Financial Inclusion Through Aid Disbursement

> Posted by Jeffrey Riecke, Communications Assistant, CFI

A community health worker in Kenya trained by Pathfinder International, using a mobile phone to collect client data. Photo by Sala Lewis.

Each year billions of dollars in cash payments are distributed by development organizations to individuals in need. Across sectors including agriculture, health, and emergency relief, cash payments are dispersed with the intent of imparting a lasting impact on their recipients. As we’ve discussed in this space previously, dealing with cash instead of electronic payments brings risks and inefficiencies to the parties involved, both development organizations and their payments recipients, too, who are likely to have a lot at stake.

Visa, in partnership with NetHope, a consortium of more than 40 humanitarian organizations, is addressing this opportunity to improve development organizations’ payments systems through the Visa Innovation Grants Program, a new initiative providing funding to development organizations for the modernizing of their payments systems. A few weeks ago the program selected the five winning organizations, who will each receive $US 100,000 for their projects. Representing a breadth of sectors, the five organizations are Agribusiness Systems International (ASI), Freedom from Hunger, International Federation of Red Cross and Red Crescent Societies (IFRC), Mercy Corps, and Pathfinder International.

The payments system projects of ASI and Mercy Corps focus on developing mobile money services for farmers and other actors in agriculture value chains. ASI is working with rice farmers in Ghana, and Mercy Corps with smallholder farmers in Indonesia. The payments systems allow farmers to receive timely and secure payments from agricultural cooperatives electronically, rather than by traveling to pick up cash, which requires expending resources, including time that could otherwise be spent tending the farm.

Pathfinder International is also implementing mobile money, in the context of a payroll system for its community health workers in Kenya. The system will be paired with electronic employee activity tracking, aiding access to field data. Freedom from Hunger is developing electronic payments systems for health-related financial services, such as health savings and credit accounts, offered by microfinance institutions. IFRC, along with the American Red Cross, is designing and testing an electronic cash transfer system with national Red Cross societies in Latin America and the Caribbean. The aim is to get relief payments to those who need them with improved efficiency, security, and transparency.

A study by the Cash Learning Partnership published in 2011 found significant barriers in technology, operations and even attitudes within development organizations slowing their transition to electronic payments systems. Visa’s funding should provide the nudge needed to speed up this important shift.

Image credit: Sala Lewis

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