Electronic G2P payments in Low-Income Countries
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REQUEST FOR EXPRESSIONS OF INTEREST
Electronic Submissions through World Bank Group eConsultant2
https://wbgeconsult2.worldbank.org/wbgec/index.html
ASSIGNMENT OVERVIEW
Assignment Title: 1092314 - Electronic G2P payments in Low-Income Countries
Assignment Countries:
- (countries have not yet been selected)
ASSIGNMENT DESCRIPTION
CGAP is an independent policy and research center dedicated to advancing financial access for the world's poor. It is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions and offers advisory services to governments, microfinance providers, donors, and investors. Access to financial services is a fundamental tool for improving a familys well-being and productive capacity. Access to financial services empowers the poor by reducing their vulnerability, and offering them opportunities to improve their lives.
The Technology and Business Model Innovation Team has been working on the link between G2P and financial inclusion since 2009. Our main research work on this topic is presented in two Focus Notes: the joint 2009 CGAP-DFID Focus Note 58 "Banking the Poor through G2P Payments" (http://www.cgap.org/publications/banking-poor-g2p-payments) and the 2012 CGAP Focus Note 77 Social Cash Transfers and Financial Inclusion: Evidence from Four Countries (http://www.cgap.org/publications/social-cash-transfers-and-financial-inclusion).
The recent Better Than Cash Alliance White Paper presents three shifts that characterize a countrys transition from a cash heavy to a cash lite economy. How a country undergoes this transition depends in large measure on its starting point. The paper gives examples of Haiti and Niger, which find themselves at specific starting points as they seek to make the first shift, as well as examples of Brazil and South Africa, which are at vastly different starting points (from Haiti and Niger) as they seek to make the third and final shift. The paper also highlights that the benefits to the main stakeholders (governments, private sector, the development community and individuals) change with each shift. For example, transparency might be the main benefit for a government as it makes the first shift to bulk electronic payments. But financial inclusion might be the main benefit in the second shift to an increase in e-payment usage. Finally, the barriers to shifting (such as accurate and credible information, skills and resources, competitively priced payment options, and unreliability of communications linkages) will also vary from one context to another, often within the same country.
CGAPs Focus Note 77 Social Cash Transfers and Financial Inclusion: Evidence from Four Countries published in early 2012 was the result of a year-long research project that investigated the costs and benefits of existing financially-inclusive G2P programs from the perspective of governments, recipients, and payment providers. The intent was to answer the following questions:
For governments: Is building inclusive financial services into social cash transfer programs affordable?
For recipients: Will poor recipients use financial services if offered to them?
For providers: Can providers offer financially inclusive services on a profitable basis?
Brazil, Colombia, Mexico and South Africa were selected because they have several years of experience making social cash transfers into bank accounts through the use of technology at scale.
All four countries in the study happen to be middle-income countries with strong financial sectors and robust infrastructure. No low income countries had enough experience to provide answers to all the questions, especially related to the provider business case and to comparisons of costs to government at different points in the evolution towards electronic payments. This in and of itself is telling since a certain level of development is needed to make such payments at scale in a financially-inclusive manner. Recommendations drawn from their experiences, while useful, might not apply to all the situations low income countries find themselves in. In fact, evidence from the paper suggests further questions for inquiry. As the BTCA White Paper clearly articulates, the starting point for a country in terms of available infrastructure, available providers with the necessary expertise, and a government willing to innovate will be indicative of what sequence the country undertakes as it transitions to electronic G2P payments and then on to financially-inclusive G2P payments.
If better than cash is to work to the benefit of poor people, there is value in studying and better understanding the experiences of low income countries as they start the shift from cash to electronic social cash transfers and build on that shift to also promote financial inclusion for the very poor. This proposed research effort will attempt to begin to address these issues, thereby contributing to the work that the Better Than Cash Alliance aims to achieve.
The proposed research will attempt to answer similar questions to those addressed in the four middle income countries, but from the perspective of experiences in countries at lower levels of development. It will focus on the same three stakeholders, but more emphasis will be at the government and recipient levels than the provider level since a robust business case is unlikely to be available for analysis. Some proposed questions (to be further refined with the selected research firm) that the research will attempt to answer include the following:
1. For governments in low income countries: What are the options for the government in ensuring the necessary infrastructure, support and enabling environment for shifting a social cash transfer programs payment system from cash to electronic? What are the governments main motivations in deciding to drive this change and what are the perceived risks? What evidence is there to support the case for the government to do make this change? To what extent were beneficiaries consulted or their needs analyzed in the decision-making process? To what extent were other stakeholders such as mobile network operators or bank regulators included in the decision-making process? What is the basic level of capacity that is needed at each level of the government for any well-run payment pilot and for scale following a successful pilot? Which government agencies or institutions were involved in the pilot? To what extent did they require (or receive) support for the transition? To what extent were regulations considered and/or modified to accommodate the transition?
