
Volkswagen Group Africa continues creative partnership with Ogilvy
Ogilvy presented a “unique partner model” during an 11-month pitch process involving 15-plus agencies and multiple rounds of presentations.
MOBILE MONEY
By our News Team | 2023
As poverty becomes more extreme, the business model starts to collapse, new study done in Kenya and Uganda finds.
Since its emergence in the late 2000s, mobile money has been a game-changer throughout the developing world for people with little savings and no access to formal banking systems.
A recent study co-authored by two researchers from the Leeds School of Business in the US found that the thriving industry is well-positioned to serve those in poverty – but only up to a point.
Photo credit: Intersect
David Drake and Gloria Urrea, along with co-author Karthik Balasubramanian of the Howard University School of Business in Washington, DC, analysed data from thousands of mobile money operators in Kenya and Uganda, two countries with robust mobile money markets.
“We wanted to understand how this business model was impacted by the pervasiveness of poverty in an area to test its fundamental purpose: to help those at the base of the pyramid,” said Drake.
“We found that the business model does very well up to a point. Demand for the service initially increases as the pervasiveness of poverty increases. This is what you hope to see in a base-of-the-pyramid business model. However, we also found that, as poverty becomes more extreme, the business model starts to collapse.”
Mobile money platforms were first proposed in 2002 at the World Summit for Sustainable Development to address the “failure of formal financial institutions to serve the developing world’s poor”.
Local agents trained by the telecoms networks
Local agents, who could be anyone from a shop owner to someone running a dedicated mobile money kiosk, are trained by telecommunications firms like Airtel and Safaricom to conduct transactions as independent contractors. Customers give agents cash to convert into ‘e-float’ credits that they can transfer instantly via pin-secured SMS text messages on flip-top mobile phones, and agents earn a commission.
In areas of extreme poverty, however, demand for these services decreases along with the number of operating agents, the study found. This could be because people have less access to cellphones or reliable cell service, or lack trust in financial institutions, Drake said.
Agents carry more cash and digital currency because demand comes in spurts – when a harvest pays off, for example – and that increased inventory comes with increased carrying costs.
“Taken all together – higher costs, less demand – it is definitely a degradation of the business case,” Drake said.
“The takeaway is: How do you support mobile money agents in these areas where, arguably, the business model is needed most? How do you incentivise agents to open a business there, and when they do that, how do you support them?”
To better support agents, the authors suggest enabling inventory pooling among agents for e-float, providing insurance services to mitigate theft risk, and paying higher commissions or other incentives.
“We are really encouraged that mobile money works well; demand is increasing up to a point and that’s good news. But it is succeeding until it gets over-stressed by the poverty itself, and arguably that is where it is needed the most,” Drake said.
You can read more about the research here.
Ogilvy presented a “unique partner model” during an 11-month pitch process involving 15-plus agencies and multiple rounds of presentations.
Nigeria reportedly has less than 4% of its cold chain capacity requirement. Much of Africa faces a similar challenge.
The latest issue of Strategic Marketing for Africa, the magazine for deep-thinking African marketing professionals, is now available.
As African commercial aviation expands, Marketing 5.0 has a vital role to play in enhancing operational efficiencies and customer service.
Researchers find that the location of sales interactions may be just as important as crafting a clever sales pitch.
CM(A) is a high-level pan-African professional designation awarded to senior marketers in recognition of their experiences and skills.
Travel industry marketers and content creators now have data-backed info on how to act, express emotion, or place products in a video.
Strong and varied speaker lineup explores into this year’s theme of ‘Resilience and Growth Through Sustainable Marketing’.
Formula milk companies must ‘stop presenting incomplete scientific evidence and inferring unsupported health outcomes’ say WHO and UNICEF.
Experienced marketer moves up from her previous position as Head of Brand and Communications for the company.
Annual CMO Breakfast in Kampala hears that achieving success in the boardroom requires depth and an understanding of your ‘kingdom’.
Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.
Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.
Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.