Optimizing G2P Payments: Nudging Beyond Financial

Inclusion

October 2018
1. Introduction/Background
● Overview of G2P Payment Programs in Developing Countries
● Drivers
● Findings
● SDG Focus

2. Optimizing G2P Payments

● The Role of Savings in Breaking out of the Poverty Trap
● Nudging towards Positive Financial Behaviors

3. Busara Experience/Findings
4. Conclusion
5. Q&A
1. Introduction/Background
● Overview of G2P Payment Programs in Developing Countries
● Drivers
● Findings
● SDG Focus

1. Optimizing G2P Payments

● The Role of Savings in Breaking out of the Poverty Trap
● Nudging towards Positive Financial Behaviors

1. Busara Experience/Findings
2. Conclusion
3. Q&A
INTRODUCTION - Overview of G2P Payments Programs in Developing
Countries

Over the past decade, G2P payment programs have garnered a lot of attention and interest from
governments and development bodies, especially those operating in developing countries. While this
has been, in part, due to the increasing global focus on poverty alleviation, a primary driver of its
popularity has been its noticeable effects in facilitating financial inclusion.

FINANCIAL INCLUSION

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INTRODUCTION - Drivers of G2P payments

Increasing global focus Means towards social

on poverty eradication welfare improvement
POVERTY LINE

Facilitates rural
Sustained interest in infrastructure
financial inclusion development

Need for livelihood

development among low-
income individuals

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INTRODUCTION - Findings

India Columbia Tanzania

$35 Billion Almost 2.6 Million families were part of the 1.1
Over
of annual G2P payments Familias en Accion conditional cash transfer program in 2015

South Africa Pakistan

million
households
Over 16.9 Million Over $3.5 Billion disbursed to
across 10,000
villages
people currently receive grants beneficiaries of the Benazir Income Support Program
Nigeria
Over 300,000 households currently benefit from the National Conditional Cash Transfer Program
Conditional cash transfer programs

almost doubled from 27 to 52 174 Million individuals, across 84 programs in 43

within 2008 and 2013 countries were receiving social cash transfers in 2013

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INTRODUCTION - SDG Focus

By virtue of the intended impact of G2P payment programs on poverty, which by extension distills to
improving the socio-economic welfare of beneficiaries as well as their access to basic amenities
facilities, the following are the parts of the SDGs that G2P payment programs aim to achieve.

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1. Introduction/Background
● Overview of G2P Payment Programs in Developing Countries
● Drivers
● Findings
● SDG Focus

2. Optimizing G2P Payments

● The Role of Savings in Breaking out of the Poverty Trap
● Nudging towards Positive Financial Behaviors

3. Busara Experience/Findings
4. Conclusion
5. Q&A
Optimizing G2P Payments - The role of savings in breaking out of the
poverty trap

Despite having charted clear pathways towards driving financial inclusion, a primary point of
contention about G2P payment programs has been their impact in sustainably improving the
welfare of beneficiaries beyond the duration of the programs.

Nevertheless, enhancing positive savings behaviors has been recognised as a fundamental tool
towards enabling low-income individuals (many of which are beneficiaries of G2P payments),
breakout of the poverty trap.

Consequently, there has been an increasing focus on incorporating into such programs, initiatives
which engender beneficiaries to not only improve their livelihood within the course of the program
but also adopt positive savings behaviours which will ensure that they are adequately capacitated
to withstand financial shocks and sustainably improve their livelihood.

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Optimizing G2P Payments - Nudging towards Positive Financial
Behaviors

Delving deep into the behavioral underpinning of savings behavior, we found four dominant behavioral
themes that influenced which savings mechanisms people used.

Mental accounting: The majority of people, use mental shortcuts to build associations between
their preferred savings mechanism and their reason for saving. Often, this means putting savings
into different places or accounts based on criteria like the source or purpose of the money.

Agency: This refers to whether people feel like a product gives them control over some aspect of
their lives. People want products that give them control over their financial lives.

