Social protection payments delivery

Laura Rawlings & Luz Rodriguez

Social Safety Net Core Course May 7th, 2018 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 16 Management and Relief NEPAL Seniors Citizens Allowance 922 K MANUAL - CASH Ministry of Federal Affairs and 3 Local Development ROMANIA Universal Child Allowance 2.1 M MANUAL - CASH Post Office 12

1.6 M DIGITAL

TURKEY Sartli Egitim Yardimi 1.9 M DIGITAL – Post Office 6

ETHIOPIA PSSN Urban 5.5 M DIGITAL Commercial Bank 12

2.4 M DIGITAL- MOBILE M-Bir and Hello Cash PAYMENT 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 State Bank – Bansefi and agents CHIP (BIOMETRIC) 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 - 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 DIGITAL- SMART CARD Commercial Bank 100 days)

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 6 Commercial Banks VERIFICATION SYSTEM 72 k MANUAL- MONEY ORDER Post Office

KENYA CT for Orphans and 1 M DIGITAL-PREPAID CARD 2 Commercial Banks 6 Vulnerable Children 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 Payments Channels providers instruments • Social • Post Offices • Cash protection • Micro finance • /Vouchers ATMs ministry institutions • Bank accounts • Implementing • Savings and credit • Cards agency Unions • Debit POS • Funders • NGOs • Pre-paid • Beneficiaries • Commercial banks • Smart cards • Payments • Public (state) banks • E-wallets Mobile service • Mobile network phones providers operators • Regulators Main requirements of payment instruments

PAYMENT NEEDS ON FINANCIAL NEEDS OF INSTITUTIONAL ADVANTAGES INSTRUMENT INFRASTRUCTURE CAPACITY

ATM and EFT POS networks. Real-time payments, Face to face , Centralized account Credit bureaus. online and remote transactions; management. DEBIT CARDS Rules and standards for inter- recurring bill payments Access to ATM and POS operability, dispute resolution and networks. consumer protection

Access to ATM and POS ATM and EFT POS networks. Real-time payments, Face to face , networks. Rules and standards for inter- PRE-PAID CARDS online and remote transactions; Real-time transaction operability, dispute resolution and recurring bill payments; authorization and monitoring consumer protection systems Centralized account management. Real-time payments, Face to face, POS and agent network Access to POS networks SMART CARDS online and remote transactions; Real-time transaction authorization and monitoring systems

Interface mobile payment Real-time payments, Person to Enabling legal framework. infrastructure with banking person including cross border Merchant / Agent network accounts (savings or credit) or E-WALLETS remittances, utility bill payment, Linkages with existing inter-bank create a prepaid product. micro-payments and purchase and payment card networks. Ability to service 7far-flung transaction capability merchant/agent network Standard SP payments delivery process

8 Associated Costs

Indicative benchmarks on Payments

9 Financial environment: Characteristics of Payment Service Providers (PSPs)

Mobile network oper.

Source: ISPA Payments tool, 2017 10 Financial environment: Policy, Legislation and regulation

• Financial sector regulation • G2P policies • Financial inclusion • Procurement and contracting

• Know Your Customer rules • E-money regulations • Basic Bank account

11 Other enabling factors

• ID system – Uniqueness – KYC – Aunthentication • Mobile Network Coverage • Flow of funds on other SP programs • Social Registries and Integrated SP Information Systems

12 Girl’s Education , Women’s Empowerment and Livelihoods (GEWEL) Project in

Multi-Service Provider Payments of the SWL AGENDA

1. A bit about Payments 2. A bit about G2P Payments 3. A bit about Zambia 4. Some background on Zambia SCT G2P 5. Why SWL Payments needed to be different 6. The Payment Options and Why 7. How it Works 8. 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 A merchant or agent, with your permission, does payment system an “authorization” (pull) for the money from your financial institution

• Your salary paid via EFT (Electronic Funds Transfer) • You swipe your VISA card at McDonalds • An international payment via SWIFT • You go to an ATM to draw some cash • A payment from a friend via PayPal • You go to an M-PESA agent to draw funds from • A mobile payment from one person to you using a mobile wallet M-PESA 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 A fairly common CT pull payment method is when previous example, CT could be push into an paying using with “Pre-paid VISA cards” account 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, , 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 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

