Deputy Prime Minister, Manoa Kamikamica with UNCDF's Regional Technical Specialist, Praneel Pritesh and UNCDF's Communications Specialist, Sheldon Chanel during an interview.

“I’m a big fan”: M-PAiSA Hailed as Important Development Tool

Sheldon Chanel
Communications Specialist
UNDP/UNCDF in the Pacific

In February, Manoa Kurulo was one of 559 beneficiaries to receive an historic first payout under a parametric insurance scheme developed by the UN Capital Development Fund (UNCDF).

Mr. Kurulo qualified for a payment following heavy rain in Fiji’s Western Division over a period of five days in January.

The sugarcane farmer was most surprised when the payments were sent directly to his M-PAiSA mobile money account by the insurer, FijiCare, with an SMS notification informing him of the payout.

The quick processing of payments helped him with the purchase of farming equipment to revive his small business and recover faster from the weather hazard.

Mr. Kurulo’s story is an example of how mobile money in Fiji is supporting development and helping build resilience against climate disasters by improving access to financial services, such as insurance, and at the same time helping the traditionally excluded participate in the formal economy.

Fiji is the epicenter of mobile money in the Pacific. The launch of Vodafone’s M-PAiSA service in 2010 was a significant moment in the country’s digital financial services ecosystem.

Uptake of the service had a slow start, but it has since taken off. The platform is strongly endorsed by the Deputy Prime Minister, Manoa Kamikamica, who, in an interview with UNCDF last month, stated that digital services would become more necessary in the global shift towards cashless societies.

Today, M-PAiSA has nearly 600,000 registered users in Fiji, with 334,000 using the platform every month. The platform is expected to process more than FJ$3 billion (US$1.82bn) in transactions this year.
“I am a big fan,” said Mr. Kamikamica, who is also Fiji’s Minister of Trade, Cooperatives, SMEs and Communications.

He said that before M-PAiSA’s introduction, the mobility of funds in Fiji was a challenge and wholly dependent on brick-and-mortar – or traditional – methods.

“What M-PAiSA did is make it easy for cash to go mobile, particularly at the lower part of the social structure and rural areas, mobilising cash movements in the informal sector,” the Deputy PM added.

Mr. Kamikamica describes M-PAiSA as “a central part of the whole financial sector” and “a very powerful way of opening up economic activity across the country.”

How did M-paisa go from a mobile money service with an uncertain future to the staple that it is today in Fiji’s modernising financial system?

Digital ‘Evolution’

The Deputy PM says the need for digital services in Fiji and the Pacific is becoming “more and more necessary” to cater for the region’s digital evolution and as cashless societies become more prevalent.

Pointing to Fiji’s critical remittances sector, Mr Kamikamica said services such as M-PAiSA are playing a critical role in the lives of people, driving innovation and making it easier to do business.

One of the Minister’s aims is to innovate and open-up the M-PAiSA-driven e-ticketing system that is used to transact on public transport to other payment providers.

“E-ticketing, at the moment, is a closed-loop system – only M-PAiSA can be used to transact on it. What we need to do is make it an open-loop system so all forms of payment can be used to access it,” he said.

Beyond public transport, Mr. Kamikamica sees a role for digital services in driving growth and financial inclusion in several sectors, including agriculture, e-commerce and MSMEs by improving access to markets and enabling participation in formal economic activities through alternatives to bank accounts.

“It does take a long time to open bank accounts, but you can just register for M-PAiSA with a basic ID,” he said.

For MSMEs, the Deputy PM is aiming to work with specialist UN agencies – such as the UN Capital Development Fund (UNCDF) – to increase access to finance for small business through digital payment gateways.

“Because a lot of SMEs need cash up front, I am looking to work with UNCDF and UNCTAD [UN Conference on Trade and Development] to develop some sort of guarantee for them, which they can eventually come out of once they start growing,” he said.

Mr Kamikamica sees demand for digital services such as M-PAiSA continue to increase in the Pacific and has called on all stakeholders to work together to ensure the benefits also reach vulnerable ‘last-mile’ communities.

“From the Government side, there are still areas for improvement in terms of the overall infrastructure and we will work on that in collaboration with the mobile service providers,” he said.

MPAiSA: a short history

UNCDF’s well-known Pacific Financial Inclusion Programme provided Vodafone Fiji with a catalytic grant and technical assistance to support the development of M-PAiSA.

UNCDF Lead Global Specialist (Climate Risk Insurance) and Programme Manager, Krishnan Narasimhan, said the support was based on solid evidence from around the world demonstrating the important role of mobile money in changing the financial inclusion landscape in African and Asian markets.

