Shainoor Khoja Managing Director, Roshan CSR August 2010 Mobile Money Afghanistan Creating a Transparent Framework for the Movement of Money and Providing Financial Inclusion For the Unbanked Shainoor Khoja Managing Director, Roshan CSR August 2010

Kids are from Jalrez

What happens when this Police Officer gets paid his full pay, can support his family and values his job? 59% of the population said corruption is a bigger problem than insecurity or unemployment. One out of two Afghans had to pay at least one kickback to a public official. More than half the time (56%) the request for illicit payment was explicit by the service provider. Approximately $2.5 million in bribes was paid in the last year, which is equal to 23% of Afghanistan's GDP.  UNODC Report

Roshan About Afghanistan Population 32 million There are currently no mobile money providers except Roshan which is the largest telecoms operator covering 58% of the population. 97% of the population is unbanked 17 commercial banks in Afghanistan Need to move cash safely and securely Hawala system is well established and trusted Trust in the banking system is low Afghan’s prefer to carry and keep cash on hand GDP per Capita $350.00 Mobile Penetration 30% Literacy Rate Primary Languages Dari, Pashto, Urdu and English IVR Yes Percent with Bank Accounts 3% 75% of the population lives in rural areas without access to a bank. More than 70% of the population lives on less than $2/day.

M-Paisa Today and Looking Forward Cash Scratch Card Bank Integration Cross Border Money Transfer Deposit Salary Payment Point of Sale Buy Airtime Pay Loan ATM Online Merchant Payment Send/Receive Money Pay Bill Withdraw Deposit through Credit Card Merchant Payment

M-Paisa Why Salary Disbursement? Problem: Ministry of Interior physically distributes salaries to the Afghan National Police. Solution: M-Paisa can serve as a secure instantaneous scheduled mechanism to transfer and receive funds. Improve safety and security related to money transfer. Provide transparent movement of funds versus the current method. Reduce soldiers taking absence without leave (AWOL). Increase employee satisfaction and guarantee salary payment. Provide a mechanism for financial inclusion.

Government of Afghanistan M-Paisa Benefits Government of Afghanistan Recipient Transparency All transactions are logged and fully traceable. Safety and Security No cash movement through unsafe districts. Cost Effective & Efficient No lost money due to theft, or skimming (savings of approx 20%). Employee Satisfaction Receive their salaries in full and on time. Reduction of employee churn. Retention of Trained Personnel ANP officers do not need to travel, thus allowing them to remain at work and securing the country. ANP family members can receive money instantly. Anywhere, Anytime Salaries can be withdrawn from any approved M-Paisa agency in Afghanistan, at the convenience of the employee. ANP officers do not have to travel home to send money. No loss of money due to theft, or skimming.

M-Paisa Opportunities to Promote Financial Inclusion Over 1 billion people across Asia, Africa and Latin America have access to a mobile phone, but not a bank account. Cell phone banking is potentially six times cheaper for routine banking transactions. In Afghanistan, there were ~356K MFI clients in 2008, which is equal to 18% of the 2 million households living under the poverty line.

M-Paisa The First Microfinance Bank Afghanistan & Hope for Life FMFB has only 17 branches across the country. Largest MFI institution in Afghanistan. Loan clients can receive and repay loans through M-Paisa. Opportunity to reduce cost of loans by 5 percentage points. Branches in Badakhshan serve as M-Paisa agents (cash in and out point). Hope For Life (MFI) Provide small loans $200 to $1,000 USD to groups of five to nine. Active in Kabul and growing number of clients: 54% are women. No branches in country – only one main office. Loan officers interface with recipients in their homes. Loan officers save approx. 4 hours a day and can securely get funds back to the office.

M-Paisa Hope for Life 347% 310% Number of loan officers using M-Paisa grew from one to 18 in just three months for this MFI. Seven females officers also using the service. M-Paisa makes it safer to travel with funds. M-Paisa reduces fraud.

M-Paisa Benefits Bank Customer Expansion Quickly move into rural areas to reach the ultra-poor and bank the unbanked. Not dependent on bricks and mortar. Safety and Security No cash movement through unsafe districts. No lost money due to theft or robberies. Transparency Reduces corruption from loan officers. Cost Added savings to MFI, which can be passed down to the recipient. Anywhere, Anytime Loan can be received and paid from any approved M-Paisa agency in Afghanistan, at the convenience of the recipient. No loss of money due to theft, or robberies. Lower interest rates. Time No need to shut down operations and take time to make repayments.

M-Paisa Creating a Regulatory Framework Know Your Customer (KYC) Fully compliant. Monitoring of all transactions – resource heavy. Any suspicious activity reported to the Central Bank. M-Paisa is regulated under the Central Banking Authority – Da Afghanistan Bank (DAB). To register for M-Paisa, all customers need to have either taskara card (national identification) or passport. In conjunction with DAB and Government, Roshan is taking a lead role to help shape and create a regulatory framework for mobile money.

M-Paisa Challenges to Salary Disbursement & Loan Payment Current methods have been around for many years and willingness to change at working levels faces resistance. Lack of capacity, technological illiteracy and illiteracy pose challenges. Develop tools to resolve this (IVR, Voice SMS, Auto-dialer). Engagements and alignment of all necessary parties. Ensuring reach and distribution mechanism to unlock the base of the pyramid.

M-Paisa Looking Forward Faster economic development, not dependent on international aid. Spurring and supporting Afghan led businesses and their development. Empowering communities to take control over their own development. Largest impact for the rural communities and the ultra-poor. Access for the unbanked.