see Lee-Brago 2013).

As such, among those who qualified for the bidding, GRemit was outbid in early 2013 by MLhuillier, a remittance company with a nationwide network of pawnshops. Partly this was because GRemit did not really have the technological advantage working for it, and MLhuillier’s network could just as easily compare with Globe’s network of merchants. Among the considerations for those who participated in the bid was the matter of cost but also their capacity to deliver the grants down to the barangay-level (community-level).

However, it is also unlikely that the 20% of the population that DSWD finds problematic will be solved through a truly mobile money based system. According to Ms. Duero, the problem for mobile money in those cases would be very basic: some beneficiaries do not have cellphones and some areas lack cell sites and have poor cell signals. More likely, m-money can work in the 80% that DSWD finds less difficulty.  However, if they are not as problematic and is already manageable, why should DSWD consider this as an option? 

Where mobile money can help will be discussed in my next blog, part 2 of 3: “The Potential and feasibility of m-money for CCT in the Philippines: where mobile money can help.”