Digital Finance Plus

Digital Finance “plus” is the use of mobile money and branchless banking to make basic, essential services and utilities - in energy, health, education, and water, for example - more accessible to people at the base of the economic pyramid. Here finance is not an end itself but a means to help solve significant development challenges in order to improve the lives of the poor.

CGAP has identified 55 services in this new field of digital finance “plus” innovations who are leveraging the already established infrastructure of mobile payments - including mobile wallets and agents – to reach and serve their customers. Businesses use this infrastructure to collect small-value payments under pay-as-you-go or lease-to-own models for use of devices such as solar lanterns and basic water pumps. Some of the devices are potentially innovative. Most of the businesses are in Kenya and Tanzania and most of them are in the energy and water sectors.

Businesses most likely to be transformative are those that provide both innovative technology (e.g., SIM-operated solar lanterns in energy) and financing solutions that go beyond enabling basic payments (e.g., credit models that enable ownership of those devices). While the industry is young, some of these businesses could disrupt traditional models of providing basic services and change the arc of development in those actors. However, it is too early to identify yet which of these businesses are truly transformative and could make a big difference in the lives of poor people.

Recommended Reading:

Sustainable Energy and Water Access through M2M Connectivity (GSMA)
Smart Water Systems (DFID and Oxford University)
A Prepaid Architecture for Solar Electricity Delivery in Rural Areas (Bennu Solar)
Multiplying Agriculture by the Power of Mobile (World Economic Forum)
Connected Agriculture (Accenture)
Advancing the Dialogue on Mobile Finance and Mobile Health (mHealth Alliance)
How Financial Innovation Helps the Poor Improve their Lives (HuffingtonPost)

Other Resources:

Lighting Africa
Mobile Water for Development Research Group
Mobile Enabled Community Services (GSMA)
MercyCorpos Agri-Fin Mobile
mHealth Alliance

Topic Contact: Kabir Kumar and Camilo Tellez-Merchan

From Our Blog

03 June 2014
A number of business model innovations that link poor households to better basic services are becoming economically viable through advances in digital payments infrastructure. This blog discusses three lessons on how to advance the nascent field of "Digital Finance Plus".
10 April 2014
In recent years, Safaricom has launched a number of value-added services through its M-PESA product in Kenya, aiming to move its customer base beyond basic money transfers. M-Shwari is by far the most popular of the offerings.