Laura Rawlings &

Luz Rodriguez

Social Safety Net Core Course

May 7th, 2018

Social protection

payments delivery

Objectives of a

Payment System

• Successfully distribute

the correct amount of benefits

to the right people

at the right time and frequency

while minimizing costs to

both the program and the beneficiary

• Facilitate financial inclusion

Payments are quickly evolving from manual to

digital

Who is manual and who is digital?COUNTRY PROGRAM # BENEF. PAYMENT METHOD PAYMENT SERVICE PROVIDER FREQUENCY OF

PAYMENT

BANGLADESH EGPP 1.4 M MANUAL - CASH Ministry of Disaster Management and Relief

16

NEPAL Seniors Citizens Allowance 922 K MANUAL - CASH Ministry of Federal Affairs and Local Development

3

ROMANIA Universal Child Allowance 2.1 M MANUAL - CASH Post Office 12

1.6 M DIGITAL Commercial Bank

TURKEY Sartli Egitim Yardimi 1.9 M DIGITAL – DEBIT CARD Post Office 6

ETHIOPIA PSSN Urban 5.5 M DIGITAL Commercial Bank 12

2.4 M DIGITAL- MOBILE PAYMENT

M-Bir and Hello Cash

PSSN Rural 600 K DIGITAL – DEBIT CARD Commercial Bank

DOMINICAN REP. PROSOLI 756 K DIGITAL – DEBIT CARD Commercial Banks Consortium 4

HONDURAS Bono Vida Mejor 240 K MANUAL - CASH State Bank – Banadesa 3

PERU Juntos 1.7 M DIGITAL – DEBIT CARD State Bank-Banco de la Nacion 6

MEXICO PROSPERA 1.2 M DIGITAL – DEBIT CARD State Bank - Bansefi 6

4.9 M DIGITAL – CARD WITH CHIP (BIOMETRIC)

State Bank – Bansefi and agents network (Diconsa)

Who is manual and who is digital?

COUNTRY PROGRAM # BENEF. PAYMENT METHOD PAYMENT SERVICE PROVIDER FREQUENCY OF PAYMENT

JAMAICA PATH 375 k MANUAL - CHEQUE State Bank 6

DIGITAL-PREPAID CARD State Bank

MANUAL - CASH Remittance agent

INDIA MREGA 111 M DIGITAL-E-VOUCHER Post Office Every 14 days (for a period of up to

100 days)DIGITAL- SMART CARD Commercial Bank

SRI LANKA SAMURDHI 1.5 M MANUAL- VOUCHER State Bank 12

PAKISTAN BISP 1.7 M DIGITAL- DEBIT CARD 6 Commercial Banks 4

3.1 M DIGITAL – BIOMETRIC VERIFICATION SYSTEM

6 Commercial Banks

72 k MANUAL- MONEY ORDER Post Office

KENYA CT for Orphans and Vulnerable Children

1 M DIGITAL-PREPAID CARD 2 Commercial Banks 6

BRAZIL Bolsa Familia 13 M DIGITAL-PREPAID CARD State Bank

Source: WBG Social Protection Payments inventory (2018) (forthcoming)

Who are the actors currently involved in SP

payments delivery

Actors Payment service

providers

Payments

instruments

Channels

• Social

protection

ministry

• Implementing

agency

• Funders

• Beneficiaries

• Payments

service

providers

• Regulators

• Post Offices

• Micro finance

institutions

• Savings and credit

Unions

• NGOs

• Commercial banks

• Public (state) banks

• Mobile network

operators

• Cash

• Cheques/Vouchers

• Bank accounts

• Cards

• Debit

• Pre-paid

• Smart cards

• E-wallets

ATMs

POS

Mobile phones

PAYMENT

INSTRUMENTADVANTAGES

NEEDS ON FINANCIAL

INFRASTRUCTURE

NEEDS OF INSTITUTIONAL

CAPACITY

DEBIT CARDS

Real-time payments, Face to face ,

online and remote transactions;

recurring bill payments

ATM and EFT POS networks.

Credit bureaus.

Rules and standards for inter-

operability, dispute resolution and

consumer protection

Centralized account

management.

Access to ATM and POS

networks.

PRE-PAID CARDS

Real-time payments, Face to face ,

online and remote transactions;

recurring bill payments;

ATM and EFT POS networks.

Rules and standards for inter-

operability, dispute resolution and

consumer protection

Access to ATM and POS

networks.

