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« CARE, Equity and Orange launch cell phone saving group product »
Lauren Hendricks | Monday, April 2, 2012 at 8:51AM 
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.
Reader Comments (4)
Great strides for sure for SGs.
The fact that a members can access from other mobile networks is good opening for competition. great partnership to leverage technology for financial inclusion.
One nagging thing though everytime i think about replacingcash- and this is not criticism but something that needs to be taken care of also may be- How is replacing cash for an sg member useful when they need the cash to pay with cash for services like consumption costs?
will their need not to deal with cash prompt the service providers to also replace cash? may be
Congratulations CARE for helping move clients from the cash world into the digital world. While I am not sure going formal matters, what does matter is that services are convenient (at your doorstep), safe (not subject to villains or glitches of any kind), relevant (products begin to actually match patterns of reality), and the ability of users to plan with new tools. Formality might guarantee safety but does not in and of itself offer convenience, flexibility and the ability to plan. Going digital opens doors whether linking users to formal or informal services. Plus it offers the benefit of connectivity among groups (down the road) and most important, the benefits of privacy when it comes to individual accounts. Bravo.
What an innovative way to bring technology into savings groups to increase security and save valuable time while also maintaining transparency. I wonder how this will affect the social components of savings groups. Will the shift toward technology decrease the social pressure for loan repayment? More importantly, will the corollary benefits of leadership development, autonomy, community engagement and coordination, and empowerment be lost? And this raises an additional consideration: is the most crucial component of savings groups the savings generated or its associated, community development benefits?
I really liked that the importance of transparency and other aspects of VSLA methodology were taken into account on this. It is exciting!
I do however, have the same questions as posed by Katherine Oglietti floating around in my mind. I hope that CARE will keep us apprised of the impact of this service regarding the questions she raised.