Digitizing Payments One Cabinet at a Time
November 4, 2015 Editor 0
Recently, the Liberian Cabinet approved the use of mobile money to pay teachers in rural areas. This is a huge step in the right direction for Liberia. But why should we care? Most teachers already get paid by check, which is better than cash, so why is the change to mobile money such a watershed moment?
Here are three reasons why I believe that mobile money is the best way to pay teachers today:
1. Mobile Money is Convenient.
Currently, many teachers and other civil servants must leave their workplace for days or weeks and travel long distances to collect their paychecks. When this happens, they leave their schools, hospitals, and healthcare facilities short staffed or closed, denying the public desperately needed services. Further, teachers and other civil servants have to pay the travel costs themselves, significantly reducing their effective take-home pay..
Mobile money, on the other hand, can be delivered right to the teacher, instantly, on their phone. They can then cash out with a local mobile money agent or save their pay in their mobile money account.
2. Checks and Cash are Expensive.
A recent analysis found that the addition of a mobile money component to Government of Liberia current payment processes could provide net benefits of more than $22.5M USD per year based on productivity savings of $13M USD from increased work time not spent traveling to pick up checks and another $9.5M USD in government worker travel cost savings.
Not only can mobile money save the government considerable sums of money, but also it’s more transparent and accountable than the current paper based check system.
3. Mobile Money is a Gateway Drug
If all goes well, mobile payments won’t stop with just teachers. This transition could be rolled out for healthcare workers, police officers, and other civil servants. And the benefits go way beyond the convenience of collecting a salary locally and saving the government money. These salary payments lay the necessary groundwork for a complete digital ecosystem that can lead to financial inclusion.
Even now, Liberians have begun paying for goods in the market, utility bills, and transferring money to relatives in other counties through mobile money. Eventually mobile money can provide families with access to products like savings accounts, insurance, and credit. Tools like these connect citizens to the formal economy and can help lift them out of poverty.
The Mobile Money Revolution Is a Process
Change isn’t going to happen overnight. It takes galvanizing political will and overhauling bureaucratic processes. In 2009, the Government of Liberia made a policy decision to move away from using cash in its financial transactions. Six years later, to support this transition, FHI 360 launched an activity to support Liberia’s Ministry of Education through the USAID funded mSTAR program to scale up mobile payments to teachers. The Liberian Cabinet approval is another step in the mobile money adoption process.
Many other countries are starting to follow suit through activities like committing to the Better Than Cash Alliance (BTCA). But these initiatives are still nascent. We need to prove that digitizing government payments has an impact on financial inclusion and we hope to bring you more news from the frontlines of the mobile money revolution shortly..
Carrie Hasselback is a project director with the mSTAR program at FHI 360.
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