USP (Universal Social Protection) wallet

Informal workers lack physical address, no-monthly payroll, irregular earnings, high job mobility & inconsistent saving behaviour. Their lack of access to financial tools for saving, credit & risk protection leads to financial & social exclusion.

Solution:

• Tech-based, user-centric solution connects with telcos & communicates over WhatsApp/SMS-Bot/USSD using basic phones, by leveraging foundation-ID.

• The f-ID agency can register everyone & enables self-activation.

• Supports short-term savings, pension & microcredit.

• Non-monetary/financial/behavioral incentives to encourage persistent savings.

• Uses digital payments including mobile money for one-click contribution. 

• Flexi-payment anytime/anywhere/any amount & real-time balance access.

• Facilitates a marketplace for one stop universal social protection products.

• Works with social registries, allows vulnerable participant identification for fiscal incentives & helps governments disburse prompt relief to the missing middle in times of crisis.

• Increased informal workers  participation through digital knowledge awareness. 

Impact: 

• Social benefits portability with labor mobility.

• Overcome hardships.

• Increased  contribution & economic participation.

• Scale social protection schemes.

We are solving the problems of inconsistent saving behaviour, no saving incentives, illiteracy, regional mobility, network migration, limited internet access, lack of transparency, no accountability, missing primary ID framework, complicated contributions and difficult withdrawal process for the informal sector workers, majority being women.

We are  based in Kenya; demographics of the informal sector here is similar to West African countries. A decade ago informal workers (80% of the working population)  didn’t have access to any savings instruments, social insurance plans, and credit facilities. These were major impediments to personal growth.

At this time we conceived the idea of Mbao pension plan to bring in financial inclusion to the informal sector in Africa, starting with Kenya. This was launched in 2010 with the approval of Regulator (RBA, Kenya). More than 150,000 informal sector workers and their dependents benefited from this social insurance by both being our members and on ground sales agents.

Various governments across Africa and beyond have reached out to us over the years to learn and benchmark private led social insurance for the informal sector. This is how we have been sharing our exceptional learnings, with the hope of positively impacting the informal sector globally.

Our current solution has been targeting the non-poor informal workers in Kenya, with at least a basic feature phone. They have irregular, low earnings, no risk protection and many are not financially literate. They have jobs that require them to migrate countrywide and beyond with a diverse range of occupations at varying skills and income levels. These are all common denominators with the informal sector in West Africa.

We have launched pilots across microhealth, microinsurance and micropensions. All this was done with close interaction and active consultation of the intended users after having a deep understanding of their lifestyle and economic activities. 

Our solution for West Africa would be co-developed after intensive consultation to understand the specific challenge they face. Studies would need to be done to understand their specific behaviour so as to design behavioral nudging framework and reminder strategies. The solution would then be tailor made using our experience to meet their specific requirements, incorporating their preferred engagement and payment transaction channels. We would work with government agencies and  telcos; to enable non contributory and voluntary contributory social protection even with limited internet access and support cross border mobility and contributions.

Problems we are solving for informal workers are inconsistent saving behaviour, no saving incentives, illiteracy, regional mobility, network migration, limited internet access, lack of transparency, no accountability, missing primary ID, complicated contributions and withdrawal process; especially considering they lack a physical address, no monthly payroll, have irregular earnings but have a mobile phone. 

Our solution for West Africa would provide social protection by enabling and encouraging contributions for their future even in low resource settings and allow regional interoperability. We focus on overcoming lack of access to financial tools for saving, credit and risk protection; in line with the challenge.

Our solution is innovative because it;

• Works on simple feature phones which most informal workers already own and are familiar with SMS/USSD. Also works on whatsApp

• Allowing interoperability across the region.

• Product marketplace

• One stop access to social protection tools for the informal sector.

• Flexible payments using mobile money and familiar existing payment channels for contributions. People can save daily, weekly and monthly depending on their income levels and preferences.

