Posted by: Tricia Cuna Weaver, Consultant, Channels & Linkages
“We believe water is the way. To break the cycle of poverty. To protect and save lives. To turn time spent into time saved. To make a bright future possible for all.”
This is the belief statement of Water.org, an international non-profit with a mission to make water and sanitation safe, accessible, and cost-effective worldwide.
Founded by Matt Damon and Gary White in 2009, Water.org currently works in 12 countries throughout Africa, Asia, and Latin America and has impacted over four million people.
Enclude recently had the opportunity to support Water.org’s efforts to expand access to clean water and sanitation services (WSS) by identifying and evaluating potential applications of digital finance for the WSS sector. Our work drew from global trends in digital financial services (DFS), providing a primer to Water.org staff on DFS and its applications not only to WSS, but also to the agriculture, energy, and education sectors that could also generate relevant insights.This is the belief statement of Water.org, an international non-profit with a mission to make water and sanitation safe, accessible, and cost-effective worldwide. Founded by Matt Damon and Gary White in 2009, Water.org currently works in 12 countries throughout Africa, Asia, and Latin America and has impacted over four million people.
Our assessment produced several global and local use cases for DFS by type of financial product – credit, savings, payments, remittances, and insurance – with examples of each use case in sector-specific contexts. Based on a deep-dive, field assessment in three of Water.org’s target markets, namely Bangladesh, India, and Peru, we also evaluated specific options for integrating DFS into Water.org’s initiatives in these countries.
Our engagement with Water.org is a good example of how focusing on basic consumer needs and household consumption of various services can drive the spread of digital financial services and advance the goal of financial inclusion. Our immediate objective was to determine how digital channels and instruments can increase household access to loans through Water.org’s WaterCredit initiative. Fundamentally, however, the purpose was to provide more people with safe, accessible water and the dignity of a toilet.
In this way, financial services are simply tools to meet the primary wants and needs of low-income households and businesses, and this may suggest a strategy for designing and marketing DFS products generally. Beyond the Water.org engagement – for example, as we work with commercial banks to grow their small and medium-sized enterprise (SME) loan portfolios – we recognize that SMEs don’t necessarily want debt, but they do want to be able to finance the specific inputs to their businesses. Another example is a project in which we are promoting the use of mobile money in oil seed value chains in Uganda. We recognize that smallholder farmers probably haven’t been dreaming of the day they open a mobile wallet account, but they do want to get paid for their crops faster than the current cash-based payment process allows.
In the energy sector, for example, companies such as M-KOPA, Mobisol, and Fenix International apply a pay-as-you-go model to allow customers to obtain a solar home kit upon providing a down payment. The system typically includes solar-charged lightbulbs, phone charger, and a radio. The balance is then paid over time in small, incremental installments using mobile money. These pay-as-you-go models highlight how digital finance has increased last-mile access. If an individual had to travel to a collection center every day for payments as little as USD 0.25, the time and cost to do so would be prohibitive. With mobile money, however, payments can be made directly to and from the mobile phone.By maintaining a focus on what customers want and viewing DFS as a tool to reach their goals, business models emerge that leverage technology to bring desired products and services closer and closer to customers, even rural and low-income consumers who did not previously offer a compelling business case for consumer goods companies (such as solar kit vendors) and financial institutions. Moreover, the challenges of account dormancy and low activity in digital products can be partially addressed by selling what customers want, rather than what banks and financial service providers think they should have, or can most easily deliver.
Additionally, by keeping the customers’ wants and needs at the forefront, DFS providers can focus efforts on creating the right value proposition for their target markets. Take the example of transportation apps, which allow customers to easily get from point A to point B. While the app facilitates payment, the focus is on the transportation service itself, making it easier to connect drivers with those who need rides. Applying this concept to basic needs and services, such as electricity, clean water, or education, DFS providers can better promote uptake and usage of their products by highlighting what the customer actually demands, recognizing finance as simply a means to that end.
This sector-based application of DFS is referred to by CGAP as “Digital Finance Plus,” defined more specifically as “the use of mobile money and branchless banking to make basic, essential services and utilities – in energy, health, education, and water, for example – more accessible to people at the base of the economic pyramid.” At Enclude, our DFS+ work with Water.org and in other contexts, such as in agricultural value chains in Liberia, Myanmar, and Uganda, allows us to focus on expanding low-income populations’ access to the products and services they need to thrive by overcoming barriers posed by lack of access to finance. Though the direct mandate may be financial inclusion, our purpose remains centered on impacting the households and small business that we ultimately serve.