Promoting inclusion through digital solutions
Written by Beza Teshome and Benjamin Cok.
There are communities around the globe who are underserved in access to goods and services because of their remote location or a lack of infrastructure. Digital solutions serve to bridge these barriers to digital inclusion and enable the delivery of the services these communities need to change their lives for the better. IAP’s ongoing investment in inclusive businesses brings digital remedies to development challenges.
ChapChap Africa based in Uganda, address the fact that only 16% of the population have bank accounts, and more than 65% depend on informal sources of finance to satisfy their demand for credit (World Bank, 2017). ChapChap offers a digital platform where users can access financial services from a place and time of their convenience. Individual subscribers can make online payments for services such as utilities, telecoms and manage money transfers. In addition to these services, businesses benefit further from features which allow them to easily keep track of their sales, finances, and inventory.
This is especially advantageous for small businesses who do not have the know how to manage their books or do not have adequate resources to recruit an expert to perform these tasks for them. The system also uses the financial transaction data of subscribed MSMEs to build their financial profile, paving the way for them to access loans without collateral. ChapChap partnered with IAP to scale the use of its digital payment platform and has since expanded to 39 new Ugandan towns, registering more than 3.2 million users and serving more than 20,000 MSMEs. The company has recently received an equity investment from Nordic Impact Funds to further expand its services in Uganda and beyond.
In Zambia, Medeem works to formalize land rights for low-income people by digitizing the process. The country has two land tenure systems, state land and customary land, which accounts for 90% of land ownership. While a title deed can be acquired from the government for state land, customary land is given by a village chief or headman through an oral agreement. Rural dwellers who obtain land through the latter system do not have formal ownership rights and often suffer from disputes over land ownership. This sees land left idle as they do not feel secure enough to invest in it.
Medeem brings a solution to this problem by providing land ownership documentation as a form of land security by collecting and digitalising land-tenure information. Once finalised, Medeem sells the certificate to the individual. The service that would cost USD 2000 to 3000 when processed through the government, is provided by Medeem at an expense of only USD 10 to 50, making Medeem’s solution to land rights formalisation accessible and affordable to rural communities. Over Medeem’s partnership with IAP, 6134 households acquired land rights certification.
Medeem is also working on connecting registered landowners with investors and off-takers in agriculture. Access to land security has enabled smallholders to realise economic gains through land cultivation and credit access by using the certificates as collateral. This was validated through an impact study conducted taking 286 of Medeem’s customers; 87% said that the service had improved their quality of life. One of the clients said, ‘I use my land to cultivate some crops which I sell to my community, and this has helped me to make some money for my family’, and another said, ‘I am now free to develop my land with a free mind.’
Another company utilising digital means to deliver its products to remote communities is Winsol. Operating in Ethiopia, Winsol is involved in importing and assembling solar home systems. Access to grid electricity in rural Ethiopia ranges from 5% to 20%. Demand for solar powered lighting products, which offer a clean and affordable alternative to kerosene lamps, is high. However, the initial investment cost of quality solar products is too high for low-income people living in rural areas. To contribute towards alleviating this burden, in partnership with IAP, Winsol introduced Pay-As-You-Go enabled solar home systems.
The solution empowers users to purchase quality solar home systems through a lease-to-own method. Clients pay for the product in monthly instalments by entering codes received from the company into a mobile payment platform. Once the payment is done, the product is unlocked for use until the next payment schedule. This process continues until the client completes paying for the full value of the product, after which the client owns the product. In the timeframe of IAP support, more than 8000 low-income consumers have gained access to solar home systems through this scheme and the company continues working to reach more clients.
Be it to facilitate access to finance, land rights formalisation or access to clean energy, digital solutions serve to break barriers encountered in more conventional ways of service delivery to enable underserved communities to gain access to resources they were previously lacking. Moreover, private sector investment to deliver digital solutions further augments the impact on these communities by ensuring sustainability whilst giving businesses access to markets with untapped opportunities. In Africa, as elsewhere, going digital is no longer an option it is the default.