Real-time transaction

authorization and monitoring

systems

SMART CARDSReal-time payments, Face to face,

online and remote transactions;

POS and agent network

Centralized account

management.

Access to POS networks

Real-time transaction

authorization and monitoring

systems

E-WALLETS

Real-time payments, Person to

person including cross border

remittances, utility bill payment,

micro-payments and purchase

transaction capability

Enabling legal framework.

Merchant / Agent network

Linkages with existing inter-bank

and payment card networks.

Interface mobile payment

infrastructure with banking

accounts (savings or credit) or

create a prepaid product.

Ability to service far-flung

merchant/agent network

7

Main requirements of payment instruments

8

Standard SP payments delivery process

Associated Costs

9

Indicative benchmarks on Payments

Financial environment: Characteristics of Payment Service Providers

(PSPs)

10Source: ISPA Payments tool, 2017

Mobile network oper.

Financial environment: Policy, Legislation and regulation

11

• Financial sector regulation

• G2P policies

• Financial inclusion

• Procurement and contracting

• Know Your Customer rules

• E-money regulations

• Basic Bank account

Other enabling factors

12

• ID system

– Uniqueness

– KYC

– Aunthentication

• Mobile Network Coverage

• Flow of funds on other SP programs

• Social Registries and Integrated SP Information Systems

Girl’s Education , Women’s Empowerment

and Livelihoods (GEWEL) Project in

Zambia

Multi-Service Provider Payments of the SWL

AGENDA

1. A bit about Payments2. A bit about G2P Payments3. A bit about Zambia4. Some background on Zambia SCT G2P5. Why SWL Payments needed to be different6. The Payment Options and Why7. How it Works8. How has it gone so far

A bit about Payments …

Split into two (2) broad categories:

1) PUSH Payments 2) PULL Payments

The sender is paying (pushing) money to you via a payment system

• Your salary paid via EFT (Electronic Funds Transfer) • An international payment via SWIFT• A payment from a friend via PayPal• A mobile payment from one person to you using

M-PESA

A merchant or agent, with your permission, does an “authorization” (pull) for the money from your financial institution

• You swipe your VISA card at McDonalds• You go to an ATM to draw some cash• You go to an M-PESA agent to draw funds from

a mobile wallet

A bit about Payments … and cash transfers

Cash transfers are one type of Government to Person (G2P) payments

1) Cash = PUSH Payments 2) PULL Payments = Electronic

But: not all push payments are cash (per the previous example, CT could be push into an account

A fairly common CT pull payment method is when paying using with “Pre-paid VISA cards”

Increasingly G2P payments are being made via Mobile Money Transfer (MMT)

A bit about Zambia …

• Lower-middle-income country in Southern Africa with 16.7 million people

• With 21 people per square kilometer, it is among the least densely populated countries, well below Africa’s average of 39

• The majority of G2P participants live in remote and rural areas, with only two main areas – the capital, Lusaka, and Copperbelt province – having dense urbanization

• The vast majority of people (75 percent) in the rural areas live in poverty (compared to 23 percent in the urban areas)

A bit about Zambia and payments …

• Access to formal financial services remains low (38 percent of adults)

• Between 2015 and 2016, active mobile money agent networks grew by over 70 percent and active use of digital services increased by 18 percent

• Zambia now has 8,000 active Mobile Money agents and over 521,000 active mobile money wallets

• The number of digital financial service provides increased from 10 in 2015 to 18 in 2018

Zambia’s SCTS

Cash by bicycle

• The Government is one of the biggest customers of bicycles in Zambia

• The Social Cash Transfer Scheme (SCTS) deposits money into the accounts of rural Government employees, mainly teachers, who ride to town to draw cash, up to 100km

• Once the cash is drawn, they ride back to the village and disperse the cash

• How much actually gets to each beneficiary is unverifiable (the transfer should be USD18 every two months)

The challenge for GEWEL

Bicycle cash delivery was not an option

• The GEWEL payment is USD200 split into two payments – the amount alone would make the payment via the current method very risky

• Analysis of financial sector providers showed that no single private sector provider had the capacity to make the GEWEL payments nationally

• And four years of failed procurement of Zanaco, the country’s largest bank, for the SCTS confirmed this challenge

• Moreover the fundamentals of the SWL intervention suggest that empowering participants with a financial services account was key

The challenge for GEWEL

• The analysis of the market (supply side study) presented a potential if not the only solution to pay beneficiairies natioanlly

• If the Ministry could use every possible provider to reach the women the likelihood of solving the possible need could be realised

The remote district of Mpulungu/Mbala on the banks of Lake Tanganyika, for example, does not have a Zanaco Bank branch but one finds that Zampost and Cavmont Bank have a branch.

