As countries around the world grapple with the economic impact of the COVID pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income, mostly via digital payments.

Those countries with well-developed social protection systems, payments infrastructure, and wide access to digital financial services have fared much better in getting these payments out quickly, but even they have struggled to rapidly open accounts for their more vulnerable populations. Many of the people at risk fall outside the usual government welfare rolls and risk being overlooked -- especially informal workers, MSME owners/operators, and those working in hard-hit industries like tourism.

The COVID crisis forced policymakers to find innovative ways to deliver rapid support payments to those most in need. A critical aspect of getting this emergency aid out has been the ability to quickly identify and onboard eligible recipients who don’t already have transaction accounts and distribute the payments as soon as possible.
<blockquote class="pullquote--right">What are governments doing to enable rapid payments to those without existing accounts?</blockquote>
CFI’s latest <a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">policy brief</a>, part of our partnership with Mastercard Center for Inclusive Growth and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), explores what governments are doing to enable rapid payments to those without existing accounts. The paper reviews three types of measures being taken to speed up payment distribution. Not surprisingly, the common theme is the ability and willingness of policymakers to be nimble and innovative. Below are a few examples, organized by type of measure:
<h2>1. Rapid Identification of Eligible Recipients</h2>
To quickly determine who’s eligible for COVID support payments, governments have had to be innovative in tapping into all available existing information, whether publicly or privately owned.
<h3>Current Beneficiary and Employment Rolls</h3>
<strong>Bangladesh Bank</strong> allowed government disbursement program information to be used to open permanent accounts on behalf of customers. The central bank also permitted the creation of accounts for ready-made garment (RMG) workers based on their employment record, given the low rates of digital IDs or other means to confirm their identity among the predominantly female group.
<h3>Voter Rolls</h3>
The Government of <strong>Togo</strong> established the Novissi cash transfer scheme, to provide support during the pandemic. Because Togo does not have a strong national ID system, they took advantage of a recent voter registration campaign to verify the identity of eligible recipients. <strong>Timor-Leste</strong> was also able to take advantage of its voter registration system, which had high sign-up rates after a recent election.
<h3>Mobile SIM Data</h3>
<strong>Zimbabwe</strong> took advantage of its <a href="https://theconversation.com/zimbabwes-restrictions-on-mobile-money-transfers-are-a-blow-to-financial-inclusion-147109" target="_blank" rel="noopener noreferrer">90 percent mobile money penetration</a> to make payments directly to the e-wallets of all phone numbers mapped to areas targeted for support payments, while <strong>Nigeria</strong> partnered with mobile network operators to <a href="https://blogs.imf.org/2020/06/22/youve-got-money-mobile-payments-help-people-during-the-pandemic/" target="_blank" rel="noopener noreferrer">identify vulnerable informal workers in urban areas through airtime purchase patterns</a>.
<blockquote>Governments have had to be innovative in tapping into all available existing information, whether publicly or privately owned.</blockquote>
<h2>2. Simplified Due Diligence for Rapid Account Opening</h2>
During COVID-19, policymakers and FSPs, in cooperation with regulators, have had to apply simplified customer due diligence (SDD), to rapidly open accounts for newly vulnerable recipients. Some of the key ways they’ve done this include use of mobile SIM registration data, employment records and deferred KYC measures.
<h3>Mobile SIM as ID</h3>
The <strong>Bank of Ghana</strong> expanded its tiered KYC to allow mobile phone subscribers to reuse their SIM card registration to open the lowest tier of e-money accounts, called <a href="https://www.bog.gov.gh/wp-content/uploads/2020/03/MPC-Press-Release-March-2020-3.pdf" target="_blank" rel="noopener noreferrer">Minimum KYC Accounts</a>. In <strong>Egypt</strong>, the central bank’s eKYC program allows customers to <a href="https://www.fintechfutures.com/2020/01/central-bank-of-egypt-pilots-ekyc-solution-for-financial-inclusion/" target="_blank" rel="noopener noreferrer">open bank accounts electronically</a>, by submitting their national ID number along with their mobile phone number to the telecommunications authority, which then confirms to the bank the information match for the mobile SIM registration.
<h3>Remote and/or Deferred CDD</h3>
In <strong>Pakistan</strong>, the government suspended the need for biometric confirmation for its Ehsaas Emergency Cash transfers, opening a <a href="https://www.pass.gov.pk/Detailf90ce1f7-083a-4d85-b3e8-60f75ba0d788" target="_blank" rel="noopener noreferrer">web portal for residents to handle applications and resolve any issues</a>, while the Central Bank of West African States (BCEAO) allowed a three-month window following the COVID crisis for in-person due diligence verification for basic accounts.
<h2>3. Use of Alternative Channels for Delivering Payments</h2>
Several jurisdictions have looked to new channels to quickly onboard beneficiaries and distribute social transfers, from mobile apps and websites to postal networks and non-bank financial institutions (NBFIs).
<h3>Apps and Websites</h3>
<strong>Brazil</strong>’s social assistance program aimed at informal workers, the coronavoucher, is accessible through a free mobile app the bank created specifically for this purpose (those without a cellphone could apply via this <a href="http://auxilio.caixa.gov.br/" target="_blank" rel="noopener noreferrer">website</a>).
<h3>Post Offices</h3>
In <strong>Madagascar</strong>, the government’s COVID cash transfer program, called Tosika Fomena, is made via the Madagascar postal system’s (Paositra Malagasy) cash transfer service called Paositra Money, and <a href="http://www.mptdn.gov.mg/?p=1974" target="_blank" rel="noopener noreferrer">can be retrieved</a> at any PO upon <a href="https://fr.allafrica.com/stories/202005261023.html" target="_blank" rel="noopener noreferrer">presentation of a national ID</a>. The <strong>South African Post Office</strong> (SAPO) <a href="https://www.techfinancials.co.za/2020/05/04/south-africa-post-office-unveils-cashless-atm-for-sassa-social-grants/" target="_blank" rel="noopener noreferrer">rolled out 10,000 cashless ATMS in rural shops</a> to allow users to access payments without having to travel to urban centers.

