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Student
Student Name: Kombo Elijah Ogaro Number: EO11708
Assignment Number: RES803 Title: Paradox of Mobile Money Mechanism with NGOs in Malawi

Professor’s Name: Profs: Habibullah Khan & Chinmoy Sahu

Due Date: 25/12/2016 Subject Code and Name: RES803

DECLARATION OF ORIGINALITY OF WORK:

I affirm that the attached work is entirely my own except where the words or ideas of other writers are specifically
acknowledged through the use of inverted commas and in-text references. This assignment has not been submitted for
any other subject at GlobalNxt University or any other institution. I have revised, edited, and proofread this paper.

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issues using appropriate concepts and
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highly relevant to the problem

3 Originality – novel ideas were introduced

and explained with substantial depth and
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supported with relevant readings and data

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expressed in a clear and concise manner

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passing grade, criterion number 1 must be assessed as
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 Abbreviation
s

ATMs: Automated Teller Machines

DMTM: Digital Money Transfer Mechanism
MMM: Mobile Money Mechanism
MPESA: Mobile (M), Money (PESA), PESA is a swahili name for Money
NGOs: International Non-Governmental Organization
OIBM: Opportunity International Bank of Malawi
SEZ: South East Zone (in Malawi)
TNM: Telekom Networks Malawi
 Abstract
:

Development partners and donors have in recent times preferred that NGOs and recipient
organizations adopt and use Mobile Money Mechanism in their day to day operational and
programmatic functions. NGOs regularly make high volumes of small payments for
program and operational functions. Predominantly and more culturally the disbursements
of these funds is through cash or cheque system. Payments to beneficiaries are particularly
high with regular frequencies.

This research project will therefore show if the paradox in the adoption of Mobile Money
Mechanism and improvement of NGO’s management of cash, reduce risks associated with
delivery of cash, increase program deliverables and outreach and restore confidence in the
recipients of such interventions.

The paper analyses the benefits of adopting MMM, assesses the preparedness of NGOs to
transition from Cash to MMM and as well focus on cost implications involved. Due to the
fact that cash based operations are prone to enormous risks, the paper will assess whether
there will be improvement in service delivery for NGOs that have adopted MMM.

In conclusion, this research is important to the large NGO fraternity that operate in
significantly and predominantly serving the large population that live below poverty lines and
are excluded from financial involvement at lower pyramid level.
Table of Contents
1. Introduction: ....................................................................................................................... 5

2. Theoretical Background ...................................................................................................... 6

3. Literature Review on Mobile Money Status in Malawi ..................................................... 8

4. Study Contribution to NGOs ............................................................................................ 10

6. Need for the Research Project: ......................................................................................... 11

7. Research Design, Population and Sampling: .................................................................... 12

8. Data Collection, Analysis & Presentation: ......................................................................... 13

8.2 Organization willingness to Adopt MMM ............................................................................ 14

8.4 Correlation between MMM and improved service delivery mechanisms ............................. 16

8.5 Steps: Migration to MMM ..................................................................................................... 18

8.6 Readiness for the adoption of MMM .................................................................................... 20

9. Conclusion: ......................................................................................................................... 21

10. References: ........................................................................................................................ 22

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1. Introduction:
`
Access to finance has remained the most common and intractable element of development
challenge that stifles humanitarian aid agencies in Africa. Limited accessibility to finance
undermines the ability of families to improve their socio-economic pyramid. Ordinarily, those
excluded from the formal financial mechanism are the large population that live below the
poverty line and are the main focus for humanitarian interventions. Without access to credit and
saving model, most families miss out on increasing their saving propensity for anticipated
future expenditures.

Most of Humanitarian Organizations seek to provide alternative intervention through the

provision of both conditional and unconditional cash transfer mechanism as part of the social
protection component. Remarkably, cash continues to increasingly be offered to households
during humanitarian intervention. Cash transfer mechanism has provided numerous advantages
over mobile money mechanisms due greater acceptability, utility and flexibility for people who
are affected by disasters and need immediate interventions such as medicines, food and shelters.
In the centre of all these benefits, there inherit risks such as theft, fraud and even life threatening
situation when cash is carried around.

Despite the fact that digital and modern technological changes have dictated how money
business should be conducted, NGOs operating in Malawi have been left behind in adopting and
embracing the mobile money technologies or even electronic bank tokens. It’s therefore
important that NGOs need to be abreast of the rapidly evolving technological landscape for
making cash payments through innovative methods.

Besides the challenges that accompany cash based operations, NGO fraternity in Malawi have
been grappling with incidences of fraud, slow lead period for service delivery, inefficiency and
ineffectiveness in prudent financial management and reporting. Studies have shown that
automation of authentication and payment process reduces opportunity for fraud and error,
provide greater audit trail and enhances monitoring and evaluation and opens room for speed
and flexibility.

