By Yaa Asamoah Boateng

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Agent networks play a critical role in the uptake of digital financial services. They make financial transactions easier as they improve accessibility and offer convenience. Consequently, agent networks have expanded financial inclusion to underserved and marginalized groups such as women, youth, and rural communities.

However, despite the significant contributions that agent networks make toward financial inclusion, there is still a lot of room to grow access and usage, especially for users outside of urban areas. Improvements to the agent network distribution model by implementing, for instance, shared agent networks, women agents, MSMEs as agents, etc., significantly impact the expansion of digital financial services. In Zambia, for example, UNCDF and partners tested Innovative Shared Space Agent Hub Models to increase access and usage of DFS among rural populations.

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In Ethiopia, the United Nation’s Capital Development Fund (UNCDF), through its Digital Financial Services for Resilience (DFS4Res) Programme, funded by the European Union (EU) and in partnership with the Organization of Africa, Caribbean, and Pacific States (OACPS), is supporting institutional partners in the country with technical expertise and capital to promote an inclusive digital economy, through enhancing the agent network model. This is happening at an exciting time in Ethiopia, particularly for the growth of its digital financial services ecosystem, as the country is liberalizing its economy by opening up the telecom sector, and the banking sector, allowing foreign companies to operate in Ethiopia and nonbanks to issue e-money.

There is therefore a critical need for innovation in Ethiopia’s current agent distribution network if underserved constituents can benefit from these services. Some key challenges hampering the growth of access points in peri-urban and rural areas include:

• The low coverage of financial services – financial institutions focus mainly on marketable parts of society. This is illustrated by the fact that nearly 50% of ATMs and 77% of POS machines are in Addis Ababa alone.
• For a long time, most banks and MFIs used their existing infrastructure and branch networks to onboard agents to offer mobile money services. However, many agents remain inactive or dormant.
• Due to competing demands from their core business, no considerable investment is made in agency banking to successfully deploy and manage the agents.
• High costs in scaling to rural communities since high investments are required to upskill customers with low levels of digital financial literacy.

Despite these challenges, there is a high potential to expand digital financial services in Ethiopia and increase users, as the total addressable market is vast and promising. Private sector players are eager to address some of these opportunities, especially mobile money providers looking for third parties with innovative solutions that can help them overcome some of these challenges and expand their services to the rural economies.

The ‘Tegera’ Project: Expanding the Agent Network in Ethiopia

UNCDF is collaborating with Highlight Trading (one of the largest agent distribution network companies and one of seven exclusive agent network managers onboarded by EthioTelecom) on the ‘Tegera’ project to develop an innovative and scalable agent distribution model that caters to underserved and unreached population segments. ‘Tegera’ refers to an old type of money in Ethiopia.

The ‘Tegera’ pilot, will identify, train, activate and monitor 2,000 agents, out of which 50% will be either women or persons under the age of 35. It is expected that 50,000 customers will be onboarded, targeting 50% women users or persons under the age of 35. The other major focus of the project is the implementation of a digital agent management tool that will help Highlight Trading run its agents in a more innovative way.

Ultimately, there are three areas in which UNCDF expects the pilot to make inroads. The first is access to financial services. Highlight Trading will develop a digital agent management platform to better manage and expand the agent network. This will increase efficiency and expand the reach of digital finance products to marginalized segments.

Secondly, Highlight Trading will ensure its agents have a wide range of innovative digital products and services for their clients. This will be done in partnership with EthioTelecom and other financial service providers. This will improve the use of digital financial services and allow agents to generate revenue to sustain their businesses. It will also create a vibrant digital ecosystem around the agents’ business and community.

Without digital skills and capabilities, uptake of digital financial services is very limited. For this reason, the pilot will also focus on improving digital literacy. Agents play a key role in teaching customers how to use digital financial services. Therefore, Highlight Trading will provide training to their agents on new products and refreshers for existing services to increase their knowledge and confidence.

Agents Scaling Digital Finance Through Unique Business Cases.

Since the commencement of the ‘Tegera’ project in March this year, Highlight Tradings has embarked on an ambitious agent recruitment drive to expand its existing distribution network across the country, recruiting over 1950 potential agents, of whom 578 are women. Over 998 have so far been oriented and are being onboarded and trained to become agents in various parts of the country.

In addition to airtime sales, most of Highlight Trading’s existing agents provide the Telebirr mobile money service, allowing customers to make various financial transactions using their phones. These services include cash-in, cash-out, airtime top-up, utility bill payment, and payment for goods and services. Particularly for agents in peri-urban areas, these innovative financial offerings beyond payments mean a more viable business case as they can generate more transactions per customer. Telebirr service currently has over 25 million subscribers, ninety thousand agents, and over twenty-three thousand merchants.

Depending on the location of a Highlight Trading agent, they may offer a particular service or identify a unique business case as their primary offer. This is the case in both urban and peri-urban areas. In Addis Ababa, one of Highlight Trading’s top-performing agents, a small local store owner located at Piassa, at the heart of Addis has utility bill payments as her primary business case, meaning that the bulk of her transactions is from the payment of utilities, digitally. Her work as an agent contributes more than 50% of her daily proceeds, topping the sale of general mer