2. For recipients in low income countries: What is the experience of poor G2P beneficiaries with new, technology-based payment channels, namely cards/POS with PIN and mobile phones? How does this differ by gender, geography, education etc.? Which of these channels are more conducive to being accepted by poor G2P beneficiaries for receiving payments and why? How does this vary by gender, geography, education? What are the main benefits to beneficiaries adopting these new payment systems (e.g. lower costs etc.)? What are the main costs/barriers/risks and the assumed costs/barriers/risks that may or may not exist in practice to adopting these new payment systems? What evidence, if any, is there that poor people know about and use financial accounts if those have been included in the G2P offer? If evidence is available, does use change over time?
3. For providers in low income countries: What is the main motivation for financial service providers to get involved in G2P? How were providers awarded or given the business? What level of subsidy was provided to whom, either in terms of infrastructure for the initial launch or on an on-going basis? To what extent was the provider mandated to invest up-front or commit to other services (such as financial education) in order to deliver the service? Assuming comparability between pilots, what are the minimum requirements of an enabling regulatory environment, available infrastructure, and required government expertise that are necessary for a pilot?
This research will also aim to provide guidance on the various models for financing the establishment of new payment infrastructure. Is grant funding justified and under what circumstances? Is private sector funding more appropriate under particular circumstances? Is there a role for public sector funders? If the government provides the funding for new infrastructure, from which ministry (or ministries) should the funding come?
More so than in the previous study, this research will focus on the process of testing new payment mechanisms, including how, when and by whom various decisions were made regarding the payment providers, technology channels, pilot location and size, and costs, as well as the contracts and service level agreements put in place. We think this emphasis on process will be useful for other countries embarkin on similar payments projects. In addition, the costs and benefits, specifically for the recipients, from the new payment mechanisms will be researched to the extent that reliable data is available.
The firm will be responsible for coordinating with the government ministries and payment providers, managing demand side surveys/focus groups of recipients, and the supply side collection of relevant data. Firms that have specific connections in some of the country schemes mentioned above should include this information in their proposal as this will facilitate the research work.
Preference will be given to a firm that has international experience in the following Qualification Criteria given below.
REQUEST FOR EXPRESSIONS OF INTEREST
Electronic Submissions through World Bank Group eConsultant2
https://wbgeconsult2.worldbank.org/wbgec/index.html
ASSIGNMENT OVERVIEW
Assignment Title: 1092314 - Electronic G2P payments in Low-Income Countries
Assignment Countries:
- (countries have not yet been selected)
ASSIGNMENT DESCRIPTION
CGAP is an independent policy and research center dedicated to advancing financial access for the world's poor. It is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions and offers advisory services to governments, microfinance providers, donors, and investors. Access to financial services is a fundamental tool for improving a familys well-being and productive capacity. Access to financial services empowers the poor by reducing their vulnerability, and offering them opportunities to improve their lives.
The Technology and Business Model Innovation Team has been working on the link between G2P and financial inclusion since 2009. Our main research work on this topic is presented in two Focus Notes: the joint 2009 CGAP-DFID Focus Note 58 "Banking the Poor through G2P Payments" (http://www.cgap.org/publications/banking-poor-g2p-payments) and the 2012 CGAP Focus Note 77 Social Cash Transfers and Financial Inclusion: Evidence from Four Countries (http://www.cgap.org/publications/social-cash-transfers-and-financial-inclusion).
The recent Better Than Cash Alliance White Paper presents three shifts that characterize a countrys transition from a cash heavy to a cash lite economy. How a country undergoes this transition depends in large measure on its starting point. The paper gives examples of Haiti and Niger, which find themselves at specific starting points as they seek to make the first shift, as well as examples of Brazil and South Africa, which are at vastly different starting points (from Haiti and Niger) as they seek to make the third and final shift. The paper also highlights that the benefits to the main stakeholders (governments, private sector, the development community and individuals) change with each shift. For example, transparency might be the main benefit for a government as it makes the first shift to bulk electronic payments. But financial inclusion might be the main benefit in the second shift to an increase in e-payment usage. Finally, the barriers to shifting (such as accurate and credible information, skills and resources, competitively priced payment options, and unreliability of communications linkages) will also vary from one context to another, often within the same country.
CGAPs Focus Note 77 Social Cash Transfers and Financial Inclusion: Evidence from Four Countries published in early 2012 was the result of a year-long research project that investigated the costs and benefits of existing financially-inclusive G2P programs from the perspective of governments, recipients, and payment providers. The intent was to answer the following questions:
For governments: Is building inclusive financial services into social cash transfer programs affordable?
For recipients: Will poor recipients use financial services if offered to them?
For providers: Can providers offer financially inclusive services on a profitable basis?
