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New Trends in USAID Procurement: The Transition Towards e-Payments


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In 2012, USAID announced its commitment to actively encourage the evaluation and use of electronic payments (e-payments) in development programs, including its own, as a member of The Better than Cash …

In 2012, USAID announced its commitment to actively encourage the evaluation and use of electronic payments (e-payments) in development programs, including its own, as a member of The Better than Cash Alliance. USAID also has made the use of e-payments a priority in the Agency’s Implementation and Procurement Reform.

In fulfillment of these commitments, USAID actively is encouraging its development partners, contractors, subcontractors, grantees, sub-grantees and private sector alliance partners to consider incorporating e-payment systems into program design and implementation where feasible. Many USAID Missions have begun to request that procurement proposals include a suitability analysis on the use of e-payments for the funded program.

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  • Growth over the last three years… 2009-2011
  • Depositors with commercial banks (per 1,000 adults) Depositors with commercial banks are the reported number of deposit account holders at commercial banks and other resident banks functioning as commercial banks that are resident nonfinancial corporations (public and private) and households. The major types of deposits are checking accounts, savings accounts, and time accounts.
  • ATMs are another 850 access points or so. Keep in mind that this was before WaridPesa and Airtel Money came into the market, which means the agent network has significantly increased this year.
  • Ensure that your accounting system is set up to track a new MM account (if MNO) or to track bank payments that are mobile. The accounting system should be ready before making the first payments. Start small and internal. Staff are your best ambassadors. If your staff understand the system, then they will explain to and motivate outside vendors, grantees, and beneficiaries to use the system. For example, in Kenya we started with travel advances and expense-report reimbursements. After staff became used to the system, they began to use it to pay vendors for goods and services and allowances to grantees.
  • Kenya example. Just as with checks or a cash payment, a project should keep confirmation of the payment. For a check, it is a copy. For cash, it is a receipt. For MM, it is a print out from the MNO or bank’s website that contains payment amount (see 30,000) and charges (see 200). Notice that functionally there isn’t a difference between this payment back up – which is provided by the external vendor, Safaricom – and an EFT confirmation. Both provide adequate documentation that a payment was executed.
  • Notice again that there isn’t a significant difference between a mobile and a cash request. They are simply different methods of making a payment.
  • Transcript