These advantages, in many cases are laid down on paper but not in practice. Perhaps the slow
adoption and implementation of digital money mechanism can be attributed to numerous facts
ranging from technological challenges, cumbersome, trust and infrastructural based. Despite
the fact many studies have pointed out the benefits of using mobile money, there is no empirical
studies that has been conducted to show case the reason why there is slow adoption and
application of mobile money mechanisms and especially in Malawi where humanitarian
intervention is contribution largely in supplementing government efforts in health, education
and rural development.

The paper is intentionally kept as brief, concise and to the point as possible, whereas at the same
time providing contextual understanding through the review previously published literature. Its
noted that there is no precise term that has been adopted to describe Mobile Money Mechanism.
Mobile money is typically defined as a type of stored value instrument or product that includes
electronic transactional payments, convertible to cash and is stored or saved using mobile
gadgets such as phones.

This paper could not be completed without mention of Kenya’s contribution towards the digital
space in money transfer. Its worthy to note that in Africa, progress and genesis of mobile money
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was the launched in Kenya in 2007 through Safaricomi’s Mpesa (Vodacome). Since then, the
industry has thrived and currently the statistics show that approximately 18 million people and
it has become Kenya’s lifestyle and grew beyond her borders to neighbouring countries. Mpesa
has continuously transformed Kenyan lifestyles with improvement and introduction of new
mobile money.

2. Theoretical Background
2.0 Background on Malawi
Malawi is a landlocked country in the Southern Central Africa with a population of
approximately 17million out of which 85% live in rural areas. Malawi’s young population
accounts for 65% of the total population. Literacy levels are high at 74.8% of the population (15
years and above) can read and write in English. Malawi is ranked as one of the LDCs with
inflations soaring at 38% on the highest side of the economic graph while the GNI per head is
$320.

Other than being agricultural dependent country, the economy also depends on a substantial
inflows of economic assistance from institutional donors such as IMF, WB and individual
friendly countries. The government cannot singly sustain the economic balance without
assistance. Numerous

NGOs provide supplementary service across the country in a variety of interventions including
health, education, cash programming and rural development. Most of these NGOs are located
rural areas with South East Zone having the highest record of medical related intervention
mechanism. The total population in SEZ stands at 2.5 (as shown in below table) and
approximately 80% of these live in rural areas under absolute and abject poverty.

District 2016 2017

Machinga 627,399 647,401
Mulanje 579,818 587,553
Phalombe 383,273 393,385
Zomba Rural 673,178 685,755
Zomba City 147,131 157,020
Total 2,410,799 2,471,114

Majority of the households in SEZ and others parts of Malawi depend upon rain fed agriculture,
with staple food crops consisting of maize, sorghum, and bananas, and main cash crops
including tobacco, coffee, tea, cashew nuts and locally grown fruits such as mangoes. The inter-
annual deviations in rainfall are positively associated with fluctuations in agricultural output as
the yields depend on the timing and quantity of rains.

As a result of the correlation between rainfall and grain output, drought is positively correlated
with food crises and famine. In 2015, the torrential rains were followed by prolonged periods of
drought, which further reduced crop yields. The country’s economy is largely reliant on
agriculture, lost about 60 percent of its harvest because of the natural disaster.

Malawi doesn’t not only suffer natural disasters. The ‘Cashgate’ scandal, which broke in 2013,
outraged donor countries, and it caused them to demand audits and withhold $150 million of aid
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to Malawi, where 40 percent of the annual budget was donor-funded. This further gave donors
the perception that aid doesn’t reach those in need. It’s on this backdrop that Malawi has seen
more funds being diverted to NGOs and other groups on the ground as opposed to the
government. What this means is that NGO’s have been trusted to provide more financial
oversight over donor funded assistance.

2.1 MMM and Endemic, Chronic Corruption

Despite the trust given to NGOs, the endemic and systematic culture of corruption has
penetrated to the NGO sector resulting to further loss of donor funds. The effect will be long
term impact. Donor funding is much more needed to cushion Malawi’s fragile economy. Donor
assistance provide long-term, on-the-ground support in education, agriculture and health to
tackle the root causes of food insecurity and child malnutrition.

Apart from emergency assistance, Malawian villages need better access to water, and farmers
need irrigation systems and diversified crop, so they have viable options if their staple maize
harvest fails. Children need support to stay in school so they can get better jobs, earn higher
wages and contribute to the economy. A report on corruption revealed that there is an indirect
effect resulting to an increasing number of stunted children in Malawi due to corruption.

On the above backdrop, several organizations have endeavoured to adopt Mobile Money
Mechanism as one sure way of mitigating against fraudulent and corrupt practices. Despite the
country being in the fast expanding continent, endemic corruption has rendered even the most
obvious aspect of education redundant as even those educated in the society fall prey.

