Pilot Launch | Inclusive digital wallet for humanitarian cash programming
Mercy Corps and Sempo pilot a digital tool for humanitarian cash programming in Uganda.
Written by Julius Adewopo — Technology for Development Advisor at Mercy Corps, and Ken Kou — Fintech & Innovation lead at Mercy Corps Ventures.
This pilot has concluded and the insights are now published.
Highlights below, read more here:
The Basic Needs Wallet (BNW) delivered speed and efficiency to humanitarian cash assistance | The BNW yielded a 56% reduction in time spent initiating and completing cash transfer to participants
The BNW is a promising innovation but still needs community buy-in to be fully embraced | 45% of participants prefered digital cash to traditional cash after being introduced to the BNW. Mobile money remains a preference with 48% of participants preferring BNW to mobile money
In a humanitarian context, BNW performed well in addressing a common and pressing need: food security | 80% of participants’ basic needs wallet was redeemed for food, however many households felt the list of redeemable items was limiting and desired more spending agency
Uganda is the largest refugee-hosting country in Africa. The 1.5 million refugees currently living in the country require timely access to basic necessities, yet, the process of providing cash assistance from humanitarian organizations often involves several layers of manual identity validation, approvals, and disbursement. These barriers and delays mean displaced individuals remain unable to support their immediate needs with agency and dignity.
That’s why Mercy Corps is piloting the use of a digital tool for cash programming in Uganda. Mercy Corps Technology for Development (T4D) team and Mercy Corps Ventures (MCV) share a common vision to advance humanitarian programing through responsible application of frontier technologies. Both teams collaboratively launched this pilot to test the ‘Basic Needs Wallet’ (also called BNW Tool) with the goal of increasing efficiencies in cash assistance for refugees living in Kampala, Uganda. In partnership with Mercy Corps Uganda and a technical partner, Sempo, this collaboration aims to advance the digitalization of humanitarian cash programming through mobile wallets and Near-field Communication (NFC) cards.
Status Quo
Currently, humanitarian organizations provide cash and goods assistance to groups living in vulnerable contexts primarily through mobile money. A core challenge of mobile money is around Know Your Customer (KYC). In Uganda, individuals must provide formal identity (ID) documents in order to obtain a SIM card. Therefore, refugees and asylum seekers who do not have formal IDs are unable to receive mobile money transfers, and even with an ID, individuals face significant delays in being issued a SIM card due to lengthy ID validation processes. Paper vouchers have historically provided a solution to the SIM card barrier, yet this requires a substantial amount of manual verification, can be prone to human error, and are usually slow.
Non-timely disbursement of cash erodes the core objective of cash programs which are intended to reduce the vulnerability and improve the financial resilience of participants.
Therefore, it is critical to develop an alternative and efficient tool for refugees to receive digital payments. One promising tool is a digital wallet. Humanitarian agencies need a wallet structure that allows the movement of value seamlessly to their program participants, while creating a transparent and traceable audit trail that supports reporting needs.
Pilot Summary
This pilot is focused on deploying and assessing the BNW Tool, a platform developed by Sempo and Mercy Corps T4D as an open source, multi-currency (crypto or fiat), digital wallet (mobile-phone compatible tool) to provide financial assistance to urban refugees and host communities in Kampala, Uganda. The BNW tool was co-developed with a front-end (user-accessible) application and a back-end (admin-moderated) dashboard, which also offers the flexibility for users to easily receive and transfer value to participating vendors. To improve inclusiveness of cash programming, transactions can be completed based on programmed USSD codes and NFC-enabled cards that are offered to the target users.
The technology is expected to foster transparent, immutable, and efficient cash disbursement to program participants, while allowing donors and authorized users to track donations and disbursements, with added traceability of subsequent transactions between the recipients and service or product vendors. For instance, say a user has USD$100 on their card and spends USD$20, but then loses the card. With this traceability, the service providers can cancel the user’s first card, and issue a second that has a value of USD$80 loaded. Potential scale-up of this technology would also enable cryptocurrency transfers, unlocking a world of decentralized finance (DeFi) use cases.
Through the pilot, the BNW will be used to transfer value to 250 refugees and host community households, reaching 1,250 individuals in total. Once onboarded, participants will receive two transfers of UGX 360,000 over two months (totaling UGX 720,000 or USD$101, the equivalent of the Minimum Expenditure Basket in Uganda). This can be redeemed by participants through the NFC card at any of the eight participating local vendors, for a mix of goods and cash. An additional efficiency of the BNW is the ability to pre-order goods, enabling vendors to track demand and ensure stock and availability. All transactions will be automatically logged and accessible through the BNW’s back-end dashboard, and vendors can choose to keep or redeem the funds from the digital wallet through a local in-country payment broker. Vendors will be trained on the value of the BNW, how to use the tool, and potential application for cryptocurrency based transactions.
Learning & Impact
We aim to generate insights about the practicalities of digital cash programming with the BNW tool for better financial inclusion. Core aspects of the technology that will be assessed include:
- Feasibility — can the technology increase disbursement of digital/electronic cash assistance to participants effectively and with speed?
- Desirability — do the users have preference for the BNW vs the traditional approach (e.g. paper vouchers).
- Viability — can the cost efficiency for cash programming be improved, considering the indirect benefits of deploying the BNW, such as financial literacy of program participants?
Mercy Corps T4D and MCV’s vision of success is that humanitarian actors will be able to leverage this emerging technology to bypass extant cash programming barriers.
As humanitarian actors seek to respond to emergency needs across various geographies, this tool can expedite delivery of basic needs by enabling participants to transact with designated vendors through digitally enabled cards, especially where and when mobile phones are inaccessible/unaffordable.
If this solution is successfully piloted and scaled, populations in fragile environments and living under humanitarian crises can access the assistance they need, at the right time, to accelerate their recovery and bolster their resilience.
Find out more about Mercy Corps Ventures pilots here.
