The Government of Malawi has today announced that it is joining the Better Than Cash Alliance, in a move that will see it transition to electronic disbursements rather than the cash transactions it was previously used to.
Malawi expects the shift to e-money to help it increase transparency, decrease costs, accelerate economic growth, and address poverty by increasing financial inclusion for all Malawians.
According to Malawi’s Minister of Finance Ken Lipenga, “We have tried many different cash payment modalities in Malawi but these have proved both expensive and subject to risk and fraud.”
“Our aim at this point is to begin by reaching 21,000 people with payments of $3 million. Of course, we already know that transitioning isn’t easy and that is why we are joining the Better Than Cash Alliance. We will be able to learn from other countries how best to handle the complexities of transition and ensure that not only the economy but also the people benefit,” he added.
Founded by the Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, USAID, United Nations Capital Development Fund and Visa Inc the Better Than Cash Alliance works with governments, development agencies and the private sector to adopt the use of electronic payments and provides resources to those who commit to make the transition.
2.5 billion adults — more than a half of the world’s adult population — are excluded from the formal financial sector. This is most acute in the developing world where approximately 80 percent of poor people are excluded. As a result, most poor households have no option but to subsist almost entirely in an informal, cash-only economy, making it extraordinarily difficult for them to access financial services like bank accounts, to save for the future, build assets or get credit. Electronic payments can create lasting benefits for people by creating opportunities to access formal financial services and begin to develop assets and save for the future.
“We commend Malawi on their leadership and commitment to improve the lives of the Malawian people and to further develop the economy of their country,” said Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance. “There are many benefits of electronic payments but also challenges and these can best be tackled in partnerships. We welcome Malawi into the Better Than Cash Alliance and look forward to our partnership with them.”
Malawi is not the first government to do so, Kenya has been so for a while now as well as Afghanistan, Colombia, Peru and the Philippines.
A number of development agencies including the United Nations Development Programme, USAID, the World Food Programme, ACDI/VOCA, CARE USA, Chemonics International, Concern Worldwide, Grameen Foundation, MEDA, and Mercy Corps among others use mobile payments too with support from the Better Than Cash Alliance.