Trust and risk: Interestingly, there is often no medium people consider to be universally “most
trustworthy.” Some consider banks trustworthy, while others trust mobile money or their local
savings group lock-boxes. People generally express trust in whichever savings mechanism they use
most actively.

Social influences: Social norms, networks and trends also influence people’s savings behavior
and the channels they use to save.
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1. Introduction/Background
● Overview of G2P Payment Programs in Developing Countries
● Drivers
● Findings

1. Optimizing G2P Payments

● The Role of Savings in Breaking out of the Poverty Trap
● Nudging towards Positive Financial Behaviors

1. Busara Experience/Findings
2. Conclusion
3. Q&A
Behavioral Interventions

1. Goal Setting 2. SMS Reminders 3. Commitment Devices

4. Use of Lotteries to 5. Timely Prompts 6. Improving Salience across

incentivize behavior channels

Remember to Save!

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Busara Experience / Findings

Promoting deposit activity in Kenya (2014)

Financial Incentives Basic Reminders

Respondents were given matching Respondents were given a basic
contributions of 10% or 20% of reminder encouraging them to
their weekly savings, framed either save for their future.
in the gain or loss domain.

Salience Emotional Reminders

Respondents were given a gold Respondents were given weekly
coin to recall the promotion and reminders with additional
make their savings more salient encouragement by framing the
and tangible. message from their children.

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Busara Experience / Findings

Promoting deposit activity in Kenya (2014): Salient reminders boost

savings level more than financial incentives.
1800

1600

1400

1200

1000

800 Providing golden coins to

600 scratch off and enhance the
saliency of weekly savings
400
was by far the most effective
200 way to increase savings.
Savings quintupled over 6
0
No Offer Reminders Post-Matching Pre-Matching Salience months.
(20%) (20%) 14
Busara Experience / Findings

Boosting savings in Tanzania (2017)

Group 1: Generic Group 2: Group 3: Group 4:

SMS Messaging Messaging Messaging Messaging
Around Around Mental Around Social
Agency And Accounting Influences
Control 15
Busara Experience / Findings

Boosting savings in Tanzania (2017): Social influences drive savings activity.

% Average Available Money

Saved Per Day
80.0%
Hi. Save more and Hi. The successful 70.0%
have greater savers in your
control over your group have a
60.0%
money and your
life! Remember to
VS. savings balance 50.0%
of %! Remember 40.0%
save today with to save today
your Busara with your Busara
30.0%
account! account! 20.0%
10.0%
0.0%
Agency Control Pure Mental Social
Agency Message Social Influence SMS Control Accounting Influence

Message

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Busara Experience / Findings

Bolstering group savings in Nigeria (2018): The use of commitment devices

have a positive impact on actual savings

Those who received commitment devices were 2.8 times more likely to save and also more
likely to save larger amounts

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1. Introduction/Background
● Overview of G2P Payment Programs in Developing Countries
● Drivers
● Findings

1. Optimizing G2P Payments

● The Role of Savings in Breaking out of the Poverty Trap
● Nudging towards Positive Financial Behaviors

1. Busara Experience/Findings
2. Conclusion
3. Q&A
Conclusion

Leveraging on these behavioral approaches in inducing positive financial behaviours among

beneficiaries of G2P payment programs will ensure the sustained development of their livelihood
and socio-economic welfare, thus enhancing the overall efficacy and impact of such programs in
achieving SDGs 1, 2, 4, 8 & 10.

Beneficiaries receive payment Beneficiaries and their

households are able to withstand
financial shocks and live above
poverty with access to basic
amenities
Alongside the development of their
livelihood, beneficiaries are nudged
towards positive savings behavior
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We design tailored Contact us for more

interventions.
information!
nnenna.okoye@busaracenter.org
www.busaracenter.org

We design solutions to help our clients overcome

behavioral barriers to products, programs, and
policies as they scale.
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Thank You!
Q&A