In <strong>India</strong>, the post office enabled people to get their funds delivered to their homes during the COVID crisis, whether they have a postal bank account or not. By downloading the India Post Payment Bank app, the user is able to withdraw funds from any bank account and <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/india-post-delivers-rs-412-cr-cash-in-doorstep-banking-revolution/articleshow/75369897.cms" target="_blank" rel="noopener noreferrer">have it delivered</a> either to the post office branch or to their home.
<h3>NBFIs</h3>
In <strong>Bangladesh</strong>, BRAC turned to the use of the country’s most prominent mobile money wallet, bKash, as a means of delivering aid to their clients. They opened mobile wallet accounts for <a href="http://blog.brac.net/cash-transfers-to-support-families-during-the-covid-19-pandemic/" target="_blank" rel="noopener noreferrer">all the clients who had their own mobile numbers</a> and, for those that didn’t, especially the women, they allowed the use of a trusted family member’s wallet.

In <strong>Ecuador</strong>, the government <a href="http://pubdocs.worldbank.org/en/129771593464547099/World-Bank-G2Px-COVID19-Ecuador-Brief.pdf" target="_blank" rel="noopener noreferrer">implemented a social transfer program</a> aimed at vulnerable households, utilizing cooperatives as well as banks to distribute the funds. Unlike cooperatives in most countries, many of Ecuador’s cooperatives are connected to the national payment system.
<h2>The Path Forward</h2>
While countries have made impressive progress over the last decade in broadening the reach of digital financial services, the COVID pandemic has magnified the remaining gaps and weaknesses in helping the most vulnerable. As governments continue with national infrastructure programs, especially around ID and payments, we offer the following crucial considerations for national governments:
<h3><strong>Value of Universal Access to Basic Accounts Opened Under SDD</strong></h3>
This pandemic has demonstrated the potential value of universal access to basic accounts that can be opened under SDD (simplified customer due diligence) measures and at no initial cost to the customer. Should all members of society, as a matter of course, be able to open accounts – immediately and remotely -- for receipt of government emergency payments?
<h3>Importance of Whole of Government Communication and Policy Responses</h3>
Like many aspects of the COVID crisis, communications have been a critical aspect of program success and/or failure. In some countries, for example, unclear messaging on how to apply for or access funds has led to overcrowding at government offices or state banks, forcing those offices to close and leading to public turmoil.
<h3>Clear, Ongoing Dialogue and Interactive Decision-making</h3>
Clear, ongoing dialogue and interactive decision-making between government ministries, regulators and FSPs -- especially payment service providers -- has proven vital to ensuring quick action on rapid onboarding programs. Governments already have established emergency protocols with telecommunications and power companies. How can governments put in place formal emergency mechanisms to engage all relevant ministries and private-sector actors, especially payment service providers, for any future crisis situations?
<h3>How can countries put in place mechanisms to address identification and verification for future crises?</h3>
One approach is to loosen impediments to the sharing of various government beneficiary databases, but there is much to understand around data privacy and security and it is unclear whether this approach is the answer. Given the likelihood of future crises, it is prudent that governments begin the longer-term dialogue and investment needed to address governance of data sharing.
<h3>What are the mechanisms that governments can use to expedite digital infrastructure partnerships with the private sector?</h3>
Where government doesn’t yet have the necessary infrastructure -- including, among others, digital payments, identification, and government databases -- partnerships with industry allow them to leverage existing capabilities and information sharing. The use of mobile SIM registration is a prime example of collaboration to address shortcomings in existing ID infrastructure. Rather than treating each situation as a one-off event, one approach is for governments to institute ongoing cooperation agreements with MNOs and other private/public sector actors to react quickly to events as necessary.