We have been engaged in contributory social insurance integrated with mobile money over the last decade and most of our competitors have been using traditional payment channels only and have always missed out the informal sector workers. The nearest competitor would be banks, as they provide savings, credits and bancassurance; however, they have always targeted higher income individuals and have left out the unbanked population due to commercial interest. Our vision has been to provide inclusion to all informal sector workers; majority of them being women, who have traditionally been left out. Other solutions that have cropped up in recent years have learnt from us and tried to deploy in their home countries, many times unsuccessfully.

Our solution has been working in Kenya for the last 10 years and is popularly known as Mbao pension plan. This program targets non poor people in the informal sector across Kenya and encourages them to save for the future using behavioural technologies. The program is totally voluntary and is aimed to help members save for their retirements with a minimum contribution of $0.20. The members have got options for medical and funeral cover as an additional rider, enabling social insurance.

We propose a similar solution with few bundled offerings based on our experience. It stands on three pillars – payments, products and ID framework. It connects with telcos and communicates over SMS/USSD using basic feature phones, by leveraging f-ID across the region. The f-ID agency can register all people and one can then self-activate. It would allow P2P,P2B,G2P,P2G payments and work with existing digital payment methods including mobile money. It enables flexi-payment anytime/anywhere/any amount and provides labor mobility with portability of benefits. Facilitates a marketplace for products. The participation of the informal sector workers would be increased through knowledge awareness using digital technology. Deliver enhanced user experience and build trust by enabling real-time access to their balance and one-click payments contribution.

Our tech-based, user-centric solution would be interoperable with social registries, to allow for vulnerable participant identification for eligibility of  fiscal incentives. This will help governments disburse prompt relief to the missing middle in times of crisis and scale social protection schemes.

Theory of Change, for our solution.

Since the inception of the pension plan our membership count has been progressively increasing every year and now the membership stands at around 150,000. The evidence created by this particular scheme (largest by informal member count), prompted the government to create a national micro pension policy for the informal sector and the National Treasury of Kenya has hence requested our team to assist in formulation and implementation of the national pension scheme.

Third party research, discussion, case study and evidence collection has been done with multiple universities (such as Duke and USIU University) and global institutions on Mbao pension plan, including: World Bank,  “A case study Informal Sector Pensions International Experiences,” by Ernesto Brodersohn 2019; ILO, “Extending social security to workers in the informal economy: Lessons from international experience,” 2019; IOPS, “Impact of the digitalisation of financial services on supervisory.Practices in the private pension sector,” 2018; Pension watch, “Social protection for older Kenyans:Options for implementing the National Social Protection Policy”; Social protection & jobs, “Discussion paper: Extending Pension Coverage to the Informal Sector in Africa,” by Melis Guven, 2019 and International Social Review Vol 66, “Extending pension and savings scheme coverage to the informal sector: Kenya’s Mbao,” by Rose Kwena and John A Turner, 2013

Mbao has been the pioneer in launching private led social insurance for informal sector workers in Africa and has been benchmarked globally and even in this challenge.

Our USP(Universal Social Protection) - wallet solution is a simple innovation that targets specifically the informal workers leveraging the foundation ID. In West Africa under ECOWAS, the f-ID framework is being designed/rolled out and we intend to piggyback on this public service to register, incorporate and deliver social protection through a basic mobile phone at a regional level. Also in the ECOWAS region both mobile subscriber & mobile money accounts are projected to grow very fast.

In 2019 there were more live mobile money services offered in West Africa than in any other region in the world. Across 59 providers there are more than 163 million registered mobile money accounts and 56 million active users with a transaction value of USD130 Billion across 4.8 Billion transactions, as per GSMA 2019 report. 

Hence user centric mobile technology based solutions can easily be adopted in West Africa to incorporate and scale social protection as we have seen the same in East Africa. 

As we stand today, mobile has become a basic necessity just after food, clothing and shelter. Hence every non poor informal sector worker would own at least a basic phone. Since our solution can work on such low resource setting the set goals are achievable in West Africa.

