#UNCDFExpertsChat: What is the development challenge you are trying to solve? How does UNCDF’s MM4P programme solve that challenge?

Till Bruett: Rather than talk about “MM4P” I think it is better to say “digital finance.” It’s not just MM4P working on these issues;in the past year we’ve seen so much more emphasis on digital across the UNCDF portfolio.

In Least Developed Countries (LDCs), less than 20 percent of the adult population has formal bank accounts and fewer use them. If you consider less formal options, like credit unions and savings groups, the percentage gets to nearly twice that. That figure hasn’t moved much in the past twenty years. That’s the development challenge.

At the same time, the level of mobile phone ownership exceeds both and the vast majority of people in LDCs have access to a mobile phone from a family member or friend. We are also seeing great strides in access to broadband internet, 3G and even 4G. That is the opportunity.

What we are trying to solve is how to take advantage of the telecommunications and data revolution to get people access to financial services --- and through that, access to the basic services they need. We have a few examples of how this can happen, as in Kenya and Tanzania, as well as in Somalia and Zimbabwe.

Through our work, UNCDF supports branchless and mobile financial services in a select group of LDCs which haven’t seen success in this space yet. Our aim is to demonstrate how the correct mix of financial, technical and policy support can build a robust branchless and mobile financial services ecosystem that reaches low income people in LDCs.

#UNCDFExpertsChat: What is the last mile financing model of MM4P? How does it build public/private partnerships?

Till Bruett: Government and business are closely related in most LDCs. Take the example of Malawi, where I am today. The government and its employees are often bug customers of private sector businesses, as are donor organizations and their employees. Both the private sector and the government recognize the symbiosis. At lunch today, my table had a woman from the revenue authority, a mobile money manager for a mobile network operator, a bank officer and a telecoms regulator -- and they all knew each other or had some friends in common.

Still, it helps to have a go-between to help them work together in an official capacity. Our approach to working in a country is first to build “buy-in” by bringing people together to learn, share and, quite frankly, have a safe place to complain. We also fund research that helps answer the questions they have about unbanked people. Then we work with both government and the private sector to support them to improve their current work. For example, we may help train a central bank on what how to measure financial inclusion or help a bank do better monitoring of bank agents. Only then do we try to innovate, working together to try a new product or develop a new policy or regulation.

There is a method to our approach. We have a theory of change that takes into account the entire digital financial services ecosystem. We look at different areas that can help or hinder use of services: policy & regulation, infrastructure, providers, distribution, bulk payment and, most importantly, customer experience. When we choose our activities, we do so on the basis of the barrier or opportunity in these areas.

#UNCDFExpertsChat: How does MM4P support the achievement of the SDGs?

Till Bruett: It starts with the customer. The “last mile” ends at the doorstep of a family, one that often depends largely on agriculture. That family already has a financial life. Right now they primarily use cash – cash under the mattress, cash from the money lender, cash at the local shop or even cash at the school.

What I like about the SDGs is that if you put the two works “I want” before almost any SDG it can also be a personal goal. “I want no poverty. I want good health. I want quality education. I want gender equality.” At their core, the SDGS are very personal. So we can’t forget that in our effort to achieve the SDGs – we are really trying to help people achieve the own personal ambitions and live up to their potential.

Like other households, rural households have ambitions. They also have relationships that extend far beyond the village. They probably sell crops to earn money. They may send money to their child at school or receive money from a relative working in the city. Some may get a loan from a microfinance institution. Almost all of them pay schools fees, medical expenses, and buy airtime, food, books and medicines.

Often poor people pay more for the things they need than do people who are wealthier. The poor can’t buy in bulk and often they have to travel a long way to get to a school, hospital or even a store. Look at energy. If you are on the grid, your electricity is cheaper (and healthier) than if you have to buy charcoal or kerosene. Tap water is cheaper than bottled water. What excites me is when digital financial services help poor families buy the things they need, closer to home at less cost. What excites me more is when companies see these families as customers. If we can change the narrative from “the 3 billion poor” to the “3 billion customers” that is a huge accomplishment.

