VZCZCXRO5675
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #0268/01 0390418
ZNR UUUUU ZZH
P 080418Z FEB 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 7144
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0725
RUEHNR/AMEMBASSY NAIROBI 0065
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEABND/DEA HQS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 000268 
 
DEPT FOR SCA/FO, SCA/RA, AND SCA/A 
DEPT PASS AID/ANE 
DEPT PASS USTR FOR DELANEY AND DEANGELIS 
DEPT PASS OPIC 
DEPT PASS TDA FOR STEIN AND GREENIP 
CENTCOM FOR CSTC-A 
NSC FOR JWOOD 
TREASURY FOR MHIRSON, ABAUKOL, BDAHL, AND MNUGENT 
OSD FOR SHIVERS 
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: ECIN ECPS ETRD EFIN AF
SUBJECT: FINANCIAL SERVICES NOW AVAILABLE THROUGH MOBILE PHONES IN 
AFGHANISTAN 
 
¶1. (SBU) SUMMARY: In October 2008, Roshan Telecom in partnership 
with First Micro Finance Bank of Afghanistan formally launched 
M-Paisa, a money transfer service through cell phones.  M-Paisa 
allows cell phone users to deposit and withdraw funds through a 
licensed agent and then send and receive cash and make bill and loan 
payments through cell phones.  In January 2009, Roshan boasted over 
13,000 subscribers and 150 licensed agents.  Roshan works closely 
with Da Afghanistan Bank (DAB), the Afghan central bank, to monitor 
transactions and highlight illicit activity.  Roshan officials are 
optimistic about M-Paisa's prospective growth.  By year's end, 
Roshan intends to expand to over 1,000 M-Paisa agents and to offer 
salary direct deposit through M-Paisa.  M-Paisa is a positive step 
towards providing financial services to "unbanked" populations and 
could help the government of Afghanistan, in partnership with 
Roshan, build faith in financial services and develop capabilities 
in detecting and disrupting illicit financing.  END SUMMARY. 
 
¶2. (SBU) In a January 27 meeting, Roshan Telecom's Head of 
Government Relations Samir Saatchu and Director of Mobile Commerce 
and Product Marketing Zahir Khoja outlined to Econoff and Treasury 
Attach Roshan's ambitious new mobile money transaction program, 
M-Paisa.  With its partner First Micro Finance Bank, Roshan formally 
launched M-Paisa October 28, 2008, and the program now has 13,000 
subscribers.  M-Paisa allows mobile phone users to deposit, 
withdraw, send, and receive money using their cell phones. 
 
¶3. (SBU) M-Paisa works through SMS communication and a network of 
Roshan agents.  Roshan customers register for M-Paisa with their 
identity documents (passport or government-issued national 
identification card, "tazkara").  Upon registration, customers can 
deposit money into their M-Paisa account through the agent.  They 
then receive a text message indicating their balance.  At this 
point, M-Paisa customers can use their phones to send money to 
another person.  The recipient of an M-Paisa money transfer receives 
a text message on his mobile phone indicating that money has been 
sent to him.  To redeem the credit, the recipient must visit one of 
Roshan's 150 agents to withdraw the funds.  Users do not need to be 
Roshan mobile phone customers to receive money, but in order to open 
an M-Paisa account with an agent for depositing funds, users must 
have a Roshan account.  M-Paisa customers can use English, Dari, or 
Pashto for the user interface and SMS messaging.  To reach 
illiterate customers, Roshan has designed an interactive voice 
recognition (IVR) system to guide users through the interface.  In 
addition to money transfer, users can pay bills and manage loan 
payments using M-Paisa. 
 
¶4. (SBU) Roshan officials highlighted the systems in place to 
prevent fraud and illicit transactions including a withdrawal limit 
of 2,000 USD per day and daily monitoring of transactions.  Khoja 
notes that Roshan rejects new accounts daily because the tazkara or 
passport ID number used to register in these cases is already 
attached to an existing account.  For example, someone who lives in 
Herat may have the same tazkara number as someone who lives in 
Jalalabad.  Roshan is working with the Afghan government to resolve 
this issue.  Khoja and Saatchu said that, in general, the national 
ID card requirement limits Roshan's target customer base for M-Paisa 
since only about 9 million of Afghanistan's 30 million people have 
IDs.  As a licensed money service provider, Roshan is responsible 
for monitoring all transactions, reporting suspicious activity to 
the DAB, and providing the DAB with monthly reports of all 
transactions.  To bolster their ability to report suspicious 
activity, Roshan says it is actively recruiting a full-time 
compliance officer. 
 
¶5. (SBU) Roshan officials are optimistic about M-Paisa's prospective 
growth.  They note the case of Kenya as an example of how M-Paisa 
can offer a viable alternative to hawalas for the "unbanked" 
population.  Khoja said that Kenya currently has 3.5 million users 
and reports 300 million USD in transactions per month.  Roshan 
expects to have over 1,000 agents by year's end.  Currently Roshan 
has a pilot salary direct deposit program through M-Paisa with its 
own employees.  Roshan plans to roll out the direct deposit program 
commercially later in the year.  Khoja says that the Afghan National 
 
KABUL 00000268  002 OF 002 
 
 
Police (ANP) have indicated an interest in such a program.  ANP 
could more easily and transparently pay their officers in the 
provinces through M-Paisa rather than entrusting salaries to a 
police commander who may not pass on all of the salary money to his 
officers. 
 
¶6. (SBU) Roshan officials acknowledge that there are still some 
glitches in the direct deposit program.  For example, Afghan 
employees tend to withdraw all of their salary on payday because 
they do not trust not having their salaries in hand.  Roshan 
officials said that direct salary deposit service will require 
additional planning and coordination throughout the country.  Roshan 
said that they need to prepare agents to have the cash on hand to 
accommodate numerous withdrawals on payday.  Roshan told Emboffs 
that they are exploring other options for expansion, including a 
partnership with Western Union to provide money transfer services 
using M-Paisa at Western Union locations. 
 
¶7. (SBU) COMMENT: M-Paisa is a positive step towards providing 
financial services to the "unbanked" population and bringing 
Afghanistan into the 21st century.  M-Paisa also offers greater 
financial transparency as the Government of Afghanistan continues 
work to provide heightened supervision in areas vulnerable to money 
laundering and terrorist financing.  As M-Paisa expands and gains 
the trust of ordinary Afghans, we anticipate an increasing number of 
Afghans will choose this service over the more traditional and less 
transparent services offered by "hawala", a popular method of money 
transfer in Afghanistan.  Moreover, this new service can offer a 
direct link between the lowest level police officer and his salary, 
ensuring that he receives his entire salary.  A deal with the ANP 
could help diminish the control that police supervisors have on 
subordinates' remuneration and provide access to those in rural 
areas where electronic funds transfer is unavailable due to the lack 
of banking facilities.  However, we have heard from reliable sources 
that the deal with ANP is in flux because Roshan will not accept 
liability for ANP's payments.  END COMMENT. 
 
 
WOOD