Insights | Why Experience Matters: Choosing the Right Payment Partner for Your Aid Disbursement
In recent years, African countries have faced a significant increase in natural disasters, economic crises, and regional conflicts, leading to an increase in displaced people and an urgent and escalating need for efficient aid disbursement.
To illustrate this scale, consider South Sudan, which needs humanitarian help for an estimated 9 million people (73% of the population). Similarly, the ongoing conflict in the Democratic Republic of Congo’s eastern region has displaced 3.3 million people (half of whom are children). And in Ethiopia, prolonged droughts have contributed to the need for urgent humanitarian support for nearly 30 million people, including 12.5 million children.
During civil unrest and crises, mass movement and resettlement of refugees into host countries are always at the top of the national agenda. While policies might allow for such settlements, financial services are sometimes restricted for multiple reasons. This leads to individuals losing their vital income lifelines and being unable to find new income-generating activities. Even when accessible, the sudden influx of displaced individuals can overwhelm the financial services sector, leading to struggles in meeting the demands for rapid, near-instant and reliable aid delivery. This has contributed to increased advocacy for providing more cash-based assistance, which is disbursed physically or digitally and is credited with ease of receipt and choice for empowerment of recipients.
Another example of aid funding is the provision of financing to farmers, a critical support mechanism in regions where agriculture drives the economy but is endangered, such as in the Democratic Republic of Congo. Given the importance of smallholder farmers, who have been recorded to provide up to 80 per cent of the food supply in Asia and sub-Saharan Africa, developmental organisations have also prioritised financial support to improve their economic and social conditions. Whether for purchasing seeds or modern equipment, this financing is vital for sustaining agricultural productivity and ensuring community resilience against economic and environmental shocks like climate change or an epidemic breakout.
For example, our partner One Acre Fund provides farmers with training, products like seeds and fertilisers, access to credit facilities, crop finance, and cash crop purchases. Of course, with a credit model introduced alongside the complexity of loan disbursements, repayments from the farmers must be factored in.
Our fundamental belief is that there’s no one-size-fits-all approach to financial solutions for aid disbursement, especially within the fragmented nature of the African payments landscape. Each donor and recipient's needs, unique regional and local contexts, regulatory landscapes, and varying degrees of financial access demand a carefully crafted financial solution. As an established African-born payment network, our approach respects recipients' dignity and choice and solves donor organisations and humanitarian actors’ prevailing challenges.
Adaptive payment services for diverse aid challenges
Cash and voucher assistance programs have grown substantially in response to emergencies and as critical tools for social protection. For instance, the number of UNICEF country offices using cash transfers jumped from 16 in 2017 to 43 in 2022. These payments, from one-time to ongoing scheduled transfers, can be made through various channels like vouchers, bank transfers, mobile payments, and direct, physical cash handouts.
As expected, there are challenges with distributing cash in person. These include accountability issues, delays, and high costs, some of which burden recipients, especially those travelling long distances to receive aid. Thankfully, as cash and voucher programs have grown, so have digital payments in regions where many humanitarian organisations work.
However, setting up digital payments quickly during emergencies is tricky. The urgency of crisis response often demands rapid deployment and establishing the necessary digital infrastructure can be costly and complex. Turning to existing networks ready for immediate deployment can provide a timely solution.
Several other critical considerations emerge in this context:
- Ensuring the identity of aid beneficiaries before disbursement is vital.
- Given the urgent nature of humanitarian crises, the ability to process bulk payments quickly and efficiently becomes cogent.
- Some of our partners also require collection capabilities to receive repayments from recipients/beneficiaries in the formats that they choose to refund their loans.
- Adaptability to local contexts, ensuring an understanding of the local socio-economic landscape, financial access, regulatory environment, and technological infrastructure.
By understanding the distinct goals and objectives of different aid programs, we provide solutions that are effective and sensitive to the specific, regional, and regulatory contexts in which they operate.
Beneficiary-Centric Solutions
As mentioned earlier, the customisation of aid delivery is crucial as it is not exactly accurate to assume that all underserved beneficiaries can be reached through popular schemes such as mobile money.