<h3>Governments must consider how they reach beneficiaries that are not digitally connected and may never be.</h3>
The cases in our report highlighted usage of alternative distribution channels through institutions such as post offices and NBFIs. These players already serve low-income people, often via some combination of cash and digital means. Those beneficiaries that only want to deal in cash must continue to be accommodated. But that doesn’t mean that the institutions they use must also deal only in cash. The further that governments can push out the digitization of payments, especially to the “last mile,” the more efficient and expedient the delivery system can be made before it’s transferred back to cash for final delivery.

<a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">Find out more</a> about these policy considerations, and about how countries have innovated and operationalized social payments for the underserved during this difficult time.

Three Ways Governments Expedited Social Payments During COVID

As countries around the world grapple with the economic impact of the COVID-19 pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income of their citizens.

This policy brief explores what national governments are doing to enable rapid payments to those without existing accounts. The swift measures governments took to speed up payments to citizens during the pandemic include:
<ul>
 	<li>Quick identification of eligible recipients</li>
 	<li>Simplification of customer due diligence for rapid account opening</li>
 	<li>Greater use of alternative channels such as mobile apps, post offices, and non-bank financial institutions (NBFIs) such as microfinance providers.</li>
</ul>
Each section of this brief includes country-specific examples and key takeaways. Efforts by 19 countries to facilitate cash transfers, both digital and non-digital, are discussed.

This publication is the second in a <a href="https://www.centerforfinancialinclusion.org/series/policy-responses-to-covid-19-their-impacts-on-low-income-customers">series</a> of policy briefs on COVID-19 economic policy responses and their impact on low-income customers.

Rapid Response for Social Payments During COVID-19

<em>&gt; Posted by Haset Solomon, Communications and Operations Associate, the Smart Campaign</em>

<a href="https://www.flickr.com/photos/worldbank/14144220893/in/album-72157626083471432/"><img class="alignright wp-image-21702" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/08/14144220893_893ef4b548_z.jpg" width="331" height="220" /></a>La Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), the common central bank of eight West African countries (Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) <a href="https://www.cgap.org/blog/20-years-financial-inclusion-progress-waemu-more-come">has prioritized</a> financial inclusion in the region. A recently announced financial inclusion strategy led by BCEAO in partnership with the several national Ministries of Finance aims to include 70 percent of the adult population by the year 2020. Financial access rates range from 7 to 34 percent across the region, according to the Global Findex.

BCEAO is expanding its financial inclusion efforts, including in <a href="https://www.cgap.org/blog/20-years-financial-inclusion-progress-waemu-more-come">mobile and e-money</a>, and financial inclusion is slowly <a href="https://www.cgap.org/blog/20-years-financial-inclusion-progress-waemu-more-come">progressing</a> in the region, but the opportunities and challenges of the member countries vary significantly, and serious client protection issues remain, particularly among unregulated institutions and in countries with weak national supervision and enforcement. A recent <a href="https://www.imf.org/external/pubs/ft/scr/2016/cr16148.pdf">IMF spotlight</a> on Senegal calls for steps to strengthen the sector’s governance through technical assistance to improve supervisory capacities and training to improve reporting standards and practices.