MMM therefore will play a greater role. Other than ensuring efficiency in service delivery, it
will also ensure that funds reach intended beneficiaries in a speed and faster manner without
pilferage and commission through middlemen. This study will preposition NGOs and
organization is tapping to low risk methodologies of cash transfer with respect to eco-
economical system being a by-product in the end.

2.3 Mobile Companies in Malawi

Mobile Companies in Malawi started business early 2010 and picked up in 2012 with
countrywide coverage. Mobile service was first introduced in Malawi in 2010 by Airtel (then
known as Zain) as “Khusa Mmanja” meaning money wallet in your hands, while their
competitor Telekom Networks Malawi (TNM) three years later introduced their own service
branded “Mpamba”, meaning start up capital. Today there are 2.2 million mobile money
accounts according to recent statistics from a National Payment System Report for December
2015 by Malawi’s central bank.

With a combined 11,000 agents nationwide, against 170 banking outlets, mobile money has
become a first preference for most Malawians regardless of social status which has seen
4million transactions in 2015 alone to the value of 16 billion Malawi Kwacha (20.3 Million
Euros).

Airtel launched Airtel Money called Khusa M’manja on 29th February 2012 to provide payment
services including cash in and out, remittances, top ups for airtime, international organization
are utilizing this services to distribute cash subsidies to Malawian rural poor families.

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TNM is a mobile company that launched TNM mobile Money on 2nd May 2013 to enable
remittances, bill payments, cash in and out, top ups for airtime, salary payments and insurance
premiums. Extrapolating on data estimates suggest that approximately 10% of total mobile
phone users in Malawi currently use or have mobile money accounts in either TNM or Airtel.
Both Airtel and TNM are now partnering with banks and MFIs to add greater depth and value to
mobile money product offerings and leverage on existing agent networks established by banks
and MFIs. The partnership initiatives has led in growth of mobile money in Malawi. Such
international organization that have contributed to the growth of mobile money in Malawi
include MM4P, US Agency for Development (USAID), the World Bank and Family Health
International 360.

3. Literature Review
Remarkably, the growth of mobile networks in Malawi and the regulator’s flexibility in
licencing are enabling organizations to transition from cash to mobile money. Increasing in
mobile phone access and a corresponding mobile money products opportunity for mobile
transactional services.

Though mobile technology is increasing becoming means and mode of business, financial
exclusion by commercial banks has seen a large population not able to access to financial
products. OIBM is a commercial bank in Malawi that has one product that enables NGOs
transfer funds to rural areas. The model is cumbersome as shown in the below:

National Bank of Malawi, Standard Bank and OIBM have aggressively introduced internet
banking and bank to mobile number cash transfer. However, it takes approximately 2 to 3 days
to have the beneficiaries receive their funds. In other areas, NGO executive interviewed
revealed that in most incidences cash is delivered by staff, stuffed in envelopes and the
beneficiaries are informed ahead of time.
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In the case of one international Canadian organization, they have positioned administrators who
collect cash from finance office and their role is to re-issue the funds to program staff who
transport the cash to beneficiaries normally located in the four districts in SEZ. The volume of
cash transaction to reach approximate over 300,000 beneficiaries is too high. Recently, audit
finding showed chronic and endemic massive fraudulent activities where finance staff colluded
with program staff to defraud fund. In some incidences, trainings were not held but cash was
taken and liquidated with forged signatures. A pilot project involving three districts where
mobile money was used to pay for stipends showed reduction in costs involved, security and
reduction of fraud cases.

A report of the High Level Panel on Humanitarian Cash Transfer published by Center for
Global Development tried to impose a fact that cash transfer are better than using digital
mechanism. The research finding argued that humanitarian aid given in cash would align
humanitarian system with the needs of the beneficiaries, it increases transparency and
accountability and reduces the costs of delivering humanitarian assistance. The paper continued
to dispose off any other methods of cash delivering an argued that aid in cash ensures absolute
support for local markets and population and it increases financial inclusion.

What the above pronouncement failed to address, though is the costs involved in the delivering
of cash in humanitarianism using different methods. Donors have given the free will to
humanitarian agencies to choose the method of which to deliver their cash. However they also
ensure that compliance measures do not lead to eminent aversion.

Digital money transfer mechanism far outweigh cash delivery in numerous ways. It makes
delivery more accountable and transparent and as well ensure clear audit trail are put in place.
NGOs should also ensure that their interventions provide a link to payment systems that can
further financial inclusion despite a few trade-offs between the speed, costs of delivery and
financial accessibility using different payment mechanisms.