Brazil, Colombia, Mexico and South Africa were selected because they have several years of experience making social cash transfers into bank accounts through the use of technology at scale.
All four countries in the study happen to be middle-income countries with strong financial sectors and robust infrastructure. No low income countries had enough experience to provide answers to all the questions, especially related to the provider business case and to comparisons of costs to government at different points in the evolution towards electronic payments. This in and of itself is telling since a certain level of development is needed to make such payments at scale in a financially-inclusive manner. Recommendations drawn from their experiences, while useful, might not apply to all the situations low income countries find themselves in. In fact, evidence from the paper suggests further questions for inquiry. As the BTCA White Paper clearly articulates, the starting point for a country in terms of available infrastructure, available providers with the necessary expertise, and a government willing to innovate will be indicative of what sequence the country undertakes as it transitions to electronic G2P payments and then on to financially-inclusive G2P payments.
If better than cash is to work to the benefit of poor people, there is value in studying and better understanding the experiences of low income countries as they start the shift from cash to electronic social cash transfers and build on that shift to also promote financial inclusion for the very poor. This proposed research effort will attempt to begin to address these issues, thereby contributing to the work that the Better Than Cash Alliance aims to achieve.
The proposed research will attempt to answer similar questions to those addressed in the four middle income countries, but from the perspective of experiences in countries at lower levels of development. It will focus on the same three stakeholders, but more emphasis will be at the government and recipient levels than the provider level since a robust business case is unlikely to be available for analysis. Some proposed questions (to be further refined with the selected research firm) that the research will attempt to answer include the following:
1. For governments in low income countries: What are the options for the government in ensuring the necessary infrastructure, support and enabling environment for shifting a social cash transfer programs payment system from cash to electronic? What are the governments main motivations in deciding to drive this change and what are the perceived risks? What evidence is there to support the case for the government to do make this change? To what extent were beneficiaries consulted or their needs analyzed in the decision-making process? To what extent were other stakeholders such as mobile network operators or bank regulators included in the decision-making process? What is the basic level of capacity that is needed at each level of the government for any well-run payment pilot and for scale following a successful pilot? Which government agencies or institutions were involved in the pilot? To what extent did they require (or receive) support for the transition? To what extent were regulations considered and/or modified to accommodate the transition?
2. For recipients in low income countries: What is the experience of poor G2P beneficiaries with new, technology-based payment channels, namely cards/POS with PIN and mobile phones? How does this differ by gender, geography, education etc.? Which of these channels are more conducive to being accepted by poor G2P beneficiaries for receiving payments and why? How does this vary by gender, geography, education? What are the main benefits to beneficiaries adopting these new payment systems (e.g. lower costs etc.)? What are the main costs/barriers/risks and the assumed costs/barriers/risks that may or may not exist in practice to adopting these new payment systems? What evidence, if any, is there that poor people know about and use financial accounts if those have been included in the G2P offer? If evidence is available, does use change over time?
3. For providers in low income countries: What is the main motivation for financial service providers to get involved in G2P? How were providers awarded or given the business? What level of subsidy was provided to whom, either in terms of infrastructure for the initial launch or on an on-going basis? To what extent was the provider mandated to invest up-front or commit to other services (such as financial education) in order to deliver the service? Assuming comparability between pilots, what are the minimum requirements of an enabling regulatory environment, available infrastructure, and required government expertise that are necessary for a pilot?
This research will also aim to provide guidance on the various models for financing the establishment of new payment infrastructure. Is grant funding justified and under what circumstances? Is private sector funding more appropriate under particular circumstances? Is there a role for public sector funders? If the government provides the funding for new infrastructure, from which ministry (or ministries) should the funding come?
More so than in the previous study, this research will focus on the process of testing new payment mechanisms, including how, when and by whom various decisions were made regarding the payment providers, technology channels, pilot location and size, and costs, as well as the contracts and service level agreements put in place. We think this emphasis on process will be useful for other countries embarkin on similar payments projects. In addition, the costs and benefits, specifically for the recipients, from the new payment mechanisms will be researched to the extent that reliable data is available.
The firm will be responsible for coordinating with the government ministries and payment providers, managing demand side surveys/focus groups of recipients, and the supply side collection of relevant data. Firms that have specific connections in some of the country schemes mentioned above should include this information in their proposal as this will facilitate the research work.
Preference will be given to a firm that has international experience in the following Qualification Criteria given below.
- 1. Social protection payment systems, including the role of governments, donors, and the implications for the recipients; the use of technology for payment systems, including smart cards, magstripe cards, mobile phones, and other technology platforms.
- 2. An ability to evaluate how this technology can be used for more effective and efficient payment systems.
- 3. Knowledge of the financial payment systems in the countries being researched, including bank and nonbank financial institutions;
- 4. An ability to carry out a comprehensive evaluation of these systems, both from a supply side and a demand side.
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