Finding a better alternative

The Big Picture

To quote a classic …

“If you build it, they will come”

By concentrating the demand, the business case for suppliers to solve the problem will become evident

Presenting the “numbers” became paramount …

The Numbers: Making the business case

Phase 1 Phase 2 Phase 3 Total

Beneficiaries 24,965 28,692 21,341 74,998

ZMK 54,923,000 63,122,400 46,950,200 164,995,600

Build what exactly?

The payment system needed to:

1. Enroll beneficiaries

2. Capture their choice of Payment Service Provider (PSP)

3. Schedule payments as the women completed the training

4. Manage the approvals to release payments

5. Integrate directly to PSPs

The GEWEL Payment System

This is a fancy technical diagram but how does it actually work on the ground ?

Zambia

This is Zambia SWLPhase 1

It’s in the

Detail

LufwanyamaDistrict

Mushingashiis 85 miles from Kitwe

LufwanyamaDistrict

In the middle of nowhere is a Natsavebranch

LufwanyamaDistrict

In the middle of nowhere is a Natsavebranch

LufwanyamaDistrict

In the middle of nowhere is a Natsavebranch

This is what it is like on the ground

Zoona AgentIn MangogoVillage

This is what it is like on the ground

MTN Agent

This is what it is like on the ground

NatsaveRural Branch

This is what it is like on the ground

ZampostChawama

PaymentProcess

The GEWEL Payment System

EVOLUTION OFSAFETY NET PAYMENTS

IN BANGLADESH

May 2018, SSN core courseYoonyoung Cho (Senior economist)

on behalf of the team

BANGLADESH SAFETY NETS

SAFETY NETS SYSTEMS FOR THE POOREST (SNSP):MINISTRY OF DISASTER MANAGEMENT AND RELIEF

- Public works + Humanitarian relief- National Household Database (NHD) for poverty targeting under development

BANK’S OPERATION

- ADMINISTRATIVE CAPACITYBUILDING- (Management) InformationSystems (MIS)- CITIZEN ENGAGEMENT+ AWARENESS- GRM MECHANISM

INCOME SUPPORT PROGRAM FOR THE POOREST (ISPP):LOCAL GOVERNANE DIVISION

- Conditional cash transfer programs for mothers with young children focusing on health and nutrition

CASH TRANSFER MODERNIZATION (CTM):MINISTRY OF SOCIAL WELFARE

- Old age allowance; widow allowance; disabilityallowance; disability students’ allowance

ELIGIBILITY ASSESSMENT AND DECISION

EFFICIENT PAYMENT SYSTEMS

GRADUATION

Beneficiary- Low level of financial inclusion- Low mobile penetration (18% among SA beneficiaries)- Low financial literacy + preference for cash over digital funds- Bearing a huge TCV (time, costs, visits) inefficiency

MODERN G2P PAYMENT: CHALLENGES

Infrastructure- Low POS/ATM penetration- Bank cards not widely used- Low coverage of the National Payment Switch Bangladesh’s (NPSB) – an electronic

platform for bank’s interoperability- Weak systems of financial institutions- NID functionality (for biometric authentication) is unknown

Institutions- Coordination & collaboration among major players

• Bangladesh bank: regulatory body of financial institution• Prime Minister’s Office through A2i (Access to information) unit: architecture

of digital Bangladesh• Finance division: vision for D2C (direct to citizen) payment

- Weak capacity of line ministries: staff/IS not fully ready for digital transfer

•

•

•

•

•

•

•

•

•

•

Instrument

Security

Modality

•

•

•

•

•

•

•

•

•

•

•

IMPROVISATIONS

Ambition- G2P 3.5 vs. 4.0?