    • 1. 1New Trends in USAID ProcurementsThe transition towards e-PaymentsApril 9, 2013
    • 2. What we will cover today21. Introductions2. USAID’s Commitment to e-Payments3. USAID Tanzania: Mission Perspective on e-Payments4. Assessing viability of e-Payments5. Practical Tips for Implementation6. Q & A/Upcoming Events319Agenda4112228
    • 3. 3IntroductionsNandini HarihareswaraOperations Director & Sr Partnerships OfficerNya Kwai BoayueAcquisition and Assistance Specialist USAID/TanzaniaHamilton McNuttProgram Manager, Payment InnovationsAnthony LattaTreasurer, Finance and AdministrationSvitlana HallOperations Associate, Finance and Administration
    • 4. 4USAID’s Commitment to e-Payments
    • 5. Why USAID Supports e-Payments5Foster cost savings and improve aid efficiencyIncrease transparency and reduce leakageand wasteReduce security risks to program staffImprove access to financial services for thepoor and unbankedCatalyze development of new and innovativefinancial products for the poor and unbanked12345
    • 6. USAID’s Commitment to e-Payments6Encourage thetransition to electronicpayments (includingmobile money) inUSAID programs andoperations whereappropriateDirect funding and support totechnical assistance programs andpartnerships fostering thedevelopment of e-paymentsE-paymentsincorporated intoproject design,procurementlanguage andexistingmeasurementsystems.Developmentof a system totrack theusage ofelectronicpaymentsTools andtrainings to assistpartners inchoosingpaymentplatforms
    • 7. USAID Procurement Executive’s Bulletin• Evaluate e-payment alternatives, Include e-paymentsuse in concept papers, applications & proposals, ifappropriate• Examples of operational costs that can use e-payments:(1) temporary staff salaries; (2) vendorpayments; (3) travel per-diems.• Examples of program costs that can use e-payments: (1) cash for work; (2) payments to trainers;(3) intra-value-chain payments; (4) grants tobeneficiaries.• Missions can elect to make use of e-payments anevaluation factor in solicitation documents.USAIDPROCUREMENTEXECUTIVE’SBULLETIN NO.2012-05(7/12/2012)7
    • 8. The PhilippinesALL SOLICITATIONS FROM THE MISSION ENCOURAGE THECONSIDERATION OF ALTERNATIVE PAYMENT METHODS• Request for Proposal No. SOL‐492‐12‐000033, Facilitating Public Investment(12/8/12): L.5 ADDITIONAL INSTRUCTIONS TO OFFERORS(6) Electronic PaymentsUSAID encourages the Contractor to consider alternative methods of payment,especially electronic forms of payment, in place of cash payments when appropriate.8
    • 9. AfghanistanTHE AFGHAN MISSION IS PROMOTING THE USE OF E-PAYMENTSIN PROCUREMENTS• Request for Proposal No. SOL-306-13-00002, Regional Agricultural DevelopmentProgram – South (#2) (1/22/13): This RFP includes the use of electronic payments in the Statement of Objectives the ability to address and implement key areas of the Statement of Objectives inthe Technical Evaluation Criteria.USAID, through the Financial Access for Investing in the Development of Afghanistan(FAIDA) program and other programs, has encouraged the use of electronicpayments, including mobile money . . . The contractor should utilize these services tothe greatest extent feasible within its company policy to strengthen the efficiency andsecurity of financial transactions at all stages of value chain activities.9
    • 10. HaitiTHE MISSION IN HAITI REMAINS A LEADING ADVOCATE OFMOBILE MONEY• Request for Proposal No. SOL-521-12-000021, Haiti Feed the Future Partnership:Northern Corridor (2/14/12): C.6.3.3 SUB RESULT 3.3: INCREASED ACCESS TO FINANCIAL PRODUCTS…The Contractor shall also explore the possibility of utilizing mobile money technology forconducting financial transactions (payments for purchases, cash transfers, payroll,credit disbursements, credit repayments, etc.).• USAID/Haiti included language requiring support of mobile money in asolicitation in 2011: The implementer shall support the Haiti Mobile Money Initiative, where feasible,including the payment of staff, the purchase and sale of goods and services associatedwith program implementation. The Mission will determine the range of allowable costmobile money services utilized by the contractor/grantee.10
    • 11. 11USAID Tanzania: Mission Perspective on e-Payments
    • 12. Tanzania’s Mobile Industry by the numbers12Source: World Bank/GSMA 2011
    • 13. Mobile Phones vs. Bank Penetration inTanzania13Source: World Bank Databank050000001000000015000000200000002500000030000000350000002004 2005 2006 2007 2008 2009 2010 2011Mobile Telephone vs. Bank Penetration in TanzaniaDepositers with Commercial Banks Mobile Cellular Subscriptions21.5million
    • 14. Tanzania: Bank Branches vs. Mobile MoneyAgents140200040006000800010000120001400016000180002012ATMsBank BranchesMobile MoneyAgents17,000Interviews*594*Work BankSource: World Bank 2010/TDY Interviews 2012*Projected bank branch growth* Estimation combines agentswho serve more than one MNO1608*Work Bank
    • 15. Mobile Money Products Available inTanzania?15
    • 16. Areas Of Action16Integrating languageencouraging e-payments intofuture solicitationsIntegrating the use of e-payments in long termdevelopmentprograms, (e.g., Feed theFuture, MaternalHealth, Health SystemsStrengthening, etc)The Mission is focused on moving away from the use of cash for the followingreasons:•Safety. Program staff holding large amounts of cash going to the field are at risk fortheft or other acts of violence.•Transparency & Leakages. A high level of cash based payments in programs can leadto a higher level of leakages. E-payments provides a paper trail.•Efficiency. By using e-payments, program staff can focus on programmatic work andFinance/Administrative staff can be more effective with the use of e-payments.•Scale. Programs, if successful, can be scaled up quickly when using e-payments.
    • 17. 17Areas Of InterestOperations andFinanceCapacitybuildingactivitiesAgriculture andHealthProgramsWorking with implementing partners to encourageuse of e-payments in the payment of per diems,travel advances, and other payments made toprogram staff that normally occur in cashEncouraging programs conducting intensive capacitybuilding activities to assess and implement alternativepayment methods for per diem and travel costreimbursement disbursed to training attendeesWork with program technical teams to examine keypayment streams within health or agricultural valuechains that experience pain points with cashmanagement
    • 18. Current Program Integration18Program Objectives Use of e-paymentsTanzania StaplesValue Chain-NAFAKA(ACDI/VOCA)Improve smallholderfarmer productivity andprofitability within themaize and rice valuechainsBeginning to evaluate how tofacilitate mobile paymentsbetween small holderfarmers and agriculturalinput companies.Community HealthWorkers-PathfinderBuilds community healthsystems in 35 districts inTanzania in order tosupport a range of healthchallenges from HIV/AIDsto family planning.Uses M-Pesa to disbursemonthly stipends to 3,500community health workersthroughout the country.The following programs have already begun exploring ways tointegrate mobile money into their programs and operations…
    • 19. 19Assessing Viability of e-Payments: Costing Utility Tool
    • 20. Process for making an informed decisionand the tools to help you get there201) Where is cash used in my program and my operations, and is it aproblem? Available Resource: Cash Scoping Survey2) Does the country I work in have appropriate electronic paymentinfrastructure and regulatory policy? Upcoming Resource: CountryWide e payment due diligence guidance3) Assess provider capabilities and get a better understanding ofproducts offered. Available Resource: e-Payment service provider duediligence guidance4) Analyze the costs associated with cash management vs. a transitiontoward e-Payments Available Resource: Cashing Utility Analytical Tool5) If you do find provider capabilities and clear benefits to yourprogram, develop an implementation plan and implement the transition.Upcoming Resource: Standard operating procedure guidance
    • 21. Costing Utility Tool Example21
    • 22. 22Practical Tips for Implementation: Chemonics
    • 23. Establish Internal and External Needs• Accounting systems• Record keeping (audit trail)• Operation proceduresInternal• Mobile Network Operatorvs. Bank• Selecting a provider• Access to payment systemExternal
    • 24. MNOs vs. BanksCountry contextMobile money vs. mobile walletGeographic distributionExample fromthe field:Philippines
    • 25. Internal – Accounting system• Ensure accounting system is ready• Start small and with your staff
    • 26. Internal – Audit trail
    • 27. Internal – Operating procedureMobile Money vs. ChecksMobile requestApprovalUploadPaymentapprovalPaymentReleasePaymentconfirmationCheck requestApprovalPrepare checkSign checkRelease checkpaymentCopy check
    • 28. 28Questions and Answers
    • 29. Upcoming EventsApril 11 April 25 April 23 May 2Ask the expertTwitter Session withUSAID MobileSolutions Division(11am-noon EST);Info:nandini@usaid.govCRS Webinar on theirexperiences with electronicvoucher systems in Haiti(11am-noon); Info:fredrik.winsnes@nethope.orgNetHope/USAID Webinaron lessons from Tanzaniaand Uganda in electronicpayments(8am EST); info:JChen@qedgroupllc.com29Replay of the Trends in USAIDProcurements for audiences inEast Africa and South East Asia(8 am EST);