Harvard Case - Roshan and M-Paisa: The Promise of Mobile Money in Afghanistan
"Roshan and M-Paisa: The Promise of Mobile Money in Afghanistan" Harvard business case study is written by Farah Kurji, Ning Su. It deals with the challenges in the field of Strategy. The case study is 15 page(s) long and it was first published on : Mar 8, 2019
At Fern Fort University, we recommend that Roshan adopt a multi-pronged strategy to solidify its position as a leader in Afghanistan's mobile money market. This strategy involves leveraging its existing infrastructure and brand recognition to expand M-Paisa's reach, enhance its functionality, and build a robust ecosystem of partnerships.
2. Background
The case study focuses on Roshan, Afghanistan's leading telecommunications company, and its mobile money service, M-Paisa. Despite facing challenges like limited financial inclusion, a volatile political landscape, and a lack of trust in traditional banking, Roshan saw an opportunity to leverage mobile technology to provide financial services to the Afghan population.
The main protagonists are:
- Roshan: A telecommunications company with a strong market position in Afghanistan.
- M-Paisa: Roshan's mobile money service, aiming to provide financial services to the unbanked population.
- Afghan people: The target market for M-Paisa, facing challenges with financial access and trust in traditional institutions.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Strong brand recognition: Roshan enjoys strong brand recognition in Afghanistan, providing a foundation for M-Paisa's success.
- Extensive network coverage: Roshan's extensive network coverage ensures widespread accessibility for M-Paisa.
- Experienced team: Roshan possesses a team with expertise in telecommunications and financial services.
- First-mover advantage: Roshan was a pioneer in the Afghan mobile money market, giving it an early advantage.
Weaknesses:
- Limited financial literacy: The Afghan population lacks financial literacy, hindering adoption of mobile money services.
- Security concerns: Security concerns regarding mobile money transactions can deter potential users.
- Limited functionality: M-Paisa's functionality is currently limited compared to more advanced mobile money platforms.
Opportunities:
- Growing mobile penetration: Afghanistan's mobile phone penetration is increasing, creating a vast potential user base for M-Paisa.
- Unbanked population: A large segment of the Afghan population remains unbanked, presenting a significant market opportunity.
- Government support: The Afghan government is supportive of financial inclusion initiatives, creating a favorable environment for M-Paisa.
Threats:
- Competition: Emerging competitors could challenge M-Paisa's market share.
- Political instability: Political instability could disrupt operations and hinder growth.
- Economic downturn: An economic downturn could negatively impact M-Paisa's user base.
Porter's Five Forces:
- Threat of new entrants: The threat of new entrants is moderate due to the need for significant infrastructure investment and regulatory approvals.
- Bargaining power of buyers: The bargaining power of buyers is low as M-Paisa offers a valuable service to the unbanked population.
- Bargaining power of suppliers: The bargaining power of suppliers is moderate, with a limited number of technology providers.
- Threat of substitute products: The threat of substitute products is moderate, with traditional banking and informal money transfer systems available.
- Rivalry among existing competitors: Rivalry among existing competitors is expected to increase as more players enter the market.
Value Chain Analysis:
M-Paisa's value chain consists of:
- Inbound logistics: Managing and distributing mobile phones and SIM cards.
- Operations: Processing transactions, managing customer accounts, and providing customer support.
- Outbound logistics: Delivering cash and other services to customers.
- Marketing and sales: Promoting M-Paisa services and acquiring new customers.
- Service: Providing customer support and resolving issues.
Business Model Innovation:
M-Paisa can leverage business model innovation by:
- Expanding service offerings: Introducing new services like micro-loans, insurance, and bill payments.
- Developing partnerships: Collaborating with businesses, NGOs, and government agencies to increase M-Paisa's reach and functionality.
- Leveraging data analytics: Utilizing data analytics to understand customer behavior and develop targeted marketing campaigns.
4. Recommendations
1. Enhance M-Paisa's Functionality and Security:
- Expand service offerings: Introduce new services like micro-loans, insurance, bill payments, and international money transfers.
- Improve security features: Implement robust security measures to address user concerns and build trust.
- Develop a user-friendly interface: Simplify the platform and make it more intuitive for users with limited financial literacy.
2. Expand M-Paisa's Reach and User Base:
- Target specific market segments: Focus on specific market segments like small businesses, farmers, and women.
