Group TigoPaare accounts in Chad may lead to Peoples’ Banks for communities across Africa
M-money has had a transformative effect in some countries but the success of its roll-out has been patchy. Some places have taken to it like a duck to water whereas others have not really taken it up in any great numbers. Tigo has developed a new m-money concept that seems to be gaining traction in one of Africa’s poorest countries, Chad. Russell Southwood spoke to Toffene Kama who is working with Tigo on the project.
Toffene Kama launched his own start-up Willstream, that does payments from the diaspora to Africa which we covered in January last year: Since then it has changed its name to AyWa Markets and is providing its services to Orange in some of its markets.
Toffene Kama wanted to “see what happens on the ground” and was approached to help Tigo initially in Rwanda. But the Manager in Financial Services in Chad left and he decided to go there to help them as a consultant.
Chad is one of the poorest countries in Africa and has seen no small measure of political instability. But counter-intuitively mobile money services have been very successful there. Over two years, there have been 500,000 subscribers to Tigo Cash and the company feels there is potential for double that number.
Kama started by thinking what is it that Tigo can do that will differentiate itself from competitors like Airtel Money?:”We didn’t want to copy what everyone else was doing and we wanted to something inspired, from the ground up.”
So he and his team started talking to cattle traders. Livestock trading is the second highest generator of GDP in Chad, so in early 2015, the Tigo Cash team met Chad's National Federation of Livestock Traders: it has 500,000 members and exports 30% of Nigeria's meat needs:”There was a gap in understanding. They don’t come in suits, they come as they are. We said we don’t just want to sponsor events or things like bore-holes but tell us about your business.”
They had a number of issues about traveling with cash and being robbed and particular issues around access to water. The issue with the latter was that sponsors and NGOs had paid for them in the past but no-one in the communities – which are peripatetic - had taken responsibility for their maintenance.
The central problem was how to get “large, often distant, communities with a common bond, to self-organize, fund and maintain shared utilities and projects”? For the oldest man in the federation, it was unclear how roaming livestock issues could be solved by these young Tigo employees looking at their smartphones.
Kama’s response was to create TigoPaare, a group wallet that can be held by a community (tontine, in French) to look after their income from cattle sales and has the functionality to make loans to members of the group wallet. The service was started two months ago as a pilot and has attracted 19,000 users, including community mutual funds, cotton producers cooperatives, churches, market sellers and womens groups. NGOs have started making it a condition of funding that a group has one of these accounts:”Some of these groups came physically to our offices. There were so many with one womens’ group that we had to get more space to host them.”
“We needed a “group layer” on top, to deal with common funds, trust, and other group initiatives. We also realized they were all already part of Africa's popular group savings plans (Paaré in Chad, Chamas in East Africa, Tontines in West Africa). Then the solution became obvious”.
It takes time to explain how the account works so they started with a few hundred in the pilot but now have a waiting list of 27,000 groups:”The group wallets will be very helpful to Tigo’s business objectives. Around half of the groups will have Airtel accounts and we will be giving them dual SIMs.”
There are obviously trust issues but “a lot of Africans rely on family or their community group to act as a bank for them. Now they can collect the money and lend that same money to the group. They know who the group members are and their reliability. They can do it for themselves. It could made into a credit union and become a bank for the people.”
With mobile as the platform, they can do this at scale across a whole country. Users can see their own wallet balance on their mobile:”Credit rating is easily done by the group. This is something the banks themselves haven’t done yet. This type of institution can lend at lower rates because of this.”
“Another example is that if a group is ambitious it can get things funded more easily by an NGO. If say US$10,000 is needed for a bore hole, then they can contribute US$1-2,000 and they then have skin in the game (and will presumably look after it).”
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