I was so excited a couple of weeks ago (March 16) to attend the formal launch of the CARE-Equity Bank-Orange cell phone savings group project in the Nyanza province of Kenya.
We worked with Equity Bank and Orange for six months to develop a joint product for Savings Groups. It was approved the week before the launch, and so far as I know, it’s the first time there has been a unique product designed for savings groups, where groups can save and borrow, using their cell phones, with the same level of transparency they are used to in their regular VSLAs. The new product enables Savings Groups to replace cash completely and ensure security, at lower cost, with less risk, and with a remarkable level of transparency.
CARE helped design the product and a grant from BMGF helped fund our staff time, but we didn’t subsidize Equity or Orange at all. Equity and Orange paid their own development costs. A savings group or their representatives can go to any Orange agent, sign up for an “Pamoja” account, and that automatically opens a banking account for the group at Equity Bank. It’s amazing – the members go to an airtime retailer, and in a few minutes they have all the protection and security of a regulated commercial bank account. The accounts were designed by Equity especially for savings groups. They have no minimum balance, minimal withdrawal fees, and no deposit or ledger fees. Groups have to open the account over Orange’s Iko Pesa system, but once the account has been created, it can be accessed using any mobile network such as Vodacom or Airtel The program uses a proprietary mobile banking platform named Eazzy24/7 developed by Equity Bank.
When we started with Equity and Orange, one of our concerns was not to destroy the principles of the VSLA group as we moved to modern banking technologies. We know that the iconic box with three locks is not about security – it’s about transparency, and we needed to retain that transparency in the absence of the box. Orange was willing to design and manufacture a special SIM card especially for groups –so far as we know, it’s the only one of its kind in the world. It has two features that were designed to mimic some familiar characteristics of savings groups: First, it has its own version of the three key holders. The SIM card requires three separate pass codes; each virtual key holder memorizes one of the codes, and they pass the phone around, enter the three codes, and unlock it so that it can conduct transactions.
The second feature that is currently in its final stages of testing is that all group members can register their cell phones and then they receive an SMS telling them about any transaction made to the group account. This is the ultimate assurance that no one has tampered with the group’s resources between meetings.
Finally, another exciting feature of the product is that as the group opens a group account, every individual member also can open an account, at no cost – Equity even takes their photo for free and issues them free Equity account cards with their photo’s included. On the day of the launch, 21 groups wanted to participate, and the same day, over 600 people opened their own personal accounts and became financially included.
My colleague Nelly Otieno said, “This is my dream come true! The bank has come to the field, and now the clients don’t need to go to the bank.” I share Nelly’s excitement. This is a way for groups to move into the formal space, while preserving the special characteristics of savings groups. For majority of these people, it’s the first time they have had any sort of interaction with a formal financial institution. Until I heard people say that, I hadn’t realized how excluded many people felt. Now they feel like they are really a part of their country’s economy.