Cash transfer modernization project

Implementation details- Financial institutions assessment- Centralized payment architecture assessment

* Payroll (program eligibility+person detail+bank account+amount)* KYC/e-KYC

- NID functionality assessment (for biometric authentication + payment instrument)- Coordination with various actors/stakeholders

Human Centered Design- Financial literacy training/education- Active information dissemination / Union Social Workers training

ACKNOWLEDGEMENTS

PREPARED BY QUESTIONS

Payment Request

NID

V

erification

2

PaymentInstruction

PaymentInstruction 3

4 5

1

6

Payment

7

Cas

h O

ut

8

Account Verification

NID Verification

Bank

Post Office

MFS

10

Cash

Ou

t

9

NID Verification

GHANA –PAPERLESS PUBLIC WORKS

PROGRAM

BUILDING EFFICIENT

DELIVERY SYSTEMSBy:

Suleiman Namara, Sr. SP Economist

Christabel Dadzie, SP Specialist

GHANA SOCIAL OPPORTUNITIES PROJECT (GSOP)

GSOP PDO: to improve targeting of the social protection programs and provide income support to poor households through LEAP grants and LIPW infrastructure in targeted districts.

Project Duration: Initiated in October 2010; Additional financing in May 2015; and Project Closure in May 2018.

Project components:

➢ Component 1: Social Protection Policy and Systems Strengthening

➢ Component 2: Labor Intensive Public Works Implementation and Capacity Building

➢ Component 3: Livelihood Empowerment Against Poverty Implementation and Capacity Building

Key Achievements

➢ Beneficiaries of Safety Nets programs (cash transfers and public works) – 1,1 million; 61% female

➢ Person days of unskilled workers under the LIPW – 11.6 million against a target of 9.5 million

➢ Positive impacts of GSOP as posited by Impact Evaluation Studies in 2012 and 2016

➢ Social Protection Policy was prepared and launched in June 2016; Social Protection Bill is under preparation

➢ Ghana National Household Registry was launched in October 2015, data collection and reporting underway

➢ Productive Inclusion pilot was initiated in 2016 and has enrolled 4149 LEAP and LIPW beneficiaries, who

have been trained and running income generation activities in shea butter processing; small ruminant

rearing; basket weaving among others.

OBJECTIVES OF LIPWTo provide targeted poor rural households with access to employment and income earning opportunities, in particular during seasonal labor demand shortfalls through rehabilitation and maintenance of public or community assets.

OPERATING SIMULTANEOUSLY….

➢ In 60 out of 216 Districts➢ In 475 Communities➢ On 361 LIPW Sites➢ Employing 35,000 poor households

LIPW MANUAL PROCESS➢ Excel-based Daily Attendance Sheets (DASH) printed and distributed on site

➢ The DASH were completed after 14 days of work

➢ The DASH was physically delivered to the District Assembly (the

implementing local authority)

➢ After clearance by District Assembly, the District Finance office proceeded to

the community to effect payment based on the approved payroll

➢ A payroll was generated using a spreadsheet (MS Excel) after entry of the

beneficiary details and the days worked

➢ It took up to 4 months to reconcile payroll and get payments to beneficiaries

➢ Manual payment list was calculated using excel and taken to field as printed

copies

➢ Beneficiaries were called by name and thumbprint against the calculated

earnings to receive cash

OVERALL LIPW SYSTEM TRANSFORMATION

KEY ACTIVITIES UNDER E-PAYMENT SYSTEM

➢ Targeting & Enrollment

➢ Work Attendance (Daily Attendance Sheet)

➢ Generation of Payroll

➢ Approvals & Transmission of Payroll

➢ Upload of Wages onto Smart Cards

➢ Cash Out by Participating Financial Institutions

➢ Reconciliation & Reporting

TARGETING AND ENROLLMENT

LIST ENTERED IN GMIS PRO

L

U

I

D

G

E

N

E

R

A

T

E

D

E-ZWITCH NUMBER SUBMITTED WITH LIST

BIO DATA

LIPW ELECTRONIC ATTENDANCE MODULE

LIPW ELECTRONIC ATTENDANCE MODULE

ELECTRONIC

ATTENDANCE

LIPW BENEFICIARY

ATTENDANCE SHEET

EFFECTS OF E-ENROLLMENT & E-ATTENDANCE

➢ All LIPW beneficiaries are uniquely & positively identifiable

➢ There cannot be duplication or Ghost names

➢ Only targeted and enrolled beneficiaries who can work on LIPW sites

➢ The number of persons on site on any day and number of days worked on a site cannot be inflated