Finding a better alternative

• 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 have a branch. 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 SWL Phase 1 It’s in the Detail

Lufwanyama District

Mushingashi is 85 miles from Lufwanyama District

In the middle of nowhere is a Natsave branch Lufwanyama District

In the middle of nowhere is a Natsave branch Lufwanyama District

In the middle of nowhere is a Natsave branch This is what it is like on the ground

Zoona Agent In Mangogo Village This is what it is like on the ground

MTN Agent This is what it is like on the ground

Natsave Rural Branch This is what it is like on the ground

Zampost Chawama Payment Process The GEWEL Payment System

EVOLUTION OF SAFETY NET PAYMENTS IN BANGLADESH

May 2018, SSN core course Yoonyoung Cho (Senior economist) on behalf of the team BANGLADESH SAFETY NETS BANK’S OPERATION

SAFETY NETS SYSTEMS FOR THE POOREST (SNSP): MINISTRY OF DISASTER MANAGEMENT AND RELIEF - ADMINISTRATIVE CAPACITY - Public works + Humanitarian relief BUILDING - National Household Database (NHD) for poverty - (Management) Information targeting under development Systems (MIS) - CITIZEN ENGAGEMENT + AWARENESS INCOME SUPPORT PROGRAM FOR THE POOREST (ISPP): - GRM MECHANISM LOCAL GOVERNANE DIVISION - Conditional cash transfer programs for mothers with ELIGIBILITY ASSESSMENT young children focusing on health and nutrition AND DECISION

EFFICIENT PAYMENT CASH TRANSFER MODERNIZATION (CTM): SYSTEMS MINISTRY OF SOCIAL WELFARE - Old age allowance; widow allowance; disability GRADUATION allowance; disability students’ allowance MODERN G2P PAYMENT: CHALLENGES

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

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 • • • • • • •

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Security

Modality

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IMPROVISATIONS

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Cash transfer modernization project

Ambition - G2P 3.5 vs. 4.0? 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

QUESTIONS PREPARED BY

Cash Out Cash

4 5 6

Payment Payment 3 Instruction Bank Payment Instruction

Post Office 1

Payment Request

Verification MFS

NID NID 7 9 10

2 Cash Cash Out Account NID Verification Verification

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NID Verification GHANA – BUILDING EFFICIENT DELIVERY SYSTEMS PAPERLESS PUBLIC WORKS By: Suleiman Namara, Sr. SP Economist PROGRAM 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 LIPW To 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 LIPW ELECTRONIC ATTENDANCE MODULE

BIO DATA 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 OUT BY PARTICIPATING CASH WITHDRAWAL REPORT 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 APPS TO BRING ALL APPLICATIONS ON ONE PORTAL FOR EASY ACCESS STATUS BY THEMATIC AREAS OF SUBPROJECT REPORTS

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 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 Assessment Matrix •Lays technical foundation for Assesses against the agreed criteria assessment on a four point scale •Provides good practices from international experience •Provides instructions to gather information Country Report Implementation Guidelines •Describes how the assessment is •Presents the findings Outlines the process of organized •Highlights strengths and application of ISPA tools from weaknesses in relation start to completion to good international practice •Summarizes complex landscape of Questionnaire policies and institutions Gathers qualitative and •Provide policy options to be used quantitative information as jumping off point for future dialogue between stakeholders What are the key financial and regulatory elements of the payments tool?

Agency rules for banks/non- banks Proportionate KYC Policy, requirements regulation e-money guidelines and Basic bank accounts legislation Financial inclusion ID National ID Government payments Procurement ICT Mobile Network Coverage

Financial institutions Financial access points Financial landscape Interoperability Assessment criteria

ACCESSIBILITY • Cost of Access ROBUSTNESS INTEGRATION • Appropriateness • Reliability • Financial Inclusion • Rights and Dignity • Governance • Coordination • Security More than 60 ISPA Applications in 50+ countries: 15 of payments tool

Lesotho- WB www.ispatools.org

Thanks!