UNCDF's programme leaves Liberia but the country cannot be left behind

Broken lives and severed ties: the tragic reality of Liberia, where forgetting the 2014 epidemy is impossible. “Ebola is real” reminds a sign in Monrovia’s airport.

After two civil wars between 1989 and 2003 and the Ebola outbreak in 2014, Liberia is a country working to get back on its feet. 69% of the population live in extreme poverty [1], access to basic services such as health care, water and electricity is limited, particularly outside the country’s capital Monrovia, and there is lack of a middle class. Very rich or very poor, inequalities persist in this country where paved roads are a luxury for fancy compounds protected by barbed wire.

The country embarked on ambitious economic reforms that brought steady economic growth from 2005 to 2013. However, as a result of the Ebola outbreak, combined with a collapse in iron ore and rubber prices, Liberia’s economy came to a halt: closed businesses, barred schools, hospitals on tilt, travel restrictions, and a drop in foreign investments and trade. Between 2014-2016, the average annual growth rate of the country’s economy was 0%.

In 2013 UNCDF-MM4P launched in Liberia, a country with low banking penetration rates (3.2 bank branches per 100,000 adults) and 28% financial inclusion rate. With a primary focus of contributing to the development of an enabling environment for mobile money, the program worked closely with the Central Bank of Liberia (CBL) and GSMA to revise the Mobile Money Regulations to allow non-bank actors to enter the digital financial services (DFS) market, encouraging competition and interoperability.

But before activities could really take off, the Ebola outbreak occurred and the travel and assembly restrictions forced UNCDF-MM4P to cease its projects. The Programmme and the Better Than Cash Alliance joined forces with the United Nations Mission for Ebola Emergency Responses and shifted focus on digitizing payments to healthcare and other response workers. From early 2015, UNCDF had no presence on the ground in Liberia until May 2016, when the MM4P program reengaged in the market and stationed a full-time DFS Expert in Monrovia, Mr. Ali Akram.

Since then, UNCDF-MM4P has stimulated the DFS market and coordination among stakeholders by promoting partnerships, dialogue and awareness in a previously fragmented and uncoordinated DFS ecosystem that could not reach beyond the capital city. Today, Liberia is member of the Better Than Cash Alliance with a financial inclusion strategy, and regulators are enthusiastically seeking to learn from other countries and private actors. To facilitate dialogue, UNCDF-MM4P helped establish the DFS Working Group, a platform that brings together the DFS stakeholders to identify and address the challenges faced by the sector, and where the two DFS operators sit at the same table despite competition. As Massa Dennis, Senior Manager of Mobile Money at Lonestar, summarized:

There are challenges that are worthwhile addressing together, but given the competition in the market, Cellcom (Orange) and Lonestar would not have sat at the table together and have a meaningful discussion without the Working Group.

Another example of increasing integration is the CBL National Electronic Payment Switch commissioned in July 2016, which hosts four member banks that share their ATM networks; interbank fund transfers and bill aggregation services will soon be added. Moreover, the Agent Banking Regulations issued by CBL in April 2017 allow financial institutions to leverage agents to distribute their services more widely and cost effectively.

Between 2016-2017 UNCDF-MM4P also assisted BRAC Liberia [2], the largest microfinance provider in the country, to prepare and successfully launch a mobile money loan collection service. The customer uptake of the service has grown ever since, showing the appetite for DFS in Liberia.

The participation of Massa Dennis from Lonestar to the #DFS4Women event, organized by UNCDF-MM4P, inspired the launch of the MoMo Market Women Initiative. The initiative aims at reducing the gender gap in the uptake and usage of mobile money. Regarding the event, Ms. Dennis said “The event was an eye opener. In this sector, we don’t talk about gender, and it never occurred to us that there is a value proposition in focusing on women”.

To facilitate the shifts from cash to digital payments, specifically those that are performed regularly in one batch, UNCDF-MM4P conducted an analysis of high-volume (or bulk) payments flows in Liberia. The resulting diagnostics will enable the development of evidence-based policies and business models as well as provide a baseline for tracking the evolution of digitization in the country.

UNCDF-MM4P also supported Lonestar and the Ministry of Finance and Development Planning to sign a memorandum of understanding for payment of civil servant salaries through mobile money. Compensation of employees account for more than 50% of Liberia’s recurring budgetary expenditure, and government payments form a large component of high-volume payments. Shifting these payments to digital will accelerate the speed towards Liberia becoming cash-lite.

Overall, the DFS market in Liberia has made significant progress between 2014 and June 2017. The percentage of adult population with an active registered DFS account has risen from 0.6% to 11% and agent distribution has improved from less than 1 to 29 per 100,000 adults. However, the market is still very much at the beginning stages of development. Products offered in the market are restricted to basic first generation and providers are struggling to deploy an active agent network, particularly in rural areas. Poor infrastructure, lack of DFS awareness and low levels of financial literacy are still major obstacles regulators and providers are facing.

It is with great reluctance that we announce that the UNCDF-MM4P programme will not be in-country to support further development. A lack of funding meant the Programme has had limited resources and time to support Liberia to build a robust DFS ecosystem. We will continue to pursue different avenues for funding but, at present, there are no clear medium or long term options to make a true impact with our current partners.

Even though it is too early to say how these efforts will translate into further progress of the DFS market and increases in the adoption and usage, the achievements are a testament to the potential of DFS in Liberia as well as the appetite of stakeholders in the country. The DFS sector in Liberia requires continued support not only to accelerate its development but also ensure that growth is equitable and targets poverty alleviation.

The Programme would like to thank all the stakeholders for the fruitful collaboration, in particular the Government of Liberia.

UNCDF hopes that the bond we have made with this country will continue despite MM4P’s disengagement. As a first step, Liberia will be invited to participate in the Better Than Cash Alliance peer exchange on e-government hosted in Rwanda next October.

We are open to staying and we welcome ideas on how to continue to fund our presence for the longer term. Liberia cannot be left behind.

[1] International poverty line of US$1.90 per day

[2] BRAC entered Liberia in 2008 with UNCDF-MicroLead support.