By Helen Mant
It is estimated that less than a quarter of adults have access to formal financial services in Africa. The lack of access to financial institutions makes it difficult for low-income consumers to make sustainable investments in their families and businesses. To address this, mobile technology is being leveraged to unlock and dramatically increase financial inclusion.
In 2011, Visa and the Government of Rwanda forged a partnership to boost financial inclusion in the country by leveraging mVISA, a new fully interoperable mobile money platform aimed at providing Rwandans with mobile banking services.
Visa engaged the IGD Advisory team in 2012, to conduct an independent evaluation to measure the socioeconomic impacts of the public-private partnership. IGD reviewed data on the partnership and interviewed key stakeholders from the Rwandan government, local banks and Visa to gather insights for a comprehensive impact assessment.
The assessment concluded that this public-private partnership demonstrated a new model for doing business in emerging markets, which laid the groundwork for enhanced financial inclusion in the country.
As many companies seek to identify and leverage opportunities to achieve inclusive growth and the Sustainable Development Goals (SDGs), public-private partnerships are critical to their success. Many of the lessons learned from our assessment are increasingly relevant to building successful public-private partnerships.
Key Impacts Resulting from Partnerships Between Visa and the Government of Rwanda
The IGD Advisory team produced an impact assessment report, “The Business of Financial Inclusion”, that revealed a transformative partnership between Visa and Rwandan government that enabled the government to achieve objectives of “electronification” of the economy and increasing financial inclusion for the country by creating a stable financial system and promoting innovation, accessibility, and affordability in electronic payments system.
Additionally, the partnership created an environment for increasing financial inclusion in Rwanda and beyond by enhancing financial literacy through a range of grassroots activities and shifting financial cultures to increase the adoption of mobile banking.
The partnership set the benchmark for successful public-private partnerships (PPPs) across Africa and other regions of the world. More importantly, it enhanced the attractiveness of Rwanda as an investment destination by demonstrating that international companies can successfully operate in the country.
Success Factors of the Partnership
The IGD Advisory team emphasizes that the critical success factors of the Visa-Government of Rwanda partnership are relevant for successful business operations and public-private partnerships.
First and foremost, the government of Rwanda’s approach to achieving a business-friendly and results-driven government has created an enabling environment for Visa to invest in the country. Particularly, the government of Rwanda and Visa’s willingness to be open and make a commitment that goes beyond financial support ensure that both parties can learn from each other along the way.
“Visa is one of the biggest corporates we’ve had such a close relationship with,” said Kampeta Pitchette Sayinzoga, then Director of Cabinet in Office of the Rwandan Prime Minister. “They have a very humble attitude—respectful and mindful that the government is not a corporate, and may have a different agenda.” The approach to embrace and cherish cultural differences has contributed to 60% of the partnership’s success.
In the course of the impact assessment, stakeholders from Visa shared with us that companies should have a long-term view and take a business-driven approach.
“We make trade-offs between spending in Rwanda and supporting products and businesses in other markets,” the Visa team pointed out in the report. “It’s not about Corporate Social Responsibility first and making money second, or vice versa. In reality, we are doing both—the payback time will be longer than for traditional products, but we will make money in the long run.” Their experience made it clear that companies can gain tremendous business benefits from their involvement in the partnership.
Another critical factor is the pragmatic and democratic approach to governing the partnership. Both the government of Rwanda and Visa have focused on actions and outcomes. They tried hard to avoid deadlock due to forced consensus on every issue, and gradually fostered mutual accountability which has enabled the partnership to flourish over the last 6 years
Key Lessons for Successful Public-Private Partnerships in Africa
The transformational partnership between Visa and the Rwandan government demonstrated a new model for doing business in emerging markets as an increasing number of companies are seeking to invest in Africa.
As greater numbers of companies seek to invest in Africa, the model proves that large multinationals can effectively and profitably address local development challenges through their core business operations by constructively engaging the government.
The role of multinational companies is not to dictate policy, the report noted, but to identify the common objectives that can create shared values. In particular, companies need to be flexible and prepared to embrace “scope creep” in the areas of alignment with the African government.
To achieve faster localization, companies should invest early and upfront in a local presence once a partnership or joint initiative has been agreed on. Staff relocation, local employment are all crucial steps to help the companies gain a greater market coverage.
“The practical and psychological benefits of having people on the ground can be highly significant to the success of the initiative and signifies commitment to key local stakeholders,” emphasized Sayinzoga in the office of the Rwandan Prime Minister.
“Local presence is crucial,” said Sayinzoga.
Within the context of this partnership, Visa’s own restructuring meant that several key members of the partnership team moved on to other projects, but the partnership continued to function effectively and has produced long-term results.
Helen Mant is Senior Advisor for IGD Advisory.
>> Read the full impact assessment report “The Business of Financial Inclusion”.
>> Learn more about IGD’s work with Visa to boost financial inclusion in Africa.
>> Learn more about IGD’s Advisory Services, please click here.
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