NUST Business School

MKT 201
Roshan & M-Paisa: The Promise of Mobile Money in Afghanistan
Assignment 2

Submitted to;
Bilal Ahmed Chohan
Submitted by;
Maira Jawad (361701)
Muhammad Anas Ali (361687)
MBA2k22

Date: 27th November, 2023

Q1. Describe the economic, social, political, and technological issues in
Afghanistan.

Ans.

Issue Category Description

● Approximately 36% of Afghanistan's population lived
below the poverty line, with constrained educational and
employment prospects.
● The country heavily depended on foreign aid, having
received more than $67 billion from the international
development community since 2002.
Economic
● Afghanistan held the unenviable position of being the
Issues
world's largest producer of opium, supplying over 90% of
the global demand.
● The Hawal system was a dominant financial force,
contributing to financing more than 90% of Afghanistan's
economy.

● Low Literacy: Afghanistan faced a low literacy rate

of 28%, hindering educational opportunities.
● Widespread Insecurity: Over 54% of Afghans
expressed fear for their safety in local areas,
Social Issues highlighting significant security concerns.
● Cash-Driven Economy: Afghanistan operated
predominantly on cash, lacking widespread access
to formal financial services.

● Impeded Growth: Weak governance systems hindered the

country's potential for development and progress.
● High Corruption: Transparency International's Corruption
Perceptions Index ranked Afghanistan as the world's third
most corrupt nation.
Political Issues
● Lingering Insecurity: The aftermath of prolonged warfare
left Afghanistan in a state of devastation, marked by
ongoing security issues. The year 2010 was particularly
noted as the deadliest for U.S. troops.

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 ● Scarce Infrastructure: Prolonged conflict in Afghanistan
resulted in a scarcity of infrastructure, necessitating
substantial resources for reconstruction efforts.
● Advancements in Telecommunications: Despite progress
Technological in the telecommunications sector, operational challenges
Issues persisted due to ongoing security issues.
● Restricted Financial Services Access: Afghan citizens
faced limited availability of savings accounts, insurance
options, and payment services.

Q2. What are the challenges Roshan faces to scale M-Paisa? Will Roshan face
similar issues in another country? Create a comparison of issues between
Afghanistan and a country of your choice.

Ans.

● Uncertainity of Regulatory Framework

The lack of clear regulations pertaining to interoperability, licensing, taxation, consumer

protection, and anti-money laundering makes Afghanistan's regulatory environment
unfavorable for mobile money services. Roshan is also susceptible to political
interference and corruption, which may have an effect on company operations and
financial outcomes.

● Low Literacy and Awareness

Particularly in rural areas, the majority of Afghans are not aware of these services and
have low formal financial literacy. To raise awareness and confidence in M-Paisa,
Roshan must make significant investments in instructing and training its agents and
customers on its use. Roshan must also get past obstacles rooted in culture and
religion, such as the belief that mobile money is exclusively accessible to the wealthy or
that it violates Islamic law.

● Issues with Infrastructure and Security

Afghanistan is a war-torn nation characterized by high rates of violence, instability, and
inadequate infrastructure. Roshan faces a number of challenges, including erratic power
supplies, patchy network coverage, and regular attacks on its staff and property. Along
with ensuring the safety of its agents and clients—who could become the targets of

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theft, extortion, or fraud—Roshan must also guarantee the security and integrity of its
data and transactions.

● Reversal Issues With Transactions

In the past, reversing an M-PAISA transaction required getting in touch with the
recipient and asking for the money to be returned. The lengthy wait times associated
with this method were made worse by Safaricom's backed-up customer support line.
The only course of action left was to call the police if the money had already been taken
out. A more direct reversal method was later introduced by Safaricom, but it is only
effective if the recipient hasn't yet withdrawn the funds.

Will Roshan face similar issues in another country?

Certainly, Roshan is expected to encounter comparable hurdles when expanding
M-Paisa to other nations. While the specific obstacles will differ based on each country's
circumstances, there are overarching patterns that are anticipated to be relevant across
diverse markets. Apart from the overarching obstacles, Roshan might confront unique
challenges specific to each country when expanding M-Paisa. For instance, the tardy
government regulation of mobile money can result in industry uncertainty.The extensive
informal economy can pose difficulties for mobile money providers aiming to reach this
particular segment of the population.

For comparison we can restore to PESTEL Analysis.

Factor Afghanistan Iran

- Moderate political stability -
- Very low political stability - Moderate regulatory
Political Unfavorable regulatory environment environment
- Moderate economic
- Very low economic development - development - Lower unbanked
Economic Large unbanked population population
- Low literacy rates - Cultural barriers - Moderate literacy rates - Fewer
Social to adoption cultural barriers to adoption
- Poor telecommunications - Moderate telecommunications
Technologic infrastructure - Limited access to infrastructure - Good access to
al smartphones smartphones
Environment - Frequent natural disasters - Climate - Less frequent natural disasters
al change - Less severe climate change

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 - Less complex licensing
- Complex licensing procedures - Data procedures - Fewer data privacy
Legal privacy concerns concerns

