Building a Digital Financial Services Ecosystem Through G2P Pilots — PART 1

An introductory to a series in which Salton shares his experience leading a consortium of DFS stakeholders in Sierra Leone piloting three carefully selected G2P use cases solutions.

Sierra Leone’s Digital Financial Service (DFS) ecosystem though still under-developed can no longer be appropriately characterized as nascent given that it has existed in the form of Mobile Money Services for a decade. Splash, aiming to replicate the success and scale of Safaricom’s Mpesa in Kenya launched in 2009 initially as a remittance service and actively sought to digitize both humanitarian cash transfer and large employer salary payments. Their launch preceded a better understanding of the challenges of delivering mobile money services, especially one none telco or bank led, before studies of Mpesa’s case pointed at its scale mainly being a function of existing conditions & practices not necessarily found in Sierra Leone. Almost immediately, Zain, now several acquisitions later Orange, launched its offering, with Africell’s variant, AfriMoney, introduced much later in 2016. Splash by all practical definition no longer exists, OrangeMoney and AfriMoney combine for a mobile money penetration rate of 3.71% (National Strategy for Financial Inclusion 2017–2020) and are deployments stuck in the sub-scale trap and mostly have not evolved past the primal stage of being predominantly a remittance tool.

As a consequence of these deployments being sub-scale, growth, and revenue may not justify a long-term continued or increased investment by MNOs in this space especially given competing priorities like a complete switch to 4G, improving both network coverage and quality, and planning for 5G, all investments that provide far higher returns. Thus there is a danger of Mobile Money Operations becoming a passive rather than active part of MNO’s portfolio if conditions remain the same, a state wherein investment is limited to maintaining a service rather than the requirement of achieving and maintaining scale.

Though an increased priority and appetite to support the ecosystem by the regulator and increased investment by the development sector, evidenced by the recent launch of Africa’s second sandbox and the Fintech Challenge supported by sector stakeholders like UNCDF, USAID & FSD Africa, there is still minimal incentive for Sierra Leoneans to transact digitally. Consumers are aware of mobile money and digital financial services but regularly fail to transverse the customer’s journey to regular use. A quick survey points to the following barriers to adoption: 1) lack of utility of mobile money beyond its application as a remittance pipeline 2) poor agent network and liquidity management especially in rural and quasi-urban environments 3) transacting digitally is inconvenient given its multistep nature, unfriendly user interfaces and connectivity challenges 4) high direct cost of transactions relative to cash.

A consensus exists in the industry that digitization of Government to People Payments (G2P), especially in fragile states like Sierra Leone where the public sector is by some distance the largest employer, can be a relatively easily applied catalyst for DFS adoption. However, research in Zambia and other countries in the SADC region suggests that a blanket approach to simply digitizing payments may have unintended, adverse effects. For example, in Malawi, due to lack of cash-out infrastructure, travel and opportunity costs incurred by digital-payment recipients amounted to more than seven times the amount of their direct account fees and accounted for 15% of their average monthly income. (

Consequently, any attempt at large scale digitization of G2P payments should first aim to solve systemic failures around agent networks and liquidity management.

Additionally, G2P payments are only one type of digital payments. To recognize the full benefits of digitization, we need a broader understanding of how to migrate other types of payments from cash to digital. (

For example, during the Ebola crisis in Sierra Leone, salaries of 30,000 Ebola response workers was migrated from cash to mobile money. Given that the cash-out cost was borne by the government rather than the workers, they did not incur the same high costs of accessing their income. However, beyond receiving their payments, almost none used it to transact digitally and 80% wholly cashed out within two days of receipt, and less than 5% maintained their mobile wallets after the programme ended. Even though efficient cash transfer was our primary priority (I headed technology for that programme), we hoped that digitization of salaries would lead to an uptake of DFS and realization of the value of digitization by the target group, but that was not the case.

I am a part of a consortium that includes iDT Labs (FinTech), Africell & AfriMoney (MNO), Sierra Leone Commercial Bank, & ACTB Savings and Loans (MFI) aiming to through a series of pilots targeting government workers to catalyse the DFS ecosystem at carefully selected pilot locations and document lessons learnt. Three pilot cases: 1) Piloting a Remittance Solution 2) Piloting a One-stop Merchant Payment Solution 3) Piloting a micro-savings product, where selected as a result of the “The Financial Lives Survey”, conducted in Sierra Leone in 2017–2018 by the UNCDF, which indicated “that government employees who received their salaries in bank accounts can be encouraged to avail of digital financial services instead of cashing out”. It surveyed how government workers spent their salaries and developed pilot cases aligned with the findings. Such a consortium in this thematic area is the ecosystem’s first in an environment where collaboration by organizations with overlapping market segments and value propositions is alien. As a consortium we aim to solve challenges and limitations that affects the development of the sector and while forwarding our organization’s specific vision & objectives.

Our approach, which will be covered in follow-up posts, revolves around finding practical solutions to the problems of 1) Inadequate Agent Networks & Liquidity Management and 2) The Lack of Utility of Mobile Money. Consequently, key methodologies employed include:

  1. Developing a New Model for Managing Access Point & Liquidity that strengthens both the availability of and ability of access points to meet cash-in and cash out demands of consumers particularly in rural locations.
  2. Leverage Credit Scoring Using Digital Trail & Promise of Improved Access to Credit as a catalyst for mobile money adoption among merchants; not only incentivizing acceptance of digital currency in their exchange with customers but also enabling acceptance by their upstream suppliers.
  3. A Platform-based Approach that encourages and enables layering of solutions/effort by other stakeholders; enabling the development of FinTech products, services and creation of value on top of our output.

This article forms the first in a series wherein, as Project Manager of the consortium, I detail our approach, methodology, challenges, and lessons learned. It is not only meant as knowledge sharing and open-sourcing tool, but also an effort to crowd-source feedback and opinions from a broader audience that can help Sierra Leone’s case.