Notes from the Field: Mobile Money in Afghanistan

In the summer of 2010, frog's Executive Creative Director for Global Insights Jan Chipchase conducted field research in Afghanistan with generous support from the Institute for Money, Technology and Financial Inclusion. He worked with his research partner Panthea Lee and a nimble local team to investigate how people use cell phones to do their banking—known in the industry as mobile money.

Why Afghanistan? Why Now?

Over half the world’s population lives without reliable banking institutions where DIY means of storing cash to guard and access one’s life savings is a real phenomenon.  In Afghanistan, money is transferred through informal couriers or hawala brokers who operate on an honor system that has been used for centuries. There is an opportunity and a need for a new way of sending money to others and a new way of banking. The success of Kenya’s mobile network Safaricom’s M-PESA service, which has 12 million subscribers, has paved the way for mobile money applications that transfer small increments of money and provide basic banking services.

In an effort to replicate M-PESA’s success Vodafone and the telecommunications company Roshan created “M-Paisa,” a money transfer service initially used to facilitate payroll for the Afghan National Police force in 2008. The service is now taking hold with the general public, but questions around its long-term impact remain.  There are many challenges to overcome with its wider implementation in Afghanistan: irregular bank hours, electricity failures, people’s mistrust around alternative money structures that lay outside of the gold currency and hawala transfer system. But with a latent demand and sufficient mobile phone penetration there is an opportunity for mobile money services to thrive.

In the Field

Jan and Panthea built on the existing research of expert resources like Portfolios of the Poor, CGAP Mobile Microfinance, the GSMA Mobile Money for the Unbanked, The Bill and Melinda Gates Foundation and Jan’s own exploration into designing financial services for the poor.

Jan and Panthea anchored their research in in-depth home interviews and intercept interviews conducted in every- day contexts — on the street and at the bazaar — and included people in a range of professions, from small entrepreneurs, farmers, and schoolteachers to police officers. They worked to include players active in all aspects of the M-Paisa ecosystem, to gain the perspective of both the user and the operating agent.

Jan’s new book Mobile Money, Afghanistan, reveals findings from his research and gives a highly visual behind-the-scenes look at the research journey and, ultimately, a look into Afghans’ everyday economics and the daily struggles they have with life and work.
 

Jan will debut his findings at Mobile World Congress next week, but we wanted to peel back the pages and share an excerpt from one of the featured interviews to give a glimpse into the cultural and political environment where mobile banking could be more viable. The excerpt below is from an interview with Ahmed, 24, who is struggling to find work as a day laborer in order to earn money to send his younger brothers through school, pay off his father’s medical bills, and pay the steep electricity bills.  But Ahmed has other motivations for using a mobile phone beyond gaining work:

Ahmed often has trouble getting paid for his work, and it’s always a gamble. If his employers are dishonest or unscrupulous, he has little recourse. “If employers don’t pay, there is nothing we can do but force them to pay through the threat of physical violence,” he says. Taking his grievances to the authorities may result in more money lost than gained. “We have to pay government officials before they’ll even look at our case. It’s just not worth it.”

He carries his most valued possessions — a few Afghani notes, his old SIM card, and an identity card, in a vest sewn into his undershirt pocket or rolled into his clothing.
Ahmed used to own a mobile phone but he sold it when things got tough. He sometimes borrows his friend Hamid’s phone to receive text messages and calls; sometimes this can lead to paid work. For Ahmed, saving is a luxury he simply doesn’t have. “To save money, you first need to have money,” he says. “Any money I make, I use for food.” He has not heard of M-Paisa and he doesn't have a bank account.

As soon as he can put aside money again, the first thing he’ll save for is a mobile phone, but not because it will help him find work; it’ll help him find a wife.
“The mobile phone makes love marriages possible,” he says. “Young people can now communicate directly with each other, without their families or friends knowing. This wasn’t possible five years ago.”

Common dating etiquette, as he explains it, has the male suitor sending airtime credit to the woman he likes, and if necessary,purchasing a basic phone for her.

But with no savings and no way to accumulate savings, the prospect of marriage for Ahmed seems like a distant hope.

The Mobile Frontier

Jan shared more insights from his trip alongside Bill Maurer, the Director of the Institute for Money, Technology, and Financial Inclusion at UC Irvine, at frog’s Mobile Frontier event on February 24th in San Francisco. Jan and Bill discussed lessons that can be drawn from Afghanistan for the design of mobile money services around the world and the innovations it can enable. Couldn't make it? We recapped the event in the video below;