This research project is therefore be beneficial to NGO and humanitarian actors in support of
ensuring that investment in financial systems are tailored to adopt digital money transfer
mechanism. There is need for investing in scalable and more interoperable platforms rather than
setting up distinct, bespoke systems (CGD, September 2015).

As mobile money continues to become the frontier of financial services, there are still a
narrative that has not been addressed of which this paper endeavour to expose. The challenges
that come along with MNOs implementing MMM for their clients include low levels of
financial literacy, limited trust as most of the clientele have never used formal banking systems,
beneficiaries do not have identification cards (Malawi does not have registration of persons
office).

Several studies have been conducted to assess the impact of Mobile Money immediately the
aftermath of the digital innovations (Duncombe and Boateng, 2009). These studies have tried to
show the need for financial inclusion of the rural population in various economies worldwide.
In Kumbhar (2011) study, the application of indicators in assessing the impact of MMM
included the level of income at both individual and household levels, saving propensity shifts,
changes in the living standards and the level of trust in using formal banking services.

The impact of MMM using the empirical findings as detailed in Dermish et al, 2002; Jack &
Suri, 2011, Mbiti & Weil 2011) showed that the adoption of MMM has positive impacts on
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personal savings, improved income and remittances and reduction of costs to both corporate
entities and individuals. Costs, in this case refer to the costs savings and operational efficiency
derived from MMM as opposed to cash based operational economies. Cost effectiveness
include reduction of transactional costs that arise from cash receipt and disbursements.

4. Importance of the Study

Mobile money transfer is by far the cheapest and simplest method of payment. Mobile phone
functionalities have enhanced easy and effective means of debt collection over time. Cellular
service providers cover a wide geographical coverage. It’s the just-in method of completing
transactions with instant confirmation of payments and confirmation that guarantees clientele
satisfaction and comfort.

According to US Global Development Lab tool kit (Making the journey from cash to electronic
payments), key inherit benefit of adopting generalised e-payments system include improved cost
saving and efficiency, increased transparency, reduced leakage (siphoned funds) and waste,
reduced security risks to program staff and participants, improved access to financial services
for your payments recipients, and improved access to a growing ecosystem of value added and
business services for your payment recipients.

There are other key salient benefits for adopting digital or mobile money transfer mechanism.
The research increasing found out that large population in the rural areas of SEZ do not trust
formal and traditional banking institutions. By adopting MMM, there is an improvement on the
cost saving propensity and improved efficiency of service delivery. From the research
conducted, atleast 3 out of the five NGOs were found to have enhanced transparency in the
process through MMM. Recipients were satisfied that MMM enhanced transparency.

Its prudent to note that a number of organizations that participated in the survey also indicated
high level of losses using the manual system. In the piloted projects across SEZ that adopted
MMM showed significant reduction of leakages and waste of donor funding. This is because of
the chain and flow of funds from financial entity to the MNOs to the recipients. The risk of
carriage is effectively transferred from the NGOs to the MNOs.

This study provides a cost efficiency analysis of the three methods (cash delivery, mobile
money and through normal banking route) with information on cost efficiency and
effectiveness. Cost efficiency is aimed to calculate the administrative costs delivering a transfer
from point A to point B. Its calculated where benefits can be quantified but not necessarily be
expressed in monetary terms.

According to a paper published by CaLP website, costs effectiveness goes beyond the limited
realm of cost efficiency trying to measure costs against the outcomes and program impact. It’s
essential that program managers to consider value for money when designing program delivery
on the basis of relative costs of achieving the desired socio-economic effects at both corporate
and household level.

MMM involves depositing, withdrawal, transfer and saving of funds. Payments and receiving of
funds can be done through MMM. It enhances B2B transactions effectively and instantly. Just-
in time payments are utilized by vendors, suppliers and general shoppers. MMM has enhanced
personal security as it reduces the need to carry physical cash.

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NGOs that operate in remote areas can adopt MMM as a perfect mode to mitigate loss of cash
to banditry and theft. Though empirically not investigated and despite several pitfalls that
include slow cellular networks, MMM provides financial security thus reducing fraud
significantly within organizations. Medical service providers allow clients to pay through
MMM paybill numbers provided thus ensuring accountability and instant debt collection before
even patients access their services.

NGOs typically disburse high and huge volumes of low value payments to thousands of
program beneficiaries in a variety of payment streams depending on their individual NGO
mandates. Payments are largely still disbursed in form of cash and cheque – often times a two
tier internal system that requires stringent internal control procedures and bureaucratic decisions
that prolong the lead time in service delivery.

In a growing number of markets, mobile money mechanisms offer a viable way for
organizations to transfer payments from single source to multiple beneficiaries efficiently,
transparently and safely. The mode of operation is fast changing from cash based to mobile
money mechanism even when paying for non-programmatic activities such as re-current
payments.

