Financial Mobility In An Immobile World
The recent outbreak of COVID-19 is an unprecedented global issue, leading many to contemplate difficult questions that are plaguing all of humanity. With rising numbers of cases being identified and related deaths, Bangladeshis are collectively bracing themselves for the worst. Granted, the primary concerns now are more existential than economic, but it is not something we should ignore altogether. For a country like Bangladesh where 24.3 percent live under the national poverty line, with a large proportion involved in low skilled wage labor, the implications of the lockdown will be far-reaching. During crises such as these, liquidity becomes an increasing source of concern—particularly when the “quarantine” of banknotes receives serious consideration to curb transmission of the virus. A possible way to work around this concern is the use of Mobile Financial Services (MFS). With 81.9 million registered clients across the country (including formal and informal workers, businesses and service industries), MFS is well placed to serve their collective needs.
There are many instances during this crisis where MFS may have played a significant role. Take the recently observed exodus for instance. Over the last few weeks, nearly a million people have made their way out of Dhaka. The media reported long queues for tickets that could have been easily purchased using MFS—a facility made available since late last year. Had our policymakers been farsighted enough to anticipate this rush ahead of the “holiday” declaration and had done a better job of making it known that such facilities are available, the travelers may have had a much lower likelihood of exposure than they did waiting in line for tickets. However, the benefits of MFS can still be reaped by those who remained. For example, a live-in domestic worker who has stayed back in the city in order to work is still in a position to send money home instantaneously through MFS, like any other month.
As social isolationism takes hold, startups and online retailers are taking advantage of MFS. Take Prakriti Farming for example, which provides fresh organic products through their app and website. Their orders have nearly doubled since the crisis hit, along with the request to pay through MFS. According to its CEO, as some of the staff have decided to move back to their village homes, for the time being, she is fully utilizing MFS to pay their arrear salaries. Larger online platforms are similarly following suit—Pathao for example now offers contactless deliveries where the buyer pays through MFS and the delivery person leaves the packages at a requested location. Lastly, a number of pharmacies (such as Ousud) are providing medicine delivery services much like Pathao and Prakriti. These services could also be beneficial to large companies, such as in the readymade garments industry, were paying salaries through MFS can greatly reduce exposure on payday. While many RMGs have adopted this technology, full immersion is still a work in progress.
Let us now move on to the health sector. As we are fully cognizant, the limited number of testing centers in the country are likely to fuel the virus rather than abate it, as crowds throng to the locations to get tested. To reduce crowding and exposure, the government can adopt a policy where upon request, someone from the testing center goes to you personally for testing. Once completed, the results can be shared via electronic means. The payment can easily be done via MSF. Take Praava for example. They are providing online consultation with patients to keep people at home, with the added provision of dropping off and picking up medical samples. If the government takes into consideration the benefits of such public-private partnerships, it can go a long way to flatten the curve.
Since I am touting the benefits of MFS, I want to point out some of the weaknesses as well. First, any withdrawal of cash imposes prohibitive costs on the account holder and is regressively discriminatory towards the poor. The government should, at least for the time being, consider a reduction or cancellation of all taxes imposed on these services. They must also take steps to ensure inter and intra-operability among MFS providers and other financial institutions to reduce bottlenecks so as to benefit customers in these times of need.
How exactly this pandemic will alter our world remains to be seen, but the impression it leaves will be indelible. The way we look at the world around us will have to adjust as we settle into the new normal, and mobile financial services can play a small but significant part. But for it to do so, some issues need to be kept in mind. Many in our country are still reluctant to make the switch from “tangible cash” to mobile money due to inertia—MFS can take this opportunity to propagate this behavioral change and take us forward towards a cashless society. In addition to increasing the accessibility to MFS, the government should also maximize its adoption of electronic payment services for payouts such as social security payments, salaries of government employees, etc. Lastly, MFS organizations must ensure the safety of their agents. They are the backbone of the network and often serve as the sole point of access to MFS for the poor. It is not clear at this stage what protection mechanisms are being put into place for these workers. In the event of an absence or unavailability of agents, the MFS organizations should have a detailed contingency strategy. Keeping this in mind, MFS organizations should invest enough time and resources to update their clients in detail on how to adapt to the crisis without interrupting their services.
Mobile phones were named so because they are portable and are able to receive radio frequencies while on the move. Though we are rendered immobile for the time being, they are now allowing our money to travel freely as well. The onus of whether we are able to maximize the benefits of these services rests in our hands.
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