Our solution is designed with the informal workers in mind who are not both financially and digitally literate. The solution will run on an interactive SMS/USSD system that can run on any feature phone without the use of the internet and almost every mobile phone user is familiar with it.

When the informal workers are registered they will be sensitised extensively to understand the key information and would also receive digital communication;

• Payment reminders that will encourage them to save regularly

• Tips (e.g.  How to access real time balance, one click pay)

The system can work over USSD short code, and also incorporate SMS bot to reply to all queries

When members dial USSD from their registered phone, the system identifies the dialer in real time. 

They will be contributing by sending money from their registered mobile money to their USP(Universal Social Protection) - wallet easily without having any complicated requirements like other financial institutions. Our solution would be able to integrate with all telcos and mobile money providers to receive contributions seamlessly.

The solution would be designed as an open framework to deploy across regions. Also it can integrate with  any form of ID framework (like foundation ID), mobile money API, payment gateway, USSD gateway, SMS gateway and any other external service provider API.

Our solution would open APIs with secured access tokens for authorised government approved third parties to plug into our solution and launch their services on the marketplace. 

Data can easily be ported out into any authorised third party database for ease of migration to avoid vendor lock-in.

Our solution runs on an interactive SMS /USSD system that users use to save directly into their digital saving wallets and to receive regular and timely reminders to save, notifications on their progress and balances to show how much money they have managed to put in the digital wallet.

In addition, since it works on feature phones which the majority of informal workers have access to and they incur no additional costs to receive the communication as the charges can be zero rated for the users.

Lastly at the beginning of the program extensive sensitization will be offered to explain the importance of saving plus on ways of using the USP(Universal Social Protection) -  wallet.

If required, the menu content/product listing and currency will be customised as per the prevalent native language of the country and the member can also choose a different language from the menu.

We are currently serving around 150,000 people in Kenya, East Africa.

Our proposed solution is to work with the government and allow scalability to work across ECOWAS region, member enrolment would depend upon government agency support. In year 1, we would roll in 1-2 countries. In West Africa, in 5 years’ time, we hope to cover all the people in the ECOWAS region whoever has phones, as the registration could be supported by foundation ID issuing authority and the application menu can be pre installed in all the phones that are sold in the region. It will affect at least 40 % of the population in the deployed region.

The goal for next year is to customize the solution after understanding the detailed requirements from the grassroot intended users, government agency, foundation ID authority and other stakeholders. In the 1st phase we would target 1-2 willing countries to tailor make the solution.

Slowly and steadily we can roll out across the ECOWAS region as we keep partnering with various providers to scale and replicate.

By next 5 years we expect to have partnered with all the participating and willing governments, telecom companies, mobile money systems and financial institutions in the region to be able to deliver one stop solution for universal social protection for all informal sector workers.

Barriers in the next year that we see in deploying our proposed solution in a region like ECOWAS are:

• Lack of regional government goodwill and support to have the legal mandate.

• Lack of funding to design, develop and deploy the solution.

• Lack of funding for partnership and marketing outreach.

Barriers in the next five years that we see in scaling  solution in a region like ECOWAS are:

• Economic recession in the region.

• Political stability in the region.

• Legal and regulatory support in each country of the region.

Government legislation may be required to overcome penetration barriers and to garner the support of various agencies within the government. 

To overcome our challenges with lack of funding for designing, developing and deploying the solution we would reach out for partnerships and grants from the development partners to ensure the success of our solution.

For the long term scaling, we would need to monitor the economic and political changes in the region and adjust accordingly. Continuous engagement with the regulators and policymakers would provide the necessary support to implement and scale.

Currently for the Mbao pension program we have a core solution team of 10 people. On an ongoing basis we engage external consultants and contractors to provide additional expertise. Apart from this solution team, we also have 102 personnel on field countrywide across our representation offices.

Depending on the scope of work and activities required for the proposed solution deployment in West Africa, required resources can be scaled up.

Our team consists of skilled and experienced IT, telecom, mobile money, finance and project management professionals.  They have previous experience of implementing projects across Africa, Asia, Europe and North America.