NGO operates predominantly in two level contexts: humanitarian assistance and development
programming. Under humanitarian assistance, they provide aid and action designed in saving
human lives devastated by either natural or artificial calamities, alleviation of the suffering of
people and maintaining and protecting of human dignity during and aftermath of these man-
made or natural disasters.

The development programming focuses on providing longer term program support for a variety
of sectors including agriculture, education, health, livelihood development, financial inclusion,
micro finances etc, typically with the goal of poverty alleviation and restoring of human dignity.

Humanitarian Operational Programmatic Value Chain

Staff travel & per Workshops & travel per Agriculture suppliers &
Cash transfers diems diems purchasers
Stipends & incentive
Cash for work Staff salaries payments Health clinics & pharmacies
Digital Educational system -
transfers Vendor & supplies Daily wages to contractors teachers & students
Social transfers to
Consultants vulnerable groups
Petty Cash

5. Need for the Research Project:

NGOs provide essential services to predominantly and largely rural and remote populations in
Africa. They supplement governments’ efforts in providing varied services ranging from health
to education to development. Access to finance, therefore, still remains among the most
common ad most intractable of development challenges, stifling enterprise and undermining the
ability of families to lift them out of extreme pernicious perpetual penury. Additionally, most
NGOs are grappling with corruption and outright embezzlement of funds as a result of too much
dependence on cash based operations.
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As the world moves from analogue to embracing digital and mobile money mechanism, most of the
NGOs in Malawi are still using traditional methods of cash delivery. A number of NGOs have
reported massive loss of funds, misuse of financial resources and delays in settling bills leading to
either holding too much of cash in the balance sheet or reduced operations due to non-prudence
management of cash flows.

The research project therefore envisaged to mitigate the above problems by: Identify the cost
effective way of cash delivery and reduce the distribution costs for recipients, and determine the
effects of MMM on programs and recipients.

Its on the above backdrop that the research aimed to give a critical analysis of NGOs
intervention in humanitarian and development issues in SEZ through improved transactions for
beneficiaries both at external and internal levels within the organization. Within organizations,
audit trails form a very key and core functions in improving internal control systems.

MMM build transactional audits to enable improved access to possible interventions to mitigate
against transactional risks. Risk reduction in carrying and delivering of cash at both individual
and corporate level will be significantly reduced thus improving the liquidity flow through
prudent cash management and reduction in volumes of cash movements in organizations.

Effort needed to employ more staff in cash delivery mechanism will be reduced through MMM
and such efforts will be focused to improve service delivery in a cost effective and efficient
manner while scaling up of project activities.

6. Research Questions
The research project aims to provide answers the following salient questions:
 What are the levels of organizational willingness to adopt and use MMM?
 What are socio-economic impacts of adopting the use of Mobile Money Mechanisms at
community level in SEZ, Malawi?
 What is the correlation of MMM and improved service delivery mechanisms
 What are the feasible cash delivery mechanism before and after adoption of MMM? Are
NGOs read to adopt the use of MMM?

7. Research Design, Population and Sampling

Desk top research design has been used primarily to establish the adequacy in preparation of
transitioning from cash based operation to e-payment and MMM. Descriptive case studies was
applied the mixed approach in gathering information from pre-selected NGOs on analysis of the
responses received through a structured questionnaire sent directly through Monkey Survey.
The design of the project was initially based on five districts in SEZ of Malawi with 5 to 10
preselected NGOs delivering projects related to Education, Health and Rural Development.
However there were constraints notably non-response from two NGOs that their executive
thought the research outcome will impact on their funding portfolio, and attributed to the fear of
negative publicity. Responses received from 3 NGOs were so conservative.

On the initial research design, it was envisaged that approximately 7 to 15 villages will be
assigned specific cash disbursement methodology, either cash delivery or funds transfers using
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tested mobile mechanism using existing service providers such as Airtel, TNM and OIBM point
of Sale. However this was not possible due to logistical nightmare of the practicability of the
assessment. The evaluation therefore largely depended on desk-top research and using prior
knowledge of the researcher having worked in the same area before. The research analysed the
data available from monitoring and evaluation reports of three NGOs that were willing to share
and included pure comparison of the delivery channels, costs associated with delivery
mechanism chosen.

Data collected from selected villages and beneficiaries will provide evidence on socio-economic
impact of adopting MMM. A substantial amount of empirical evidence documents the impact of
both conditional and unconditional MMM in a various emergencies and development contexts
(World Bank 2009, Baird, McIntosh and Ozler, DFID 2011).

