Social cash transfers spur financial inclusion
UNICEF supports shock-responsive social protection in Malawi
A brown hen moves about with its chicks, looking for food in a compound, and the 64-year-old Grace Mulinde from Mackenzie Village, Traditional Authority (T/A) Matola in Balaka, cannot believe her luck as she stares with pride.
She has never owned chickens before, but making it on the Social Cash Transfer Programme (SCTP) list in 2021 made all the difference as she could finally afford them.
They have become her fallback plan whenever she faces financial constraints because, as they reproduce, she can sell some to get fast cash.
The transformation in her household as one of the 10,070 SCTP beneficiaries in Balaka is evident with the livestock she now owns and with improved access to nutritious food, farm inputs, a better house, and her grandchildren's education.
As the programme shifts from manual to electronic payments across the country, Balaka and Ntcheu districts have led in payment digitalization of the cash transfers through mobile money and agency banking platforms.
Mulinde, who looks after four children, is happy to access the funds through mobile money platforms, giving her the liberty to withdraw at her convenience.
"Electronic payments are better than manual payments. Some people have been attacked, and their money because thieves easily identified those who received the funds through the physical payment platforms. Apart from that, with mobile money, we can keep some of the money in the e-wallets for a while and use it for something valuable later,"
Correspondingly, Joyce Mun'deranji from Matalala Village, T/A Ganya in Ntcheu, who receives her money through FDH Bank’s Banki Pakhomo agency banking platform, hails the convenience of the e-payments. She can access her cash at the bank, an agent, or any Auto-Teller Machines (ATMs).
So far, 10 districts, including Ntcheu, Balaka, Kasungu, Nkhotakota, Karonga, Chiradzulu, Blantyre and Thyolo, have migrated their payment systems to the harmonised e-payment system, and now disburse cash to the beneficiaries of social support programmes such as SCTP and Climate Smart Public Works (CS-PWP) using banks and mobile money operators. UNICEF, with funding from the Government of Ireland, supported the district councils to transition their systems from manual to electronic payment systems.
For instance, in Ntcheu, each of the 14 378 cash transfer beneficiaries has a bank account, while their counterparts in Balaka, totaling 10 070, receive their monthly cash transfers through mobile money wallets.
FDH Bank, which manages SCTP disbursements in Ntcheu and other districts, offers savings and debit card services, including cash withdrawals, cash deposits, and mobile banking services to the social cash transfer beneficiaries.
Ministry of Gender, Community Development and Social Welfare Deputy Director for Social Welfare responsible for social cash transfers, Laurent Kansinjiro, said the e-payment system gives more freedom, safety and dignity to the beneficiaries.
"Beneficiaries no longer receive their money in cash, which was compromising their safety, security, confidentiality, and dignity. They can now access and use their money as and when they want to.
"The e-payments have also facilitated financial inclusion among the beneficiaries. It has also mitigated the fiduciary risks as councils no longer have to carry cash to pay beneficiaries at designated pay points," he says.
On challenges, Kansinjiro said, in some cases, beneficiaries, especially the elderly, reveal their pin to relatives who end up duping them. However, he said continuous awareness of the need to keep pins as confidential as possible is helping to mitigate the challenge.
Additionally, he said in some hard-to-reach areas, liquidity for agents is a challenge, especially for those receiving through mobile money.
But this is being addressed by engaging the service providers who, in turn, involve super agents as a backup to smaller agents each time funds have been credited to the beneficiaries.
UNICEF social protection specialist George Juwawo added the social cash transfer e-payments have significantly reduced the programme’s operational costs and improved its delivery.
"For the beneficiaries, e-payments have brought convenience, dignity, and financial inclusion. Cash transfers have spurred economic activities for the community, and households have increased their disposable income to ensure their children have food and good nutrition," said Juwawo.
He said UNICEF is working with the government and e-payment service providers to improve financial literacy among the beneficiaries and increase the number of cash access points to enhance user experience with the e-payment system.
Malawi’s Social Cash Transfer Programme is financed by multiple partners, including the World Bank, the Government of Ireland, Germany’s KfW, the European Union (EU), and the Government of Malawi.
