Central Bank Agrees to Continue and Expand Mobile Money

UNCLAS KABUL 003096

SENSITIVE
SIPDIS

DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A
DEPT PASS AID/ASIA BUREAU
CENTCOM FOR CSTC-A, USFOR-A
TREASURY FOR AWELLER, JCASAL AND MNUGENT

E.O. 12958: N/A
TAGS: EFIN EAID PGOV AF
SUBJECT: Central Bank Agrees to Continue and Expand Mobile Money
Pilot Project

REF: KABUL 3077


1. (SBU) SUMMARY: Afghanistan's Central Bank Governor Abdul Qadeer
Fitrat has agreed to extend indefinitely a mobile money pilot
(m-Money) with the Afghan National Police (ANP) in Wardak province.
In an October 1 meeting with EmbOffs, CSTC-A representatives,
m-Money program participants, and mobile telephone operating company
Roshan, Fitrat also authorized expanding the pilot with ANP to other
provinces as well as additional Afghan ministries. According to
Roshan, the program operator, and CSTC-A, the military element
overseeing the Wardak pilot, the program in Wardak province has been
very successful and ANP officers' take-home salaries are 30 percent
higher than when they received them in cash. Although there were
some administrative challenges in the initial stages of the Wardak
rollout, participants expect they will be overcome as the pilot
expands to additional provinces. Fitrat also discussed problems
Kabul Bank is having paying government salaries and asked Roshan
representatives to select m-Money agents carefully to ensure
customers are protected. Overall, Fitrat is satisfied with the
m-Money pilot and supportive of its expansion. END SUMMARY.


2. (SBU) On October 1, Treasury Attach and Senior Deputy
Coordinating Director for Development and Economic Affairs discussed
bank expansion and continuation of Roshan's ANP salary disbursement
project in Warkdak province, Jalreez district with Central Bank
Governor Fitrat. Representatives of the U.S. Training Command
(CSTC-A),which helped with coordination and implementation efforts
on this project, also participated. CSTC-A, along Roshan executives
outlined the Wardak pilot and argued to continue it and expand
m-Money services to additional provinces and Afghan ministries.
Fitrat agreed to continue the Wardak pilot indefinitely, expand ANP
pilots and explore additional pilots with other Afghan ministries
(e.g., Ministry of Energy and Water for payment of electricity
bills; payment of salaries for Ministry of Education).


3. (SBU) The combined Roshan/CSTC-A brief pointed out several
important aspects of the ongoing Wardak pilot project. First, the
ANP officers participating in the program are pleased with the
pilot's results. Several ANP officers reported their salary is 30
percent higher than they thought, an important metric demonstrating
the technology's ability to reduce skimming and other corruption.
Second, Roshan found the Ministry of Interior had not been fully
supportive or prepared to start the process when the pilot was
launched, failing to provide dedicated personnel resources. While
these problems were overcome during the pilot, a more robust system
is necessary for a broader roll-out of m-Money salary disbursement.
Finally, Roshan, CSTC-A, and the Ministry of Interior will continue
the pilot in Wardak indefinitely and begin similar pilot programs in
other provinces soon. CSTC-A presented Fitrat with notional
expansion provinces based on the following criteria: a) banking
payroll method; b) distances to and from the nearest bank versus an
M-Paisa agent; c) cellular telephone coverage; and d) the province's
threat level. Based on this assessment, CSTC-A recommended Patika,
Farah, Khost, Kandahar, and Ghazni as sites for additional m-Money
salary payment pilots.


4. (SBU) Fitrat also noted concern over Kabul Bank's inability to
deliver government salary payments before the Eid holiday and
indicated he would like to distribute government salary payment
contracts (which the Ministry of Finance competed and awarded to
Kabul Bank) among other banks or ensure Kabul Bank can improve its
capacity moving forward. On a similar note, Fitrat asked Roshan to
select its agents carefully and take precautions to safeguard its
customers. Roshan executives noted they are selecting and equipping
qualified agents and expect to have 500 in place nationwide by the
end of the year. They also told Fitrat negotiations are underway
with Azizi Bank, Maiwand Bank, and First MicroFinance Bank as
potential agents for M-Paisa (which is Roshan's m-Money platform)
and asked for his help in more successfully engaging licensed money
service providers.


5. (SBU) COMMENT: Fitrat praised all those involved in the project
using mobile banking to pay ANP salaries and its impact on spreading
technology to the local level in Afghanistan. He promised the
Central Bank will quickly address matters related to expanding
mobile money and offered to facilitate meetings with various
financial sector entities per Roshan's request. Following the
meeting, Roshan executives and CSTC-A both noted they were pleased
with the outcome of the meeting and would begin work immediately to
implement a broader ANP rollout, as well as new pilots with other
ministries. Regulations for m-commerce, which will formalize
procedures for m-Money transactions, are out for public comment and
due to be reviewed by the Central Bank's Supreme Council at the end
of October. Once adopted, Roshan and other service providers will
be able to move beyond pilots to full roll-out of these services
according to the regulations.

EIKENBERRY