Liberia: How Lonestar Cell MTN Is Driving Financial Inclusion in Liberia

Lonestar Cell MTN staff demonstrate a new Mobile Money payment module at a supermarket in Monrovia.

More than three decades ago, settling household bills or tax in Liberia meant the whole day.

It involves traveling through traffic, spending hours in a crowded banking hall, and then enduring another queue at the tax offices. But nowadays, the situation has changed with the Lonestar MTN Mobile Money platform, which makes paying tax and settling household bills easy and fast.

"Mobile Money directly benefits the bottom of the pyramid customers by offering affordable, convenient and easy-to-use financial services that are carefully designed to better the lives of those who are somewhat excluded from the financial system," an employee of Lonestar Cell MTN told the Daily Observer.

Since it was launched in 2011, the company's Mobile Money platform has allowed millions of Liberians, who were in the past unbanked, to have access to financial services, sometimes which would have taken a decade to happen. Currently, Lonestar MTN has 1.6 million Mobile Money subscribers out of Liberia's total population of 4.6 million people making it the country's largest operator.

Such a revolution is now making it increasingly rare for individuals to keep stacks of banknotes on their persons or at home.

"Financial inclusion of the unbanked population has not only made paying bills easy but enhances government revenue collections. With the platform, an individual can settle their utility bills instantly or pay government tax without leaving their homes," the employee added.

Furthermore, the platform has modernized the Liberian economy, through its cashless transactions with the availability of agents who have gone from oddity to ubiquity in many parts of the country. In addition to earning income for themselves, these agents are also extending financial services to thousands of Liberians, which allows them to make deposits and pay bills via a simple mobile handset.

The move by the company to introduce cashless transactions in the Liberian economy is now yielding fruit as the government through the Central Bank of Liberia, and other financial institutions are now rolling out a similar initiative.

"Such ambitious move by the government and financial institutions is not only driven by the success of the company's initiative but the increasing rates of mobile penetration and a growing realization that cashless transactions bring a host of socio-economic benefits.

"Conducting financial transactions in a completely cashless environment make welfare programs more efficient, as payments are transferred directly to beneficiaries, whilst also helping to prevent money laundering. As a government, we are working to fully transition the country from a cash-based economy to a cashless economy which is in the process," an employee from the Central Bank of Liberia told the Daily Observer.

For the government, the drive towards cashless economies offers an exciting window of opportunity, particularly unlocking development gains for the poorest and most excluded communities, which can easily be achieved through Mobile Money.

For example, the company has partnered with the Liberia Revenue Authority (LRA) and Ministry of Finance and Development Planning (MFDP) and other government's agencies to enable them to pay their employees securely and efficiently as well as facilitate the collection of taxes. It is now one of the governments' biggest payroll card programs, with majority public sector employees receiving their salaries through the platform.

"Financial inclusion is part and parcel of our business strategy and vision to create a country beyond cash. We bring our technologies and infrastructure, our capital and creativity, and our ability to scale solutions to support people's journey from poverty to prosperity," the Lonestar MTN employee said.

Moving up the financial services value chain

Although cash is still the dominant payment method in Africa, the volume of electronic payments grew at an annual rate of 13% between 2014 and 2016, according to the McKinsey report on growth and innovation in African retail banking.

The Mckinsey report added by the end of 2015, there were nearly 400 million registered mobile money accounts--nearly half of the global total--across sub-Saharan Africa with nearly 90% of users in East and West Africa.

According to a 2017 CBL report, mobile money activities across the country's 15 political subdivisions experience an increase in the agent network from 2,110 in November 2016 to 3,162 as of October 31, 2017, representing an increase of 49.9 percent.

The report added that the total number of subscribers or users of mobile money significantly increased over the period from 1,034,725 as at end of November 2016 to 1,709,436 as of October 31, 2017, which represents 65.2 percent increase in the subscriber's base. The total mobile money transactions valued from January to October 2017 was US$20.4 million and L$12.85 billion.

"Mobile Money is the future; Liberians have to join the rest of the world and embrace this digital revolution to benefit from the ease and convenience of mobile money presents in the provision of financial services. It is a platform that enables public workers to receive payments via Mobile Money, which is currently ongoing," the CBL employee added. "Currently, mobile money accounts now surpass bank accounts in the country and greater financial inclusion has benefited large swathes of the population."

The McKinsey report added that telecom operators have more customers and better distribution networks compared to a bank, and its ease and safety of use in contrast to the paper-heavy processes of banks.

However, banks themselves have also put the mobile networks to good use for the provision financial services. Banks, such as the Liberian Bank for Development and Investment (LBDI), began with SMS and email alerts for customers to keep informed about activity on their accounts. Now the bank is giving customers the option to push cash from their bank accounts into their Mobile Money accounts -- an unprecedented convenience, especially for customers transacting large amounts of local currency.

As local banks add digital financial transactions to their systems, the mobile telecommunications operator is working with banks to enable customers to transfer money in and out of their local bank accounts using their Mobile Money wallets.

The new service, which Lonestar Cell MTN calls "Push and Pull", allows the company's Mobile Money subscribers to transfer money from their Mobile Money wallet to their bank accounts (Push), as well as transfer money from their bank accounts to their Mobile Money wallet (Pull).

"The product will enable customers to seamlessly move funds from their bank account to their MTN mobile money wallet and seamlessly cash out or perform other transactions," Prince Chesson, head of Lonestar Cell MTN Mobile Money said.

In an economy where, just a few years ago, customers painstakingly hauled suitcases or rice bags full of local currency in and out of commercial banks, or stashed away loads of cash in their mattresses or ceilings, digital finance platforms are solving the trust and convenience problems for many of those who have remained unbanked for these very reasons.

Now, the current liquidity crunch in the country provides an opportunity to onboard customers dealing in much smaller transactions. It is only a matter of time when Mobile Money enables micropayments with the speed and convenience that matches or surpasses the use of cash.

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