LIPW BENEFICIARY PAYROLL

LIPW BENEFICIARY PAYROLL GENERATION PROCESS

ELECTRONIC ATTENDANCE & DISTRICT APPROVAL

DISTRICT CHIEF EXECUTIVES APPROVAL PROCESS

UPLOAD OF WAGES ON SMART CARDS

UPLOAD OF WAGES ONTO SMART CARDS

CASH CREDITS REPORT

CASH WITHDRAWAL REPORT CASH OUT BY PARTICIPATING

FINANCIAL INSITUTIONS

EFFECTS OF E-PAYROLLS

➢Data used for building Payrolls not alterable

➢Value of payrolls based exactly on actual number of days worked on LIPW sites

A Queue of Beneficiary waiting for their turn on a payment day

Biometric validation in LIPW E-payment Process

RECONCILATIONS

USER INTERFACE OF GSOP APPSTO BRING ALL APPLICATIONS ON ONE PORTAL FOR EASY ACCESS

STATUS BY THEMATIC AREAS OF SUBPROJECT

GHANA SOCIAL OPPOURTUNITIES PROJECT

STATUS BY THEMATIC ARE AS AT MARCH 5 2018

Indicator Climate Change Feeder Roads Small Earth Dams and Dugouts Social Infrastructure Aggregate

No. of subprojects planned 331 378 293 40 1042

No of participating district assemblies 59 60 40 40 60

No. of communities 327 634 298 41 1118

Total projected cost (GHS) 42180784.8 89248259.43 83344814.8 7059346.17 221833205.2

No. of subprojects completed 232 344 259 40 875

Kilometres of completed subprojects 0 1284.33 0 7 1291.33

Hectares of completed subprojects 2159.24 0 0 0 2159.24

Cubic metres of completed subprojects 0 0 26701725.11 0 26701725.11

No. of subprojects ongoing 18 4 8 0 30

Kilometres of ongoing subprojects 0 13.9 0 0 13.9

Hectares of ongoing subprojects 109 0 0 0 109

Cubic metres of ongoing subprojects 0 0 652009 0 652009

% completion of ongoing subprojects 72% 59% 65% 69%

Actual expenditure to date 37838180.11 74446972.38 63175117.71 6642875.68 182103145.9

Actual person days of unskilled labour 3795855 4340880 5259340 187541 13583616

Actual number of unskilled beneficiaries 36070 64458 67135 7939 167244

Actual amount paid to unskilled beneficiaries 25986450 29986364.5 36542906 872220 93387940.5

Average amount paid to unskilled beneficiaries 720.44 465.21 544.32 109.87 558.39

Actual number of unskilled male beneficiaries 14925 25461 23459 3960 64529

Actual number of unskilled female beneficiaries 21145 38997 43676 3979 102715

Number of inspections carried out on ongoing subprojects 30 5 25 0 60

Number of unskilled beneficiaries from LEAP households 640 1139 1357 74 3054

REPORTS

KPI measurement

Data report for

Management

Detailed report on

subproject

DASHBOARD

SYSTEM

NOTIFICATIONS

CONCLUSION

LIPW Digitized Delivery System:

➢ protects integrity of targeting

➢ removes duplicates and ghost names

➢ promptly alerts management

➢ pays “the right person, the right amount at the right time”

IT IS SCALABLE!

THANK YOU

What is the ISPA Payments Delivery Mechanisms tool?

What does the Payments tool include?

“What Matters” Guidance•Lays technical foundation for assessment•Provides good practices from international experience•Provides instructions to gather information•Describes how the assessment is organized

QuestionnaireGathers qualitative and quantitative information

Assessment MatrixAssesses against the agreed criteria on a four point scale

Country Report•Presents the findings•Highlights strengths and weaknesses in relationto good international practice•Summarizes complex landscape of policies and institutions•Provide policy options to be used as jumping off pointfor future dialogue between stakeholders

Implementation Guidelines

Outlines the process of application of ISPA tools from start to completion

Policy, regulation and legislation

Agency rules for banks/non-banksProportionate KYC requirements e-money guidelines

Basic bank accounts

Financial inclusion

Government payments

Procurement

ID National ID

ICT Mobile Network Coverage

Financial landscape

Financial institutions

Financial access points

Interoperability

What are the key financial and regulatory elements of the payments

tool?

ACCESSIBILITY

• Cost of Access

• Appropriateness

• Rights and Dignity

ROBUSTNESS

• Reliability

• Governance

• Security

INTEGRATION

• Financial Inclusion

• Coordination

Assessment criteria

More than 60 ISPA Applications in 50+

countries: 15 of payments tool

Lesotho- WB

Thanks!

www.ispatools.org