This blog is written by Nic Wasunna with contributions from Joëlle Hazoume Alao, Orange Money Director at Orange Guinea.
In an endeavour to share best practices from mobile money providers around the world, this blog shines a spotlight on Orange Money in Guinea, who recently implemented person-to-government (P2G) payments for motor vehicle tax. Previously, we’ve shared insights on P2G initiatives from Côte d’Ivoire and Pakistan. This latest blog looks at the factors for success, benefits and future P2G plans for Orange Money in Guinea.
Factors for success
Orange Money had a plug-and-play system that could meet the government’s immediate request: At the beginning of 2017, the tax authority in Guinea Conakry made a request to Orange Money to collect all road tax digitally. Orange Money responded quickly to this opportunity by developing an easy and efficient process using their mobile money platform and distribution network. This process allows vehicle owners to make their annual vehicle tax payment via mobile money in exchange for a sticker that matches the vehicle type to the vehicle ID. Launched in March 2017, Orange Money is now not only able to provide a digital payment solution, but also provide distribution support, with their shops serving as collection points for the tax stickers.
Ability to align and address the government’s pain points: Vehicle tax was not the P2G use case that Orange Money had initially planned to digitize. “Initially when we approached the government, we had seen an opportunity to digitize payment of business taxes e.g. business permits,” said Joëlle Hazoume Alao, the Orange Money Director. “The government had a different proposition and the Ministries of Finance and Budget asked us how we could use our platform to ease collection of vehicle taxes. Their main issue was that of the several agents that the government had appointed to collect this tax, they were only managing to collect 1% of the possible taxes or less.” She added that this loss was due to a lack of tracking for payments that were made exclusively using cash.
Simple user experience and sales support drove adoption: From their mobile phones, Orange Money users in Guinea use USSD to access Orange Money. Here they select the menu that allows them to pay the tax, and enter their car type and the tax amount. This payment can be made remotely at any time and for more than one vehicle. To collect their tax sticker, users visit an Orange Money agent outlet. At the Orange outlets, sales agents use a web app to verify the user using their vehicle license, ID and Orange Money account number. Copies of both their license and ID are retained once the payment is matched with the correct vehicle type and corresponding amount. A tax sticker is issued which is valid for one year. A reversal is done immediately if the wrong amount is paid.
Simple commercial agreement between provider and government: The amount of tax paid depends on type of vehicle—$100 for large trucks, $35 for small cars and $8 for motorbikes. At the moment, there ae no transaction fees and the treasury pays Orange Money $0.10 per tax sticker issued. During the pilot period, Orange Money will keep the transactions free until the usage scales. Once this happens, Orange will collect its revenue in advance from transaction fees, without having to wait for payment from the government, which may take longer.
With this agreement, the Government has distributed 70% of the initial tax sticker stock to Orange Money as well as other banks and the post office (for those who want to pay cash). The initial stock was 100,000 stickers, and Orange Money has so far sold an average of 1,000 per day. Orange Money sales agents can use the app to monitor the stock of the stickers. There is a daily reconciliation and payback to the government from Orange Money.
Proactive marketing: To increase awareness of this new service, Orange Money is sending SMS notifications to users, encouraging them to make their tax payments before the 30 June deadline to avoid the 25% surcharge. Additionally, Orange Money has launched social media campaigns, educating motorists on the steps to make payments and collect their stickers.
Benefits since launch
Orange Money customers will save on transportation costs, which they previously incurred whenever they would have to travel to Conakry to get their stickers. For rural customers, Orange provides 20 shops for ease of access when collecting their stickers. Customers are also more confident that they are paying for real tax stickers, as opposed to sometimes counterfeit ones previously.
According to Joëlle, this new service has seen the number of new Orange Money users increase by 70,000, as well as a 12% increase in the overall active customer base. An extended benefit is increased activity at Orange Money agent outlets, where cash-in transactions have increased, which in turn incentivises agents through increased commissions.
This new initiative has helped Orange to achieve a stronger association among its customers as a trusted brand. The tax authority has also increased its trust in Orange Money’s processes because it allows collections 24 hours a day, making it more flexible. The government also benefits through daily reporting through the Orange Money system on how many stickers have been purchased, what category, and from which Orange shops.
Future plans for other P2G use cases
The government of Guinea is determined to drive more transparency in tax collection. For Orange Money, the success of this new service should open up collections for other local taxes and P2G payments. Currently, Orange is also able to process collections on behalf of pension schemes and disbursements of university scholarships for students via mobile money.
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