‘Agent Cash’ addresses agent liquidity to expand financial inclusion in Zambia

FINCA Zambia partners with the  (UNCDF) to bring financial services closer to where people live and work 


Mobile money agents (MMAs) form the backbone of inclusive finance, bringing financial services closer to the unbanked and offering people the ability to move between cash and electronic currency at will. However, agents don’t always have enough resources at their fingertips. As such, agent liquidity and obtaining e-float has become a growing problem in places like Zambia, which loses about 225 million kwacha ($17.1 million) in the Zambian mobile money industry each year.

In an effort to find a solution to this vexing problem, FINCA Zambia partnered with the United Nations Capital Development Fund (UNCDF) in the piloting of a financial product (Agent Cash) that provides a revolving line of credit to agents without collateral. The purpose of the pilot project, which was conducted over a three-month period, was to gain feedback in order to better refine the product’s usability, viability, supporting processes and pricing.

How geography hinders liquidity

MMAs in Zambia face a number of challenges while managing the liquidity of their operations, and these challenges occur at different stages of the liquidity management process. Far too often, a customer visits an agent and is turned away, with the agent having neither enough cash on hand, nor adequate e-float to service the customer.

“In urban areas, eight customers are bounced by MMAs each day. In rural areas it’s even worse, with over 20 customers bounced daily,” says Weluzani Ziwa, Digital Financial Services Manager at FINCA Zambia.

To avoid bouncing customers, agents must regularly rebalance their accounts. However, the distance and time it takes to reach rebalancing points presents a major obstacle.

“The time frame to rebalance is problematic. Having to close down your booth or shop, and then get to and from a re-balance point presents a big challenge for many agents,” notes Mukuka Bwalya, Marketing Manager at FINCA Zambia.

The combination of having to close their business and long travel times, is particularly problematic for agents in rural areas. In fact, on average, rural agents lose about 4 hours of business every time they have to rebalance, whereas urban agents lose about 20 minutes. Not only does this come at a great cost to rural agents, but the inconvenience imposed on customers undermines their faith in the product the agents are providing.

Fintech as a liquidity solution

By partnering with UNCDF and MTN, Africa’s largest mobile network operator, FINCA Impact Finance helped create a product that offers agents a revolving line of credit that can be accessed remotely via mobile phone. This digital liquidity solution, which is essentially an overdraft account, reduces the frequency that agents have to visit a branch or re-balancing center. When an agent needs float, they simply log into their FINCA account and pull the money they need. Once registered it takes about two minutes!

On average, rural agents lose about 4 hours of business every time they have to rebalance, whereas urban agents lose  about 20 minutes.

Another advantage that Agent Cash provides is that it also enables agents to rebalance on weekends, holidays and in the evenings when banks and rebalancing centers are usually closed. In turn, they are able to execute more transactions per day, which increases the amount of money they can earn. Not only has this made doing business easier for the agents, but it has made the services they provide much more reliable.

A work in progress

While the Agent Cash pilot is still in its infancy and remains an ongoing process, FINCA Zambia’s Marketing Manager Mukuka Bwalya notes that the initial feedback has been encouraging.

“Early into the pilot, we noticed that some of the agents’ business lines started improving because they could easily pull funds from their FINCA Impact Finance account. This was because they no longer had to close-up shop and travel to a service center to rebalance their account. Instead they could do it on their mobile phone.”

Bwalya notes that Agent Cash is basically a savings account with an overdraft limit. This limit is determined based on the commission they earn with the MNO. She says the procedure for determining the limit is akin to a credit scoring process.

“We take a look at what their usual business looks like – how much they usually earn in terms of commission and what their transactions look like historically. From there we can set an overdraft limit.

Bwalya explains that they are still working on the product’s development and that there are still some tweaks and changes that need to be made. Once these tweaks and improvements are undertaken, FINCA Impact Finance can then think about rolling out the product full scale.

At the end of the day, FINCA Agent Cash is another example of how FINCA Impact Finance is leveraging fintech innovation to increase financial inclusion and bringing banking services closer to where people live and work.