The project focused on sampled and pre-selected NGOs operating and working in Malawi’s
SEZ region. Communities are hereby based on 5 districts. However as stated above, it was not
possible to gather samples from all the districts in the initial research proposal. The research
will limit itself to those NGOs that provide essential program services to the largely excluded
population on financial inclusivity and reach. The research primarily adopted the ‘deep-dive’
methodology with inductive methods and qualitative tools which included two focus groups –
one at office/administrative levels and the other at community level. The result varied and were
affected by gender, geographic comparisons and type of organizational intervention. The deep
dive methodology focused on the two focus group discussion, review of selected case studies
and oral interviews with finance and program staff perception of MMM applicability.

8. Data Collection, Analysis & Presentation

Preliminary data was collected from 5 to 10 preselected NGOs that operate in SEZ with project
areas spread across five districts will form the basis of the project research.
Data was collected through a mixed method strategy and desk top method which will involve
sending structured questionnaires to sampled and preselected INGOs and as well conducting in-
country interviews for those NGOs that are within the proximity of the researcher.

8.1 General Information

The general information of the included the gender, work experience and the education level of
project beneficiaries and staff as indicated in the table 11.0 below. The study response rate was
93.3% since out of the 15 questionnaires issued 14 were duly received and used in the analysis.
Table 8. 1: General Information
Gender Frequency Percent Cumulative
Percent
Male 8 57.1 57.1
Female 6 42.9 100
Total 14 100

Work Experience Frequency Percent Cumulative

Percent
1 – 5 years 3 21.3 21.3
6 – 10 years 9 64.3 85.7
Above 10 years 2 14.3 100
Total 14 100

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Education Level Frequency Percent Cumulative
Percent
Diploma 4 28.6 28.6
Degree 6 42.9 71.4
Other 4 28.6 100
Total 14 100

Table 8.0 indicates that respondents who participated in the study and were male accounted for
57.1% and those who were female accounted for 42.9%. In addition, those respondents who
indicated that they had a work experience between 1 to 5 years were represented by 21.3%.
Further, those respondents who indicated that they had work experience ranging from 6 to 10
years with 64.3%. Also, those who had work experience of above 10 years accounting 14.3%.
On the education level of the respondents, those who had diploma and others accounting for the
same results of 28.6%. Finally, those who had degrees accounted for 28.6%.

The above attempted to analyze the levels of literacy of the participants in the selected projects
areas and the responses indicated that prior knowledge on the use and applicability of MMM
was essentially more common to the educated. A number of respondent, however, have not
heard the practical use and application of MMM.

8.2 Organization willingness to Adopt MMM

The respondents were asked to indicate whether the organization has the capabilities and
resources of moving to MMM. The results were indicated in the figure 11.2.
No, 14.3, 14%

Yes, 85.7, 86%

Figure 9.2: Organization willingness to Adopt MMM

Figure 9.2 indicates that those respondents who concur that the organization is willing to adapt
MMM accounted for 85.7%. On the other hand those respondents who indicated that they don’t
agree that the organization has the capabilities and resources accounting for 14.3%. The main
reasons included fear of creating mistrust between the beneficiaries and the NGO staff. The
research revealed very noble cases of Malawian’s lack of knowledge on the advantages MMM
bring along. There was a very strong indication of the large scale trust on cash based
mechanism.

8.3 Comparison of Delivery Options

The continuous growth and desire to use cash as the alternative means of cash delivery in
emergency and relief environment remains the viable option for both beneficiaries and NGOs.
However, NGOs have got other available delivery options. These options depend on a few
factors which clearly came out during the desktop research: who are the delivery agents
involved? And how is the cash delivered to the beneficiaries?

The cash delivery agents highlighted in the responses included banks, post office, government,
security companies, NGO staff or a combination of the above. The delivery methods usually
Page 14 of 27
employed include cash stuffed in envelopes or cash boxes, delivery through banking institutions
normally through over the counter withdrawals, ATMs, other mobile money and banking
mechanism (though not fully exploited). Most of the agencies worked with banks to ensure
direct transfer of salaries through RTGS and wire transfers. To a certain senior management
staff were issued with smart cards and credit cards.

Delivery Options Advantages Disadvantages

Direct Cash Speed, Simple, Cost Effective. Its also
Delivery flexible incase of movements
Reduced workload for agents/staff,
Bank Accounts reduces corruption and security risks,
Delivery Flexible and convenient, unbanked
Mechanism recipients can access banking services
High risk in security and corruption.
Labour intensive and no flexibility
reluctance to set up the bank accounts,
bank charges might be expensive,
possible exclusion of people without
accounts

Transfer of risks such as loss and
Delivery through security, flexible and easy access,
Sub-Contracts familiarity by the recipients
Reduced corruption/fraud and security
risks, reduced workload, greater
Mobile Money flexibility, easy and effectively means to
Mechanism transfer money in fast manner=
Require greater and close monitoring,
reduced control by NGO, NGO
credibility at stake
System maybe be over logged thus
might delay, costs such as transfer
charges night be a little higher and not
known to recipients, unfamiliarity by
the recipients

8.4 MMM and socio-economic status of Beneficiaries at Community level

The respondents were asked to indicate if the adoption of MMM/DMTM will/has lead/led to the
improvement of socio-economic welfare. The results were indicated in the table 11.3 shown
below.