Factor Afghanistan Iran

- Complex and evolving
- Relatively stable regulatory
regulatory landscape -
Regulatory Landscape environment - Clearer and
Frequent changes in
more predictable regulations
regulations
- Higher literacy rates and
- Low literacy rates and
better access to information
limited access to information -
Literacy Level - Customer education still
Need for extensive customer
important but less
education programs
challenging
- Higher risk of fraud due to - Lower risk of fraud due to
weaker security infrastructure stronger security
Security and Stability - Need for robust security infrastructure - Security still
measures and fraud important but less of a
prevention mechanisms concern
- Poor telecommunications - Moderate
infrastructure and limited telecommunications
Infrastructure and internet connectivity - infrastructure and good
Technology Challenges Challenges in providing internet connectivity - Easier
reliable and affordable to provide reliable and
services affordable services
- Essential to gain access to - Beneficial to leverage local
local expertise and networks - knowledge and resources -
Local Partnerships
Need to carefully select and Partnerships less critical but
manage partnerships still valuable

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Notable differences arise when comparing Afghanistan and Iran based on multiple
factors. Iran has a more stable and well-defined regulatory framework than Afghanistan,
which seems to be more dynamic and complicated. Afghanistan's low literacy rate and
information scarcity make it difficult to provide comprehensive customer education,
while Iran's higher literacy rate makes providing customer education easier.
Afghanistan's weaker infrastructure raises security concerns because it increases the
risk of fraud and necessitates the use of strong security measures. Iran, on the other
hand, has a more robust security framework, which allays worries about fraud.
Afghanistan faces infrastructure problems that affect the availability of dependable and
reasonably priced services, including inadequate internet connectivity and bad
telecommunications. However, consistent and reasonably priced services are easier to
provide in Iran thanks to its reasonably developed telecommunications network and
robust internet access. Both countries recognize the value of local partnerships; Iran
views them as helpful for utilizing local resources, but they are not as significant overall.
Afghanistan highlights the importance of these partnerships in gaining access to local
knowledge.

Q3. What would be your recommendation for Roshans management team?

Highlight the risks involved in the recommendations.

Ans. There are several recommendations along with the risks involved in them for
Roshan and its management team, including:

● Enhance Financial Literacy Programs

Roshan and the management team should invest in comprehensive financial
literacy programs to educate the Afghan population about the advantages and
functionalities of M-Paisa. This could involve workshops, awareness campaigns,
and partnerships with educational institutions to ensure a broad reach. However,
the impact of financial literacy programs may take time to materialize, and there
could be resistance or skepticism from individuals accustomed to traditional
banking methods. Roshan needs to carefully measure the effectiveness of these
programs and adjust their strategies accordingly.
● Strengthen Security Measures

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 Prioritize the security of M-Paisa transactions and user data by implementing
robust security protocols and continuous monitoring for potential threats.
However, sophisticated cyber-attacks or data breaches pose a significant risk. A
breach could undermine user trust and confidence in the platform. Roshan must
invest in state-of-the-art cybersecurity measures and have contingency plans in
place to respond swiftly to any security incidents.
● Collaborate with Government and Regulatory Bodies
Roshan and its management team should actively engage with the Afghan
government and regulatory bodies to establish a supportive legal and regulatory
framework for mobile money services, addressing any regulatory challenges.
However, navigating the regulatory landscape can be complex and
time-consuming. Delays or changes in regulations may hinder the scalability of
M-Paisa. Roshan should maintain open communication with regulators and be
prepared to adapt to evolving regulatory requirements.
● Expand Agent Network
Focus on expanding the agent network to increase accessibility, especially in
remote areas. Recruit and train reliable agents, and provide ongoing monitoring
and support to ensure quality service. However, ensuring the reliability and
trustworthiness of agents is crucial. There is a risk of inconsistent service quality,
and Roshan needs to establish rigorous training programs and performance
metrics for agents.
● Foster Partnerships with Merchants
Establish partnerships with local merchants to encourage the acceptance of
M-Paisa as a payment method, driving adoption and usage. But resistance from
merchants or challenges in integrating M-Paisa into existing systems could pose
obstacles. Roshan needs to provide support for seamless integration and
demonstrate the benefits of accepting M-Paisa to merchants.
● Improve Customer Support
Invest in a robust customer support system to address user queries and
concerns promptly, enhancing user satisfaction and trust. However, resource
constraints and the need for continuous training to ensure efficient and effective

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 customer support may arise. Roshan should allocate adequate resources and
regularly assess the performance of the customer support system.
● Enhance User Experience
Focus on improving the user experience of the M-Paisa platform to attract and
retain users. Regular updates and improvements should be implemented to meet
evolving user expectations. But, technical challenges and the need for ongoing
updates could be demanding. Roshan should invest in a dynamic development
team and be responsive to user feedback for continuous improvement.

The overall risks associated with the above given recommendations include:

● Time and Resource Constraints

Implementing these recommendations may require significant time, effort, and
financial resources. Roshan's management team should carefully allocate
resources and plan for potential delays or budget constraints.
● Regulatory and Legal Challenges
Collaborating with government and regulatory bodies may involve navigating
complex legal frameworks and complying with regulations. Roshan should be
prepared for potential delays, changes in regulations, or the need for additional
approvals.
● Market Competition
As mobile money services continue to grow, Roshan may face competition from
other providers. They should be prepared to differentiate themselves and
continuously innovate to stay ahead in the market.
● User Adoption and Trust
There is a risk that some users may be hesitant to adopt M-Paisa due to limited
financial literacy or concerns about security. Roshan should address these
concerns through educational initiatives and robust security measures.

In conclusion, Roshan's management team needs to approach these recommendations

with a strategic and adaptive mindset, considering potential risks and having
contingency plans in place. By addressing these challenges proactively, Roshan can

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increase the likelihood of successfully scaling M-Paisa and achieving their goals in
Afghanistan's dynamic socio-economic landscape.