UNCDF’s Lead Global Specialist (Climate Risk Insurance) and Programme Manager, Krishnan Narasimhan

According to Vodafone Regional CEO, Pradeep Lal, the UNCDF funding helped to mitigate the many “unknown risks” of investing in mobile money in the Pacific market. It was unchartered territory for a telco service provider but an obvious gap that Vodafone could bridge with connectivity and the access provided through mobile phones, he said.

Vodafone Regional CEO, Pradeep Lal

Two in-house software engineers were tasked with developing the mobile money platform that officially hit the competitive marketplace in 2010, following approval by the Reserve Bank of Fiji.

One year after launch, M-PAiSA won the Global GSMA Mobile Money for the Unbanked Award at the 2011 Mobile World Congress in Barcelona. “It was a very proud moment accomplishment for the business,” Mr Lal said

But Vodafone still had work to do for M-PAiSA to realise its full potential. By Mr Lal’s own admission, the “…benefits of the service took some time to register with the users and businesses.”

Kenya’s mobile money platform known as ‘M-Pesa’ quickly earned a global reputation as a financial service disruptor. The relatively slower start of Fiji’s ‘M-PAiSA’ raised questions about sustainability in a low volume market with strong reliance on brick-and-mortar services.

All that seems like a footnote in history now. A major new Mastercard product that will see M-PAiSA move from a ‘closed-loop’ to an ‘open-loop’ service is on the way and the number of active users is at healthy levels.

Mr Lal said the shift to an ‘open-loop’ system will “enable the financially and economically excluded to become part of the mainstream economic activity and enable more women and geographically isolated populations to contribute to and benefit from the digital economy.”

UNCDF supported this process by resourcing an Innovation Hub within Vodafone through which new services like QR payments, utility bill payments, inward remittances, e-ticketing on public buses, government-to-person and person-to-government payments were introduced from 2017 onwards.

Growing Importance

Reaching the ‘unbanked’ and ‘under-banked’ segments of Fiji was a central theme and motivation behind the development of M-PAiSA.

According to Mr Lal, besides the challenge of finding use-cases, three additional issues had to be addressed before the platform’s potential to reach the ‘last-mile’ could be realised.

These include the central bank’s decision to accept sim cards as a legal ID for M-PAiSA registration, the setting up of a larger agent network and an ecosystem across the country with initial cash support from Vodafone and the enabling of bank transfers directly to its e-wallet.

These changes have allowed the service to play a more prominent role in economic development as well as social protection.

An example is the Fijian Government’s use digital wallets such as M-PAiSA to disburse nearly FJ$200 million (US$100m) in welfare and social protection payments as part of its COVID-19 economic response plan in 2020/2021.

The integration of mobile wallets to the National Payment System will further improve flow of funds in the economy with an integrated and interoperable financial system that will spur more economic activity.

Through the UNCDF-led Pacific Insurance and Climate Adaptation Programme (PICAP), mobile money is bringing insurance closer to the historically uninsured and helping build climate resilience in the region.

The necessity of digital services

The growth of mobile money services in a geographically spread-out region like the Pacific underscores the increasing importance of digital inclusion, both financial and non-financial, in the region’s development.

According to UNCDF’s Mr Narasimhan, digital services can enable access to information and public services and help meet key daily needs in education, health, and other areas .

After success in Fiji, Vodafone has rolled out mobile money in Samoa, Vanuatu, Cook Islands, Kiribati and expected to introduce the service in Vodafone PNG also. UNCDF is working with Our Telekom in Solomon Islands to develop the mobile money services which is expected to be launched by mid-2023.

“With mobile network penetration improving in most Pacific countries and the usage of smart phones ever on the rise, UNCDF sees a great opportunity for cost effective delivery of basic financial and payment services through mobile money,” Mr Narasimhan said.

Future of mobile money

For Vodafone Regional CEO, Mr Lal, the impending launch of the Mastercard product will cement M-PAiSA as a key player in Fiji’s growing digital payments ecosystem and pave the way for a bigger regional presence for Vodafone, including in large markets like PNG.

“As economies transition into digital economies, being able to transact whenever and from wherever is critical for island economies and local businesses to remain accessible and competitive,” Mr Lal added.

Mr Narasimhan said UNCDF will continue to support providers of mobile wallets in the Pacific address existing challenges, such as agent network expansion, to improve the ecosystem and last-mile reach for mobile money.

“There are challenges around cash-in and cash-out points, full integration between banks and mobile money providers to enable seamless transfer of funds and the awareness amongst users, especially in rural areas. These can be strengthened further,” he added.

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