Schools in Africa Aren’t Taking Advantage of Mobile Money – Why?

Demetria wakes up before dawn to set out on a four-hour journey by foot and bus through the Ugandan countryside to the closest city (cost: $2). Once there, she waits in line at the bank to deposit her child’s school fees in the school’s account (cost: $1.50). Two hours later, she emerges with a receipt that must be hand-delivered to the school, about two hours away by bus (cost: $1). When she arrives at the school, the headmaster sees that she has only paid half of what she owes. Her child will be permitted to attend school, but she must pay the balance within three weeks. Demetria returns home (cost: $1) just in time to begin the evening chores, having spent all day paying the school fee.

All told, Demetria spent $5.50 to pay school fees and lost potential earnings of about $3. And to make matters worse, she will need to repeat the entire process in just a few weeks.

Mobile money could make this process far cheaper and easier. If the school accepted mobile money, Demetria would be able to pay her child’s fees in a matter of minutes without ever leaving home. If she were unable to pay the full amount, she could make subsequent payments in the same manner. If other family members supported her child’s fees, they would also be able to submit payments directly to the school using mobile money to ensure the funds were spent on education. A digital savings product could help Demetria plan and save for the next term’s fees in a secure mobile money account. And if an emergency were to hit, access to digital credit could enable her to disburse payments using mobile money so that her child could continue going to class.

It sounds great, so why aren’t schools accepting mobile money on a larger scale?

Other than Cote d’Ivoire, where 99 percent of secondary school registration payments are made with mobile money, mobile money is not commonly used for school fee payments. Take Uganda and Kenya, for example. Both countries have relatively high levels of mobile money activity, yet very few schools outside of urban centers accept mobile money.

In Uganda, the mobile money infrastructure is still developing. The agent network is still such that people living in rural areas often have to travel some distance to reach an agent. That can certainly negate some of the benefits of using mobile money. There is also a lack of familiarity with mobile money among rural customers, so the process of paying school fees would require a customer to first register for a mobile money account and then figure out how to use it. These considerations are common to many markets where mobile money is still nascent.  

Beyond these structural factors, the real linchpin seems to be the schools themselves — not for lack of interest (though in some cases there are those who benefit from maintaining less transparent cash transactions), but for lack of systems and capacity. Shifting from cash to digital transactions is not an easy feat for any organization (ask microfinance institutions). But to do so at a rural school with inconsistent access to electricity, spotty mobile connectivity, and no computer is particularly difficult. Given these realities, it is not enough for mobile network operators like Safaricom or MTN to create a “Pay School Fees” option in their mobile money menus and hope that parents and schools use it.

An opportunity exists for companies to fill this gap and help drive the adoption of mobile money for school fee payments. What would this look like? The core of the solution could be a simple app running on an inexpensive smartphone or tablet at school. Through the app, a school could issue invoices to parents and others who support a student’s education. Payments could be made via mobile money and charged a typical mobile money transaction fee (most likely less than the total cost of cash payment) or potentially discounted or zero-rated. To help families get ahead of payments, financial incentives or rewards could be provided to those who prepay for the next term. The payment could include a unique student identity number, making it easy to correctly allocate the funds and reconcile payments against student accounts.

At the school, the bursar would no longer have to sort through stacks of paper receipts and meticulously record those payments in a paper ledger. Instead, the school would review a balance sheet in the app to see which students have paid and which have not. The app could also be used for other important tasks, such as recording attendance. Eventually, schools could also use the app to manage outgoing payments, such as teacher salaries and vendor payments, so that it would become a financial hub for the school.