Macroeconomic Situation Population 6.2M Human Development Rank 2015 (out of 188) 181 % rural population 62% % under national poverty line 52.9% GNI/Capita $260 Literacy rate 35% % access to financial services 15% # of bank branches per 100 000 inhabitants # of ATMs per 100,000 inhabitants 2.92 0.43 # of post offices per 100,000 0.88 inhabitants
CURRENT SITUATION OF REMITTANCES IN SIERRA LEONE Sierra Leone s economy receives around USD 66 million from remittances on an annual basis (WB, 2015). IOM estimates this number to be USD 110 million. USD 130 million or more is estimated to enter Sierra Leone through informal channels. MTOs charge an average 12% for remittance services. Similar charges are applied by the informal channels. MTO services are reasonably good, but expensive and rigid, still dominated by cash-tocash transfers. These remittances are predominantly sent by Diaspora living and working in surrounding countries in West Africa, the US, UK and continental Europe. Policy interventions are needed to reduce the US$ 30 million annual cost for senders to less than US$ 8 million in 2030. How can the existing postal network contribute to accelerate this cost reduction of > US$ 20 million per year, and what and how does SALPOST need to make it happen?
SWOT ABOUT SALPOST IN SL REMITTANCE MARKET STRENGTHS Urban and Rural reach and access Trusted in the communities Government support Low transaction costs Low value transactions can be facilitated Local language support Consumer protection WEAKNESSES Informal Market Low financial literacy Challenging regulatory policies Technology and Network challenges in rural communities Investment capital OPPORTUNITIES Cross regulator initiatives and better coordination within Government agencies Postal network can be part of national initiatives for financial inclusion and remittances Build aggregated platforms to manage partnerships with Banks and remittance providers THREATS Inadequate / unclear regulation Competing Commercial Interest Low literacy and poverty Technology and Network challenges in rural communities High cost of Energy Distribution
SALPOST FINANCIAL SERVICES STRATEGY with a full License from Central Bank engage with foreign investors attracts remittance receivers be a door way for local Immigrant transfers deliver savings and investment products for the Diaspora organize well equipped centers to assist the unbanked be THE PARTNER for payment solutions for Government and Donors deliver the SL payment switch (for small amounts) be a Suitable partner for egovernment Services develop and run emarketplaces develop a relationship with Migrant Community
IDENTIFIED SOLUTION FOR SALPOST The innovative character of the UMVA solution was a perfect match for the renewed strategy expressed by SALPOST to diversify from traditional postal financial products to a digitalized service platform. Based on feedback from market surveys on prospective users and stakeholders, SALPOST launched the POST UMVA service on 16 June 2016. The service is now available in Sierra Leone, on a progressive scale. Next step is roll out with mobile tablets in all post offices. 6
OVERVIEW OF POST UMVA PLATFORM Commercial Bank INTERNATIONAL SWIFT Commercial Bank Diaspora Receiver SME Development FUND Migrant Bank Migrant Financial Eco system Collective buying Migrant org. APEX body EUR 100 USERS SLL 600 000 SME Community Hospital SALPOST Rural Financial Eco system Farmers Schools Markets
OVERVIEW OF POST UMVA PLATFORM An innovative and low-cost service that could be accessible to the entire population (14 year olds or more), especially in rural areas. Enhances local development, driven by improved financial inclusion through the development of a nationally representative and innovative platform for international and domestic remittances. Improves the degree of financial inclusion by using virtual transactional or mobile device accounts to accede to basic financial services and mobile payment services Resonates a semblance of the World Bank s Smallholder Commercialization and Agribusiness Development project, it will promote smallholder commercialization by fostering productive business linkages between smallholder farmers and selected agribusiness firms and other commodity. It incorporates a Financial Education tool and as such provides an opportunity to the Financial literacy campaign of UNDP and The World Bank. Suites the Postal strategic focus.