Accessing financial services can really help people save for a home, pay for school, start a small business and create positive externalities within their communities, including creating new jobs. Our work in digital financial services for financial inclusion contributes to a number of SDGs as a result.

#UNCDFExpertsChat: The SDGs have a strong focus on leaving no one behind. How does MM4P reach poor communities and under-served regions in LDCs? How does it make sure that it reaches women and vulnerable groups?

Till Bruett: 70 percent of the world’s poor live in rural areas. Women are also much more financially excluded than men, and the digital divide between women and men is even greater than the financial divide. Education, mobility and culture all play a role, among other factors.

Our programme places a premium on supporting partners and projects that reach rural areas and women. Our research is all sex disaggregated and we specifically take on projects that are linked to agriculture.

But we also acknowledge that migration combined with telecommunications is creating a very strong link between urban and rural families. Every Malawian at my table for lunch today sends money to at least two family member in rural areas. So while we emphasize the last mile, we have to also remember that middle class, urban, salaried women and men have a role to play, too.

#UNCDFExpertsChat: Can you give an example of how MM4P has made a difference to the lives of poor people and communities?

Till Bruett: In Malawi, where we started our work in Africa, there were less than 1000 active users of digital accounts in 2012. Now there are between 750,000 and one million. Anecdotally, most of the Malawians we met in the last few days in Lilongwe and Blantyre say they think that digital money transfers are becoming “mainstream.” As one woman noted, “I haven’t sent money by bus or taxi in the past year to my Aunties. I only use Zoona, mPamba or Airtel Money. And now I don’t have to go to all the funerals in the village. I can send cash which is what the family needs the most.”

In Uganda, where MM4P is active in agro value chains, we support Kyagalanyi Coffee Limited to digitize payments to over 12,000 farmers on the slopes of Mount Elgon. We are supporting: MTN Uganda, offering some risk coverage for losses (which did not occur) in this rural area; Yo Uganda, Ltd. to help transfer payments between Kygalanyi and MTN; and Fenix International provided phone loans and solar charging solutions for coffee farmers. More info is available at https://uncdf.org/en/wan-yala-naabi-ku-lerra-network

#UNCDFExpertsChat: What are the lessons learned from MM4P's implementation so far?

Till Bruett: We’ve learned so much and continue to do so. We are working in a very new sector and there are no “best practices” yet. So at the risk of being wrong, I will share the following:

First, trust, trust, trust. It’s hard to earn trust and easy to lose it. This applies to both the relationships between people and companies (like banks and mobile money providers) as well as between organizations.

Second, don’t put all your eggs in one basket. What may seem like “the best partner” now may not be in one year. We work with many partners and don’t pick winners and losers. Change in leadership, corporate takeovers, and many other factors beyond our control impact our project all the time.

Third, don’t treat regulators or regulation like a problem; rather think of them as an opportunity. I personally love working with central banks and ministries of finance as much as the private sector. They play a major role in making digital finance work and we need to support them as much as possible.

Finally, being present, showing up and listening matters. Embodying a collaborative spirit, working together in complementary ways and having an open mind really help.

Ok, one more. I say this as a manager. Hiring smart, passionate people is the key to success.

#UNCDFExpertsChat: What's the plan for scale up? What can we look forward to in the future of MM4P?

Till Bruett: We are spending a lot of energy on understanding the customer better. Look for some great research on customers – particularly women – in our markets. We are also doing some pilot on customer centric design, adopting some practices from the private sector to help our partners build services that really reflect the customer input.

In terms of scale, we are hoping that digitizing agricultural value chains in Uganda and Nepal will provide us great learning on how to reach rural areas.

And finally, we are working closely as part of “one UNCDF” in Myanmar to support digital financial inclusion. It’s a great market with great potential.

#UNCDFExpertsChat: What's exciting about working in this space?

Till Bruett: Everything.