Kenya has a 76% mobile money penetration rate, with near-universal adoption across genders. In contrast, Nigeria presents a more complex landscape, featuring both MNO-led and non-MNO-led(app-based) mobile money services and a 46% gender gap in mobile money account ownership. Additionally, with cash accounting for 54% of transaction volumes in Nigeria, agent networks also play a crucial role in facilitating transactions and reaching areas with limited mobile coverage. This disparity shows why donor organisations approach aid distribution by being beneficiary-centric and why Onafriq crafts disbursement strategies to ensure that support effectively reaches the most vulnerable.
Working with partners like One Acre Fund, World Vision, and Save the Children has been an incredibly rewarding experience. Along the way, we’ve learned important lessons, such as:
The importance of building trust and leveraging expertise
A successful aid disbursement strategy starts with building trust with your payment partner. By fostering a strong partnership, you can tap into their in-depth knowledge of local payment systems and dynamics. Your payment partner should not just process transactions; they should serve as a trusted advisor, helping to navigate the complexities of disbursement across diverse African contexts. Relying on our insights allows our partners to effectively address regulatory challenges, technological obstacles, and the needs of beneficiaries.
Prioritising context-driven payment solutions
As established, no single payment solution is suitable for all cases of aid disbursement in Africa. The diversity of our financial ecosystems necessitates a context-driven approach. By working closely with your payment partner to identify methods that not only align with your program's goals but also resonate with the financial habits and infrastructure of the local community, you can ensure that aid is delivered in a manner that beneficiaries can easily access and trust. This could involve leveraging mobile money in regions like Kenya while considering agent networks or hybrid models in areas with lower digital penetration, such as Nigeria.
Building long-term strategies with measurable goals
Successful aid disbursement is not just about immediate impact but also long-term sustainability. Working with your payment partner to create a clear strategy and defining measurable success indicators (KPIs) is crucial for sustained impact.
By aligning on shared objectives, you can create a resilient partnership that adapts to changing needs and continuously improves outcomes for recipients.
Our commitment to simplifying payments and a proven track record of reliability position us as the ideal partner for aid disbursement. We are equipped to adjust quickly and thrive in the vastly fragmented payment landscape, which has been a great relief for partners actively disbursing aid in multiple countries simultaneously.
At Onafriq, we have first-hand expertise about the varying payment cultures across the continent, and that’s why we have built our payment ecosystem into a network of networks. We connect over 500 million mobile money wallets, 200 million bank accounts and 460,000 agents in Nigeria. Our omnichannel network, which connects with the most mobile money providers in Africa, allows our partners to send money domestically and across borders to beneficiaries directly into mobile wallets, prepaid cards, bank accounts and through cash pickup agents.
We take pride in our network, which empowers charities by streamlining operations through bulk aid payouts, and when needed, efficient bulk payment collections. We remain committed to supporting humanitarian efforts with reliable and adaptable financial services tailored to those in need.
Would you like to speak to one of our aid disbursement experts? Leave us a message here.
Some stories we’re especially proud of:
- How Onafriq helped small-scale farmers get paid more with TruTrade:
We partnered with the agricultural organisation TruTrade to enhance financial transactions for small-scale farmers in Kenya and Uganda. Our partnership ensured that farmers received a fairer share of the value of their produce. Critical aspects of our collaboration include:
- Integrating TruTrade's platform with our network facilitated direct digital payments to farmers, making transactions quicker, more secure, and fairer.
- Enabling TruTrade to instantly issue payments in multiple currencies to their members while ensuring accurate transaction records for reconciliation purposes.
By developing customised features tailored to support adoption and growth among small-scale farmers, the program successfully launched 13 franchises, supporting an average of 114 farmers monthly over seven years.
The shift from cash payments to digital also reduced risks associated with personal safety and fraud, as funds transferred to franchise agents in the field became more secure. Through our cards program, we also introduced a prepaid wallet solution in Zambia for farmers to receive government subsidies.
Working with M-KOPA to scale digital financing for SMEs in Uganda:
As a leading fintech, M-KOPA provides digital financial services and products to individuals with limited access to traditional banking. Despite the digital nature of its financing solutions, M-KOPA manually processed bulk mobile money payments to its extensive network of sales teams in the field. M-KOPA sought a single solution to streamline payment processing and reconciliation procedures and Onafriq delivered with a 33% month-on-month transaction volume growth in 2023.
>>> Watch how we helped M-KOPA disburse loans to SMEs in Uganda.