Table 11.3: Relationship between adoption of MMM and Low Income

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 3.273 1.815 1.804 .101
Lower the cost structure
of providing financial
.727 .304 .514 2.390 .038
services to those living
in poverty
Providing provision for
rural poor with low
.182 .182 .216 1.000 .341
balances and transaction
sizes
The poor and unbanked
have access to financial -.727 .304 -.514 -2.390 .038
services

To determine whether there is relationship between MMM and improved livelihood of low
income through the adoption and application of MMM and DMTM a regression analysis was
Page 15 of 27
done using three proxies to represent the low income. Table indicate that MMM adoption
would lower the cost of providing financial services because it was significant at p = 0.038
which is less than apha of p=0.05. Also, the proxy that the poor and unbanked would have
access to financial service was significant at 0.038. However, whether provision for the rural
poor with low balances and transaction sizes with p = 0.341 which is greater than p=0.05. From
the above it can be deduced that there is a relationship between MMM and improved livelihood
of low income through the adoption and application of MMM and DMTM.

Unlike the manual system where cash received is immediately used, money sent through MMM
is usually appropriated and staggered in use. The respondents revealed that they are able to save
thus their propensity to save through the month and cover for roll-on expenses has improved.
Additionally, statistics showed that there is improved socio-economic decisions made at
household levels on spending. More spending was reported to go to children education and
investing in small micro businesses.

8.5 Correlation between MMM and improved service delivery mechanisms

The study was to identify whether there is correlation between MMM and improved service
delivery mechanisms in NGOs that operate in remote areas. The proxies of it enhances B2B
transactions. Just-in time payments, provides financial security thus reducing fraud within
organizations were used to represent service delivery. The results were indicated in the table
11.4 shown below.

Table 11.4: Correlation between MMM and improved service delivery mechanisms in NGOs
that operate in remote areas
Provides
financial
security thus
It enhances reducing fraud
B2B Just-in time within Adopting the
transactions payments organizations MMM platform
It enhances B2B Pearson
transactions Correlation 1

Sig. (2-tailed)
N 14
Just-in time Pearson
-.292 1
payments Correlation
Sig. (2-tailed) .000
N 14 14
Provides financial Pearson
.884** -.330 1
security thus Correlation
reducing fraud Sig. (2-tailed) .000 .000
within organizations N 14 14 14
Adopting the MMM Pearson
-.250 .856** -.283 1
platform Correlation
Sig. (2-tailed) .000 .000 .000
N 14 14 14 14
**. Correlation is significant at the 0.01 level (2-tailed).
Page 16 of 27
From the table 11.4 above it can be noted that adoption of MMM is significant to service
delivery because the first correlation proxy of enhancing B2B transaction, provides financial
security thus reducing fraud and physical financial losses within organizations and just-in time
payments with a Pearson Correlation (r ) of -0.292, 0.884 and 0.856 which were all significant
at p=0.00 which is less than p=0’01.

8.5.0 Review of Processes before and after adoption of MMM

8.5.1 Process before adoption of MMM

The above process poses numerous challenges including delay in processing payments to
beneficiaries as time is wasted in travel from main office to the field. There might be delays as
well which might be caused by human error and organization liquidity levels. Since cash is
physically carried from main office to the field, there is significant risk in handling of cash
which might lead to physical theft, attacks and risk to human life by bandits.

8.5.2 Process after Adoption of MMM

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The above process after switching to MMM shows that payments are made faster without
delays. As most of the NGOs operate in emergency backgrounds, payments are facilitated
quickly through to beneficiaries thus improvement in the corporate image of the entities and
improved relationship between the agency and the beneficiaries. The requisition of cash is also
staggered along and only done as and when necessary thus improving the liquidity flow of the
organization. There is also significant savings in time and money arising from from reduction in
travel between main office and the field.

The use of MMM has made disbursement and receipt of cash transfers cheaper, improved
transparency and accountabilities, increased the security of cash and lives of staff and has
introduced formal of financial inclusivity to the rural population in SEZ. Additionally, NGOs
have been able to focus on program expansion and improvement in humanitarian assistance
through pro-active cash planning and preposition of the same to beneficiaries.

8.6 Steps: Migration to MMM

The respondents were asked to indicate steps have been adopted and are necessary from moving
from cash based mechanism to mobile money mechanisms with the proxies of the organization
planning to engaging in MMM activities, the organization in preparation receiving donation
from the MMM platform and formulating adopting the MMM platform. The results are given in
the table 4.4. Also, the key for the analysis used was represented as strongly disagree (SD),
disagree (D), neutral (N), agree (A) and strongly agree (SA).