Weak supervision can lead to problems like those the Smart Campaign uncovered during its <a href="http://smartcampaign.org/tools-a-resources/1076">Client Voice</a> research in Benin, where illegal microfinance institutions collected and disappeared with clients’ savings.

To support a healthy consumer protection ecosystem throughout the region, both top-down supervision and bottom-up efforts are critical. As an example of the latter, the Smart Campaign often supports <em>upgrade projects</em> that offer tailored technical and financial support to financial institutions, and recently, with funding from MasterCard Foundation, two institutions in BCEAO member countries were awarded upgrade projects, COMUBA in Togo and Assilassimé Solidarité in Benin.

Although the Smart Campaign has developed numerous tools and resources (available on <a href="http://smartcampaign.org/tools-a-resources">our website</a>) for institutions to improve their client protection practices, upgrade projects tackle specific challenges as identified in collaboration with the institutions themselves.

To be eligible for an upgrade project, institutions first undergo a <a href="http://smartcampaign.org/certification/2-assess">Smart Assessment</a>, a comprehensive strengths and gaps analysis of the MFI’s consumer protection practices. Following the assessment, they outline the institution’s desired objectives and plan for moving forward.

<a href="http://www.comubasfd.com/">La Coopérative Des Membres Unis Bethel Actions</a> (COMUBA) is a Beninois microfinance institution formed in 2000 that almost exclusively serves women. Through the upgrade project, COMUBA adapted several Smart Campaign tools for its own use, including those on: <a href="http://smartcampaign.org/tools-a-resources/976-mechanisms-for-complaints-resolution">Mechanisms from Complaints Resolution</a>; <a href="http://smartcampaign.org/tools-a-resources/1023-training-tool-data-privacy">Data Privacy</a>; and <a href="http://smartcampaign.org/tools-a-resources/544-codes-of-conduct-and-the-role-of-microfinance-associations-in-client-protection">Codes of Conduct and the Role of Microfinance Associations in Client Protection</a>. COMUBA was seeking to address three core challenges: loan management, internal audit, and human capital concerns. The new tools include a manual on savings and lending procedures (for example, it outlines improved collateral management procedures), and a new system for client complaint resolution. With the completion of the project, COMUBA is working to integrate the tools throughout the institution.

<a href="http://www.entrepreneursdumonde.org/nos-actions/nos-partenaires-locaux/assilassime/">Assilassimé Solidarité</a> is a microfinance institution in Togo formed in 2012 that aims to reach vulnerable Togolese in the peri-urban area of Lome, particularly focusing on unbanked individuals, persons with disabilities, and single mothers. Assilassimé applied for an upgrade support to ensure and strengthen the fair and equal treatment of its clients. Accordingly, its approach included not only new policies and procedures but also staff training on those procedures capped by training for clients and assessments of client well-being. One outcome of the project was the computerization and streamlining of Assilassimé’s assessment of clients’ levels of poverty. Interviews conducted with group loan clients a few weeks after trainings indicated that they had increased knowledge of their client rights, and strengthened understanding of the institution’s client complaints system. Assilassimé continues to improve its processes and procedures to achieve international best practices, with the goal of Smart Campaign <a href="http://smartcampaign.org/certification/all-about-certification">Certification</a> in mind.

<em>To learn more about upgrade projects, and all the ways the Smart Campaign works with institutions to improve their practices, visit <a href="http://smartcampaign.org/">the Smart Campaign website</a>.</em>

<em>Image credit: <a href="https://www.flickr.com/photos/worldbank/14144220893/in/album-72157626083471432/">World Bank</a></em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/01/27/the-impact-investing-landscape-in-west-africa/">The Impact Investing Landscape in West Africa</a>

<a href="https://cfi-blog.org/2015/10/22/what-do-clients-care-about-results-from-benin/">What Do Clients Care About? Results from Benin</a>

<a href="https://cfi-blog.org/2016/05/23/why-not-africa/">Why Not Africa?</a>

Strengthening Consumer Protection in West African Microfinance

Loretta Michaels

Haset Solomon

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Ghana

India

Latin America and The Caribbean

Madagascar

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Timor-Leste

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Three Ways Governments Expedited Social Payments During COVID

Rapid Response for Social Payments During COVID-19

Strengthening Consumer Protection in West African Microfinance