Mobilizing Myanmar: A Smartphone Revolution Connects The Poor With Economic Opportunity

"A majority smartphone market could serve as an ideal lab environment to test how mobile money could disrupt entrenched social and financial structures that have kept most people - especially women, ethnic minorities, and rural farmers - in deep poverty."

In 2014, less than 10% of Myanmar's population had access to a mobile phone; 3 years later, over 90% of population has 3G coverage, and 83% of households have mobile phones. This report explores the transformation underway in Myanmar and the opportunity for digital financial services (DFS). It shows that Myanmar has progressive mobile financial services regulations and 3 mobile network operators (MNOs) actively working to connect rural and urban populations with financial services. (Despite the rapid uptake of mobile technology, Myanmar remains one of the least developed financial systems in Southeast Asia. Only 2% of adults have a debit card.) Commissioned by the Bill & Melinda Gates Foundation, the report shows that thoughtful implementation of DFS could transform the lives of economically poor and marginalised peoples in Myanmar, providing a path out of poverty. "The combination of inexpensive smartphones, rapid expansion of rural connectivity, technology adoption among a disproportionately high number of youth and the rural population, all combine to create a crucial tipping point to ignite mobile financial services in the country."

The report is based on country-level diagnostic that leveraged data from the Central Bank, Ministry of Communications, the 3 telecommunication companies operating in Myanmar, Facebook, Viber, a nationally representative information and communication technology (ICT) survey of 7,500 households, and recent census data from the United Nations Population Fund (UNFPA). Over a 3-month period, the multilingual research team also conducted interviews with more than 150 people in rural and urban areas about their mobile phone usage, financial lives, and challenges and hopes. Most surveys on Myanmar telecom usage have focused on the majority Burman population in Yangon, Naypyitaw, and Myanmar's central lowlands. Their goal was to supplement this quantitative information with a qualitative snapshot of migrant and ethnic border areas where economically poor, ethnic, and marginalised people live. "Our observations and interviews validate the statistics about smartphone usage. Even in rural villages with no running water, no roads and no school past fourth grade, our team found paddy rice farmers using smartphones, often charging their batteries with a cheap solar panel embedded in the leaf roof of their bamboo homes. We were particularly intrigued by the varied stories of street vendors, usually entrepreneurial women who serve as hubs of the informal economy. They'd be ideal to consider as cash-in cash-out agents as they are already engaging in community transactions." Portraits of individual interviewees are included in the report, along with suggestions for each about how DFS could help.

In addition to providing a snapshot of interviewees, the report examines mobile phone use, access to financial services, and DFS in the country. The reader learns, for example, that, given the lack of access to banking, the people of Myanmar rely on unregulated financial service providers in an agent-to-agent informal financial payment network called Hundi. Hundi networks transfer cash payments and remittances throughout the country as well as from Myanmar's migrant workers abroad. The latter will be a key population to reach in future efforts because they have a higher rate of mobile usage, higher rate of women users, and, as early adopters, they are likely to drive in-country usage.

Another population whose needs are highlighted by the research is women, only 0.01% of whom have access to credit with a formal financial institution regulated by the Central Bank of Myanmar. Even the few who have bank accounts have difficulty accessing credit, according to the report, because most lending to small and medium enterprises (SMEs) is based on collateral. Because of the gender gap in asset ownership, it is difficult for women to secure a loan. In addition, Myanmar women face a significant gender gap in mobile ownership. However, since many more women own mobile phones (52%) than have access to bank accounts, "it appears mobile financial services would be the most feasible way to open financial access to women in Myanmar. As Myanmar builds out its cash-in cash-out network, regulators are considering a mandate that at least half of all the cash-in cash- out agents in Myanmar are women. If implemented, that requirement would go a long way toward integrating women into the formal economy as both agents and consumers. Daughter-to-mother technology transfer could speed the adoption of digital financial services among middle-aged women, the generation that holds economic power within the family and makes decisions about spending on family needs. (See Women, Section 5, page 38.)"

As noted here, the new Myanmar government, led by Aung San Suu Kyi, has vowed to provide nationwide "universal financial access" by the next election cycle in 2020. To open up the payment industry and support the Myanmar government's national goals of inclusive economic growth, greater financial inclusion, reduction of corruption, and elimination of shadow economies, the Central Bank of Myanmar has eliminated all existing restrictions in order to welcome all international payment providers to Myanmar. Its progressive Mobile Financial Services (MFS) regulations mean that there are also opportunities to test new innovations, such as using smartphone technology with Quick Response (QR) codes, social-media-integrated payment systems, and biometrics payments.

"Ultimately, the success of mobile financial services will depend on creating awareness of products, confidence in using the system, and access to cash in/cash out agents in the vicinity. It will also require digital literacy to establish privacy and security so that users can build confidence and trust in the mobile financial ecosystem. This education effort will require a wide range of partnerships including, for example, reaching out to teachers and health workers to help educate and promote mobile financial services. Existing trusted hundi networks combined with more than 100,000 sellers of airtime across the country are poised to be converted to a truly pervasive cash-in/cash-out agent network. Ensuring at least half the agents in the country are women during buildout will go a long way toward integrating women into the formal economy as both agents and consumers."