- Develop partnerships: Collaborate with NGOs, government agencies, and businesses to reach underserved populations.
- Leverage social media marketing: Utilize social media platforms to promote M-Paisa and engage with potential customers.
3. Build a Robust Ecosystem of Partnerships:
- Partner with financial institutions: Collaborate with banks to enable M-Paisa users to access traditional banking services.
- Partner with retailers: Integrate M-Paisa with retail outlets to facilitate payments and cash withdrawals.
- Partner with government agencies: Work with government agencies to promote financial inclusion initiatives.
4. Invest in Technology and Analytics:
- Upgrade infrastructure: Invest in robust IT infrastructure to support M-Paisa's growth and expansion.
- Implement data analytics: Utilize data analytics to understand customer behavior, identify opportunities, and improve service offerings.
- Develop mobile applications: Create user-friendly mobile applications for accessing M-Paisa services.
5. Promote Financial Literacy and Education:
- Conduct awareness campaigns: Launch awareness campaigns to educate the Afghan population about mobile money services.
- Partner with educational institutions: Collaborate with schools and universities to teach financial literacy.
- Develop training programs: Provide training programs for M-Paisa agents and customers.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Roshan's core competencies in telecommunications and its mission to connect people align with M-Paisa's goal of providing financial services.
- External customers and internal clients: The recommendations focus on meeting the needs of both external customers (unbanked population) and internal clients (M-Paisa agents).
- Competitors: The recommendations consider the competitive landscape and aim to differentiate M-Paisa from its competitors.
- Attractiveness: The recommendations are expected to be attractive based on potential for increased market share, revenue growth, and positive social impact.
6. Conclusion
Roshan has a unique opportunity to leverage its strong market position and M-Paisa to drive financial inclusion in Afghanistan. By implementing the recommended strategies, Roshan can solidify its position as a leader in the mobile money market, contribute to economic development, and improve the lives of millions of Afghans.
7. Discussion
Alternatives not selected:
- Exiting the mobile money market: While this option would minimize risk, it would also forgo the potential benefits of M-Paisa.
- Focusing solely on organic growth: This approach could be slower and less effective in achieving market leadership.
Risks and key assumptions:
- Political instability: Political instability could disrupt operations and hinder growth.
- Competition: Emerging competitors could challenge M-Paisa's market share.
- Limited financial literacy: The Afghan population's limited financial literacy could hinder adoption of mobile money services.
Options Grid:
| Option | Pros | Cons |
|---|---|---|
| Enhance functionality and security | Increased user trust and adoption | High investment costs |
| Expand reach and user base | Increased market share and revenue | Requires strategic partnerships |
| Build a robust ecosystem of partnerships | Creates value for customers and partners | Requires careful coordination and management |
| Invest in technology and analytics | Improves efficiency and customer experience | Requires significant investment |
| Promote financial literacy and education | Increases user understanding and adoption | Requires long-term commitment |
8. Next Steps
Timeline with key milestones:
- Year 1: Enhance M-Paisa's functionality and security, expand service offerings, and develop partnerships.
- Year 2: Increase marketing efforts, target specific market segments, and invest in technology and analytics.
- Year 3: Promote financial literacy and education, expand M-Paisa's reach into rural areas, and continue to develop a robust ecosystem of partnerships.
By implementing these recommendations and monitoring progress closely, Roshan can successfully navigate the challenges and opportunities of the Afghan mobile money market, creating a sustainable and profitable business while contributing to the country's economic development.
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Case Description
In 2008, Roshan, Afghanistan's leading telecommunications provider, launched M-Paisa, its mobile money transfer service, which allowed Afghans to use their mobile phones to transfer funds, receive and repay microfinance loans, make purchases, and disburse and receive salaries. The company was committed to building a financial ecosystem for transparent, safe, convenient, and secure services, which would also contribute to the long-term development of Afghanistan's society. Utilizing technology from Vodafone Group Plc, which had been successful in Kenya, Roshan enjoyed several successful pilots, but it still faced a myriad of issues as it sought to scale the service amid a challenging operational environment. In 2011, three years after its launch, the M-Paisa service had yet to make a profit. Roshan's chief executive officer and chief operating officer wondered what more they could do to turn M-Paisa around and, ideally, make an even more significant social impact.
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