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Haiti Mobile Money Initiative - Case Example of Incentive Prize Competition

Haiti Mobile Money Initiative - Case Example of Incentive Prize Competition

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Published by vjgoel07
How the Gates Foundation's Haiti Mobile Money Initiative leveraged a $10M Prize to incent the creation of mobile financial services in Haiti following the 2010 earthquake
How the Gates Foundation's Haiti Mobile Money Initiative leveraged a $10M Prize to incent the creation of mobile financial services in Haiti following the 2010 earthquake

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Published by: vjgoel07 on Jun 18, 2012
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08/21/2013

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©2012 Goel Insights, LLC. All rights reserved
Haiti Mobile Money Initiative
Incentive Prize Competition
CASE STUDY
Version 1 - April 25, 2012
Authors:
Vijay Goel, MD
Principal, Goel Insights 
Salah Goss
Financial Services for the Poor,Bill & Melinda Gates Foundation
 
www.innovationinthecrowd.com
1
an
 
initiative
 
of
CASE EXAMPLE—INCENTIVE PRIZE COMPETITION
HAITI MOBILE MONEY INITIATIVE
©2012 Goel Insights, LLC. All rights reserved
OVERVIEW
The 7.0 earthquake that struck Haiti in January 2010 killed over 300,000 people,displaced an additional 500,000, and ruined about a third of the country’s formalbanking infrastructure in earthquake affected areas. Prior to the earthquake,76% of Haitians lived on less than USD $2 per day. Haiti suffered from chronicproblems of food insecurity, hunger and political instability and was classified asthe poorest country in the Western Hemisphere. Many of those who survivedthe earthquake had previously depended on the dilapidated and overcrowdedbanking and payments infrastructure that now lay in ruins. Rebuilding their livesand the economy would require a new model for financial services. This crisiswas an opportunity to radically change how financial services were brought tothe people of Haiti, ensuring that access to cash and services took place morequickly and more conveniently.Sensing an opportunity to accelerate reconstruction efforts while at the sametime setting the basis for longer-term development, the Bill & Melinda GatesFoundation and US Agency for International Development (USAID) examined thetools they could use to quickly restore access to financial services in Haiti. BothUSAID and the Gates Foundation desired to improve the welfare of Haitians living
HMMI REQUIREMENTS
First-To-Market 
 
¾
$2.5M awarded to first operator tolaunch qualifying services within 6months of the HMMI announcement.Operator must have processeda minimum of 100 qualifyingtransactions at each of 100 newoutlets during that 6-month period.
¾
$1.5M awarded to the secondoperator to launch qualifyingservices, or for the first who doesnot meet the 6-month deadline butdoes launch such services within12 months of announcement.Two equal awards of $1.5M is apossiblity.
Scaling Award: Incentive to reach scale 
 
¾
$6M in awards available tooperators in proportion to eachoperator’s contribution to marketscale.
¾
Scaling award eligibility starts onthe first of the month followingthe public announcement of thewinner of the First-to-Marketaward, or on June 10, 2011,whichever comes first.
¾
An award made against materiallyincorrect self-reports must bepromptly refunded.
¾
Only Qualifying Transactions willbe counted.
¾
No Scaling Awards will be madeafter 24 months from the date ofthis announcement.
 
¾
Eligibility Tranches:
1.
$10 per transaction will beawarded in proportion to
(continue) 
   P   h  o   t  o  c  o  u  r   t  e  s  y  o   f  :    B   i   l   l    &    M  e   l   i  n   d  a   G  a   t  e  s   F  o  u  n   d  a   t   i  o  n   /   N  a   t  a  s   h  a   F   i   l   l   i  o  n
 
www.innovationinthecrowd.com
2
an
 
initiative
 
of
CASE EXAMPLE—INCENTIVE PRIZE COMPETITION
HAITI MOBILE MONEY INITIATIVE
©2012 Goel Insights, LLC. All rights reserved
in poverty, whose situation was exacerbated by the devastation of the earthquake.They thought to leverage the potential of lower cost mobile technologies toprovide financial services rather than wait to rebuild more expensive physicalbank branches. In the context of post-earthquake Haiti, for both USAID andthe Gates Foundation, a prize was preferable to a traditional grant. From theirexperience, they knew that awarding money to ambitious proposals often entaileda lengthy process of proposal submission and review. Instead, they decided toutilize an Incentive Prize Competition to encourage multiple players to build therequired infrastructure and prove they could successfully engage people on theground. The Incentive Prize Competition model also has the benefit of engagingmultiple stakeholders simultaneously while paying only for success. Competitiveforces in the telecommunications and banking industries could be harnessedto focus on solving a specific problem, thereby transforming otherwise high-risk investments into potentially high-reward technology innovations. Withthe participation of the public and NGO sector, private companies could beincentivized to put up large amounts of capital toward developing commercialservices that had far reaching social benefit.The Haiti Mobile Money Initiative (HMMI) was established in June 2010 forthe purpose of expanding access to financial services, especially where bankbranches were nonexistent or had been destroyed. Funded by the GatesFoundation, HMMI is a $10M prize fund created to incent development andscaling of mobile banking services in Haiti. HMMI offered rewards for thefirst two companies to deploy a qualifying service and all companies thatsubsequently contribute to the scaling of the Haitian mobile money marketto 1M and 5M transactions. Up to $5M in USAID grants are also availableto provide technical assistance in overcoming obstacles encounteredin deploying the service. Haiti Integrated Financing for Value Chains andEnterprises (HIFIVE), funded by USAID and staffed by World Council of CreditUnions (WOCCU) was working with the financial sector to develop mobilemoney prior to HMMI and was a good choice to administer HMMI locally.HIFIVE’s role as an administrator includes conducting verification of theprize claims and awarding the technical assistance grants. HIFIVE also worksclosely with the mobile money, banking and microfinance sectors to ensure aconducive environment for innovative financial services.By October 2011, $4M in prize money had already been awarded, as Digicel-Scotiabank successfully launched Tcho Tcho Mobile, the first mobile moneycontribution to the total, up to100,000 transactions.
2.
$2 per transaction will beawarded in proportion tocontribution to the totalfrom 100,000<x≤ 1,000,000transactions.
3.
$0.80 per transaction willbe awarded in proportionto contribution to the totalbetween 1,000,000<x≤5,000,000 transactions.
Qualifying Services 
 
¾
Full mobile wallet services (ableto deposit, withdraw, transfer, andmaintain a balance)
 
¾
Sustainable pricing
 
¾
Electronic value exchangeable forcash at outlets
 
¾
Mobile licenses and regulatoryclearance in Haiti
Qualifying Transactions 
 
¾
Must be part of a qualifyingservice
 
¾
Must be made against the mobilewallet
 
¾
Do not include in-group electronicgoods (e.g., phone airtime)
 
¾
Only counted when using NewOutlets (non- banking or moneytransfer outlets prior to 2010)
 
¾
Only count if successfullycompleted
HMMI REQUIREMENTS
(cont’d) 

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