CGAP: Digital Finance Can Help Transform Critical Services for the Poor


DEC 19,2013.


CGAP has identified at least 55 companies, primarily in Kenya and Tanzania, who are leveraging the already established infrastructure of mobile payments to make essential services and utilities - in energy, health, education, agriculture and water - more accessible to people at the base of the economic pyramid.

Under this framework of "Digital Finance Plus," businesses are using mobile money and branchless banking to help solve significant development challenges and improve the lives of the poor.

"Financial services are a means to an end. The platform and access that mobile money and digital finance create can make it easier and affordable to bring other essential services to poor people," said Kabir Kumar, Microfinance Specialist at CGAP. "Our assumption is that people don\'t want a bank account or an electronic wallet. They want to use the little money they have to address their needs."

Kytabu is one company innovating for education in Kenya, where a common practice is to buy photocopied chapters of textbooks from middlemen, since whole textbooks are very expensive. Kytabu enables people to pay for chapters of core curriculum textbooks in small increments via their cell phones, purchasing only the chapters they need for their coursework. By digitizing something that Kenyans are already doing, Kytabu is helping to make textbooks more accessible and affordable.

Similarly, Angaza Design offers a pay-as-you-go financing model for solar lamps in East Africa. Rather than stripping down the functionality of solar lamps to make them less expensive, Angaza decided to innovate with financing. They are selling high-quality solar lamps for just a few dollars up front, giving people a viable and affordable alternative to kerosene fuel, which can be expensive, inefficient and dangerous.

Of the 55 Digital Finance Plus companies CGAP identified, all share two key characteristics: they aim to solve a fundamental access problem and digital financing schemes (with or without mobile money) figure prominently in how their business works. 

"The short-term benefits of these innovations are obvious," notes CGAP CEO Tilman Ehrbeck. "For instance, poor families get access to cheaper and cleaner energy. Additional long-term benefits are up to the imagination."

Read more about Digital Finance Plus and watch the animated video at