The Ecosystem and our Design for the POST UMVA Platform Example: Sierra Leone, scaling to 1 million users 160.000 Postal members 50.000 migrants 120.000 receivers 20.000 Migrants 350.000 students 250.000 Parents & suppliers 30.000 Migrant Workers Sending Bank Batching Receiving Bank Commercial Bank Receiving Location MFI Branches 2.500.000 unbanked people 200.000 SACCO members International Switch Swift National Switch Post UMVA Switch 200.000 comm bank members 9
Example Receiver Postal org. And MFI s BANK UMVA PLATFORM(S) First organizing the receivers Farmers Community Schools SME Commercial bank for central receiving SACCO s and the Central support (Apex) organization Farmer Cooperative systems and support tools Schools and Students, reports to Min of Education Community administration and the support tools Small and Medium sized organizations And all in 1 UMVA Platform
Example Sender Migrant account Sending Cash Secondly, organizing the senders Organize the migrant union Connect to Receivers Organize the WW migrant organization (Apex) Develop communication centres, deliver training Assist in Collective buying contacts Develop the migrant bank Migrants organizations Migrant Bank Migrant Development FUND Migrant Financial Eco system APEX body for Migrants Collective buying e.g. Insurance Local shops
Organise the transfer at 0 cost, members pay a monthly fee Amount Organize the transfer within the existing legal framework Fast and secure Contract with 1 sending bank Contract with 1 receiving bank Commercial Bank Send Cash SWIFT UMVA solutions Commercial Bank Cash delivered Migrant account EUR 450 BIF SLL 810.000 Receiver account Migrant Receiver Migrant connects to internet Receiver connects to internet
The POST UMVA service for partner organisations Each member is fully identified All money enters the UMVA system through the banking system; so there are 2 «KYC» and «AML» filters in place The underlying money flows are under supervision of the Central Bank Different levels of access; - Receptionist - Cashier - Administrator - Auditor Good reporting and monitoring facilities Opportunities to extend outreach and achieve financial sustainability Copyrights Auxfin 13
Quality improvement Post, MFI s, Community Banks, etc BIG ISSUE : CAPACITY BUILDING 6. Connecting International community 7. Building of Funds 8. SME development and Micro Funding 3. Mobilization of groups 4. Training and leadership programmes 5. Directing of savings and credits 1. Organization of the POST 2. Implementation of POST UMVA Mgrants Students Cooperatives Security ID Cards Risk Management Remittances International Funds Investment Programs POS Web=payment Org. Development Internal system all locations and many clients Growth and Expansion Connect schools, agro cooperatives, POS and Mobile systems International and funding Connect Migrants, introduce (int.)national payment systems 29/02/16 14
International transfers via POST UMVA International SWIFT transfer administration by UMVA SALPOST Makeni 2000826 SLL 200 000 UMVA-INT Brussels SALPOST Freetown 100 123456789 SALPOST Freetown 2000234 SLL 300 000 EUR 100 BIF SLL 600 000 SALPOST Savings account 2000068 SLL 100 000 15 Less then 15 minutes; no transaction fee 29/02/16 15
Migrants Development Fund Send the benefit of transaction cost into a fund Sender 16%, receiver 4% Members have a safe for Development FUND Sender puts the money in type of savings for investments, For example : Family emergency 0% interest Solar energy project 4% School fee 4% interest Small business 10% interest Normal investment 17% interest Diaspora organizes the fund, execution is with SALPOST/MFI s Investment fund will make money, need for remittances will go down Interest and profit 29/02/16 African Conference on Copyrights Remittances Auxfin and Postal Networks 16
Members POS ATM ATM POS Agents Migrant bank Int Banks Eco Bank SALPOST Agents France Spain UMVA/MIGRANTS platform connected with Local MFI Community Banks Schools Italy MFI UK Benelux Central Bank Church Sweden AGRO Cooperative USA Qatar SME Group National and International Migrant Associations SALPOST, Locations, Cooperatives, Social Groups 17
Online trainings AUX-EL E-learning tool -Computer skills -Financial Education -Language -Hygiene -.. Copyrights Auxfin 18 29/02/16
Database tool: CAP REG REP Bank Account Sum of funds available for the interventions Cash Based Interventions Automated distribution to target population, with application of relevant filters. Contractual data privacy respecting the interests of the users/members and in compliance with national and international regulation. 17/08/15 Local shops, Bakery, Bank, etc. Advantages Fully tracable and good reporting and monitoring functionality, less cash, less risks (safety or corruption), highly efficient and low cost, more autonomy to beneficiaries, reduced likelihood Copyrights Auxfin 19 of undesirable spending behaviour, providing a platform for Community Activation beyond the Cash Based Intervention.
Communication UMVA Business Centres - Internet - Computer/Tablet - Video Camera - Projector Offering access to - UMVA - Internet ( email, Skype, Google, etc) Managed by small local entrepreneurs 29/02/16 African Conference on Copyrights Remittances Auxfin and Postal Networks 20
THE ROAD FORWARD POST UMVA is a pilot demonstrating success and adding to credibility Much more is needed for SALPOST to be the gamechanger in the remittances market and to deliver financial services and access to finance - Capacity building in Commercial and Financial management - Partnership building and agency management - HR management and e- learning for staff and clients - Gradual expansion of the range of financial services towards complete packages - Repairs of post offices and upgrading the technology base - Vehicle fleet to ensure secure cash supplies - Synergizing with e-commerce fulfillment and e-government Benefits from investing in SALPOST s development program will generate attractive returns ensuring business continuity and a positive impact for rural and social economic development, MSME trade, and growth through competition and poverty reduction.
FINANCIAL PLAN Bus Plan SALPOST - 5 years Investment in Marketing, Training, Systems, Logistics, and Post offices Total CAPEX in 3 years 5 million Revenue growth up to 6 million Per year after 3 years Net earnings per year >1 million Financing need 3 million To fund CAPEX, clean up and cash flow in first 3 years Business Partners expected to co-finance further development through PPPs once enabling conditions are in place
THANK YOU Questions? Suggestions?