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Table 11.5: Steps have been adopted and are necessary from moving from cash based
mechanism to mobile money mechanisms
SD% D% N% A% SA%

The organization planning to engaging in MMM activities 7.1 7.1 7.1 0 78.6

The organization in preparation receiving donation from the 0 0 7.1 7.1 85.7
MMM platform
Formulating strategies for adopting the MMM platform 7.1 0 7.1 7.1 78.6

Table 11.5 that those respondents who indicated that the organization is planning to engaging in
MMM activities with those who indicated strongly disagree, disagree and neutral accounting for
the same results of 7.1%. In addition those who indicated strongly agree that the organization is
planning to engaging in MMM activities with 78.6%. Finally, those who indicated that agree
that the organization planning to engaging in MMM activities accounting for zero results.

Also, those respondents who indicated that they agree and were neutral on the organization in
preparation receiving donation from the MMM platform accounting similar results of 7.1%.
However, those respondents who indicate that they strongly disagree and disagree that the
organization in preparation receiving donation from the MMM platform accounting for zero
results. Finally, those respondents who indicated that they strongly agree that the organization
in preparation receiving donation from the MMM platform accounting for 85.7%.

In addition, those respondents who indicated strongly disagree, neutral and agree that they the
organization is in process formulating strategies for adopting the MMM platform with similar
results of 7.1%. Further, those who indicated that they disagree that the organization is
formulating strategies for adopting the MMM platform with zero results. Finally, those
respondents who indicated that they strongly agree that the organization is formulating
strategies for adopting the MMM platform with 78.6%.

Figure 8.6: Initial Step to ensure that there is Management Goodwill and roadmap

Page 19 of 27
8.7 Readiness for the adoption of MMM
The respondents were asked to indicate whether the organization are ready to use the MMM in
the rural areas and the results were indicated in the table 8.6 shown below. Also, the key for the
analysis used was represented as strongly disagree (SD), disagree (D), neutral (N), agree (A)
and strongly agree (SA).

Table 8.6: Readiness for the adoption of MMM

SD D N A SA
% % % % %
Donors promoting the use of MMM 0 7.1 7.1 14. 71.4
3
Are INGOs operating in rural and remote areas ready to adopt 0 0 0 7.1 92.9
and use electronic payment system including MMM?

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Are the markets (beneficiaries and NGOs) ready to adopt and 0 0 0 28. 71.4
embrace both MMM and DMTM in Malawi 6

From table 8.6, it can be noted that respondents who indicated that they disagree and neutral
that donors promoting the use of MMM with similar results of 7.1%. Further, those who
indicated that they strongly disagree, agree and strongly agree with 0.0%, 14.3% and 71.4%
respectively. In addition, those who indicate that they strongly disagree, disagree and neutral
that INGOs operating in rural and remote areas ready to adopt and use electronic payment
system including MMM with zero results.

9. Conclusion
9.1 Summary of Research Objectives
MMM has greatly changed the manner and culture in which businesses operate. They have
reduced transactional charges and enhance efficient and convenient service delivery and
improved financial inclusion of the rural poor population in Africa. Its envisaged that the
research project and its findings and recommendations will be used by NGOs, Institutions and policy
makers when designing MMM for their organizations. The project will provide blue prints for
prudent management of organizations resources, restructuring of internal standard operating
procedures and ensure that value for money is scaled up in and as much as program deliverables and
outputs are concerned.

9.2 Research Limitations

There are ethical issues in adopting and embracing mobile money mechanisms which have not been
discussed in this paper. It was foreseen that such ethical issues such as advertisements will be limited
to Mobile Money servicee providers and not NGOs. Furthermore, such ethical issues are a reserve of
the regulatory bodies in Malawi to enforce. Its important to note that the regulatory environment of
Mobile Money Companies in Malawi is through the Reserve Bank which issues certificate of
objections, leaving several unattended financial and legal gaps.

Notable limitation of this research was purely a mix of logistical issues and trust from the
organization pre-selected for the research. Five districts in SEZ are located dispersedly and covering
all the five districts posed a logistic nightmare. At organization level, a number of employees felt that
they were not authorized to speak without approval from their respective head offices. Therefore the
research narrowed itself to desktop research, responses from informal group discussions and review
of published literature.

9. 3 Future Work
As regards to the adoption and application of mobile money mechanism with NGOs in Malawi,
further research is need to explore and contribute to a better and sound understanding of the
phenomena. The cost effectiveness is also dependent by individual organization and hence its
important that this research could be advanced to each NGOs. There is need still to further
research how MMM has transformed the socio-economic livelihoods of Malawian both in
Urban and Rural Areas

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