We have the technical and subject matter expertise as we have been successfully running very similar social insurance programs (micro pension, micro health & micro insurance) in Kenya East Africa for the last 10 years. 

We also have the experience of working with government agencies, regulators, development partners, research institutions, telecom companies, mobile money providers, financial institutions and associations to benefit the informal sector workers.

We also have the experience of partnering multiple organisations to benefit the informal sector worker including; 

• Government (National Treasury of Kenya, Ministry of Health of Kenya) 

• Regulators(Retirement Benefit Authority of Kenya and Insurance Regulatory Authority of Kenya)

• Development partners (German Development Bank)

• Research institutions ( African Population & Health Research Centre)

• Telecom companies (Airtel, Safaricom, Telecom Kenya)

• Mobile money providers (Mpesa, Airtel Money)

• Financial institutions (Kenya Commercial Bank Trustee, Coop Investment Trust)

• Associations (Informal Sector Associations across Kenya)

We take a collaborative approach to provide different solutions for different problems that exist especially in the informal sector.

Our social business model

Initially the proposed program would require infusion of external funds. Once it achieves considerable members and transactions the program could run self sustainably going forward. 

In the long run, once at least million plus  people  are actively on board and start transacting, then with such scale revenues streams will start trickling in. It could be based on multiple revenue models including but not limited to;

• Insurance & other additional product sales commision.

• A very small percentage of the earnings over the investments made through the contributions especially for long term savings like pensions.

• A very small percentage of the interest earning over micro lending.

• A small annual micro management fees for the platform.

These can be fine tuned and modified as per the regulatory requirements and policy frameworks of each country. This would eventually make the program in an auto pilot mode from a sustainability perspective.

For the proposed solution in West Africa (which we conceptualised for this challenge) we have not started raising any funds as of date. 

For the proposed solution herein we would look at government and development partner support for funding and resource mobilisation.

In regards to the solution deployment in West Africa, we would need further clarity in terms of scope of work, activities and other details for us to estimate the applicable expenses and budget.

Through our practical implementation experience in Kenya, East Africa; we strongly believe we can bring a change and positive impact to the millions of the informal sector workers even in West Africa.

Our mission has always been to provide access to financial and social protection for the bottom of the pyramid in an inclusive manner. Having started the journey 10 years back with Mbao pension, we carry the learnings  to  benefit a wider population across the continent. We believe this Mission Billion Challenge WURI West Africa would be a good platform to support the informal sector in the ECOWAS region.

By winning the Mission Billion Challenge; it would provide us the requisite springboard to connect with the right stakeholders in the ECOWAS government. It would provide a favourable and credible environment to present our ideas and experience to the stakeholders for them to support and furtherance of social protection for all. After winning this challenge, we hope the governments and development partners would be in a position to plan and allocate the necessary resources for scalably implementing and promoting  the solution.

Partnership goals: A program that redefines social protection in the way we are envisioning to create a reasonable impact across the region will need champions in the government (policy makers & regulators) and the funding partners to implement and scale the solution. Marketing and distribution of the product/services becomes seamless with the support of the ECOWAS governments and the f-ID issuing authority. Integrate with all the telecom and mobile money providers in the region. Also we would want to partner with financial service providers for our social protection marketplace.

The organisations that we would like to partner with are

• Government agencies like f-ID issuing authority and policy makers.

• Regulators of pension/ credit/insurance/savings. 

• Development partners.

• Telecom companies.

• Mobile money providers.

• Financial institutions and associations.

The government goodwill, resources and support would be crucial in adoption and implementation of the program. The f-ID issuing authority would be a crucial stakeholder in the ecosystem along with the individual government within the ECOWAS region.

The development partners bring the relevant capacity and resources to mobilise the program progress at the needed scale along with technical assistance.

The combined support from the above partners would be crucial in implementation, uptake of the proposed solution and scaling of the program to all eligible beneficiaries within the region.