CROSS-PUBLISHED BLOG: This blog was written by Janet Shulist from the Mobile Money for the Unbanked team in August 2014, highlighting the role that mobile money plays in improving access to basic energy and water services in underserved markets. As our programme, formerly known as Mobile Enabled Community Services (MECS), was rebranded Mobile for Development Utilities, all references to MECS have been updated to M4D Utilities.
There’s an estimated 2.5 billion unbanked people in low and middle-income countries, with many living in rural areas [1]. For rural populations, financial inclusion isn’t the only disparity that exists – often limited or no access to reliable energy and improved water sources is also an everyday reality. In fact, 80% of people globally without access to safe drinking water live in rural areas and over 1.2 billion people are still without access to electricity worldwide, almost all of whom live in developing countries.
However, as mobile connectivity extends beyond the reach of the electricity grid and central water utilities, more people now have access to the mobile network than to energy and water. The size and reach of the mobile industry offers new pathways to achieve reliable energy and water access. Our colleagues in the GSMA M4D Utilities programme have identified five mobile channels – including mobile infrastructure, distribution channels, M2M connectivity, mobile payments and services – that can be used to better support access to energy and water solutions.
In this blog post, I’d like to introduce the role that mobile money can play in improving water and energy access in emerging markets, and highlight a few of the GSMA-supported trials currently underway.
Leveraging mobile payments
Based on M4D Utilities’ five channels, mobile money plays a key role in access to energy and water solutions through enabling remote and affordable mobile payments for services. Traditional water and energy utilities are increasingly offering mobile payments as a more convenient and affordable customer payment method. At the same time, many off-grid energy service companies are turning to mobile payments as a way to manage lease-to-own models and payment plans for solar energy products. Our 2013 State of the Industry report highlighted that bill payments is one of the most widely available mobile money products, and that the number of bills paid using mobile money has increased [2].
According to M4D Utilities [3], promising opportunities exist in Africa for energy service companies and water service providers to use mobile payment services to provide micro-financed and affordable pre-paid utility solutions to customers. In addition, bundling energy or water services with mobile money accounts also represents an important opportunity for mobile operators to drive adoption of these mobile financial services in rural locations.
When looking at water utilities in Africa, a University of Oxford study on mobile water payments in Tanzania found that mobile payments were an effective tool for improvements in revenue collection and controlling governance-related losses [4] and that mobile payments helped to break down the monthly billing and payment paradigm by allowing households to pay when, where, and how they want.
In Asia, while utilising mobile payments for energy and water services is still less established, changing regulation, increasing bank partnerships and the growing number of mobile financial services means the opportunity to leverage mobile payments for energy and water will likely improve in 2014[5]. In India, Simpa Networks is one of the few companies currently offering a lease-to-own model, or ‘Progressive Purchase’ as they refer to it. This allows consumers to purchase solar home systems at minimal upfront cost and then to make a series of small mobile payments to complete the purchase of their system over time.
M4D Utilities Innovation Fund: Trialling energy solutions using mobile money
Information on the Innovation Fund and how to apply is available here: http://www.gsma.com/mobilefordevelopment/programmes/utilities/innovation-fund
The M4D Utilities team is working with grantees across Asia and Africa (see Round 1 and Round 2 for full list) that are trialling the use of mobile channels to improve or increase access to water or energy services. In particular, some of the trials using mobile money to address energy access include:
- Fenix International in Uganda: In partnership with MTN Uganda, Fenix will launch ReadyPay, an ultra-affordable pay-to-own solar energy solution, with payments made through MTN Mobile Money.
- Eco Energy Finance in Pakistan: Eco Energy Finance will test the sale of solar products to off-grid communities through the use of UBL OMNI’s mobile money service.
- Easypaisa in Pakistan: Easypaisa will introduce an affordable, solar energy service to low income groups through a leasing model, paid back using the mobile money service.
- Kamworks in Cambodia: Solar power company Kamworks has partnered with mobile money operator WING, and CamGSM (through its CellCard brand), to test rental services for solar home systems in Cambodia, using mobile payments for rental fees.
- M-KOPA Solar in Kenya: In partnership with Safaricom, M-KOPA Solar – which provides financing to off-grid households in Kenya for solar home systems through an affordable mobile money payment plan using M-PESA – will introduce a new pay-as-you-go solar product to the Kenyan market targeted at small entrepreneurs.
- Mobisol in Rwanda: Working in partnership with MTN Rwanda, Mobisol – a company that combines solar energy with an affordable payment plan via mobile – will test the introduction of pay-as-you-go solar home systems in Rwanda, using MTN Mobile Money for the repayment of monthly instalments until users have completed payments for ownership.
Conclusion
While insights from the M4D Utilities grants will be shared early this year, they highlight some of the ways mobile money can be used to help rural and low-income customers afford access to reliable and clean energy. For people in rural off-grid locations, not only does this mean gaining access to a convenient way to charge mobile phones, and power lights, radios and even TVs, but it also means a reduction in the reliance on kerosene, a fuel that is dangerous and detrimental to human health.
Do you know of any other ways mobile money can be used to improve access to energy and water? Let us know in the comments below or at mmu@gsma.com.
Photo: A phone charging entrepreneur with his Fenix International ReadySet System in Uganda.
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[1] Less than 30% of adults living in rural areas have an account at a formal financial institution (World Bank Global Findex)
[2] The State of Mobile Money Product Offering – What do people use mobile money for? (27 March 2014)
[3] The Synergies between Mobile, Energy and Water Access: Africa (March 2014)
[4] Wireless Water: Improving Urban Water Provision Through Mobile Finance Innovations (April 2013)
[5] The Synergies between Mobile, Energy and Water Access: Asia (March 2014)
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