How digital payments affect key institutions in vaccine campaigns: a stakeholder analysis

In this final blog post, we use scenario analysis to identify the cost drivers for administering payments to workers in vaccine campaigns. Key drivers of efficiency and cost savings include: (1) reusable databases of workers’ payment credentials, (2) low staff attrition, and (3) stability of workers’ telephone numbers. Our analysis also yields strategic insights into the change management process, with key messages for donors, health ministry officials, and finance and administration offices tasked with implementing change. 

Previously, we demonstrated the benefits of digital payments for frontline healthcare workers in vaccine campaigns (supplemental immunization activities, or SIAs). Vaccine campaigns can require thousands of workers to travel to temporary sites, incurring additional costs even when they are already employed by the Ministry of Health. Our research was based on measles catch-up campaigns in four countries, a type of campaign that is relatively large in terms of the population served. These campaigns require skilled clinical staff and cold storage for vaccines and are typically administered in a fixed post setting rather than door-to-door or via normal outpatient care. 

The 2021 measles catch-up campaign in Kenya, which primarily disbursed funds via M-PESA, incurred transaction costs of payments equivalent to 12.5% of the value disbursed. That is, the cost of administering payments would add up to $100 for every $800 in stipends and allowances due to healthcare workers. We derived that estimate from a detailed financial model of staff time and expenditures across all phases of the payment use case: planning for the expenditure, onboarding employees for payment, verifying that work has been performed, filing paperwork, payment fees, and cash-out of balances by recipients. 

The model accounts for factors that can significantly affect staff time or other costs to administer digital payments. 

• Enrolling workers in the payments database is a significant sink for staff time. Therefore, the greater the number of first-time payees, the higher is the cost of onboarding employees. 
• Similarly, if those new staff are opening a mobile money account for the first time, the staff time required for registration is higher. 
• If staff have changed their phone numbers, they must also update their payment details. 

Under worst-case assumptions, we estimated the cost of administering digital payments could rise by 20%. Conversely, reusing a database of payees in subsequent campaigns could hugely reduce the cost of setting up digital payments, leading to overall savings of 30% relative to the base case. 

When we compare the cost of cash operations to the cost of digital operations, we find that the Kenya 2016 measles catch-up campaign — which was paid in cash — had a lower cost of disbursement. Framed in terms of the population covered by the campaign, Kenya’s 2021 campaign cost $47 per thousand population served (using mobile money), whereas the earlier campaign cost $39 per thousand population served (using cash). 

A final source of benefits, in addition to the preceding, is to reduce cash losses from theft or fraud. Theft and fraud are typically unreported and cause stress due to accountability policies. Theft and fraud have been estimated in excess of 5% of the notional value of payments in high-risk environments (and in extreme cases, as high as 30%). When we adjust the figures to account for the timeliness of payments, the value of payment confirmations, and the reduction in fraud, the results are dramatically different. The benefits of digital payments more than offset the increased cost, resulting in net benefits of about 67%. 

Key quotes from finance and administration personnel show their enthusiasm for digital payments. They appreciate the quality and speed of accounting for digital payments. Digital payments are a point of pride.

The accounting staff loves our new system. It is much better than in the past. The information is extremely timely and accurate. There is no risk of errors from financial operations. Any failed payments can be traced to the specific record that could not be paid. All funds are accounted for and controlled using this system.”

 

“There is no longer a need to spend money on cash logistics. Cash operations were very expensive.”

 

“Authorizations for payment trigger the creation of a fund with its own disbursement account. Only one employee has access to the disbursement account. Payment confirmations provide an audit trail for every transaction. Balances are accurate to the shilling and are reported on a daily basis.”

 

“Anything that involves cash involves a lot of fiduciary risks.”

 

“We used to arrange for cash in transit. We would go to the bank. The bank would park the money. Then a security escort would move the money to the pay point. Security becomes a challenge.”

 

“Cash operations sometimes require an advance to our own personnel. That money comes to his personal account. The banks would lock the money. There were also issues with anti-money laundering. Why should someone who earns 2,000 be able to pay 20,000? The staff could experience challenges at the personal level.”

 

“The moment you pay in cash, you do not have proof who has been paid. You must identify the person on the ground. That process is open to errors.”

With that in mind, we can leverage this study for change management.

• With donors, the pitch for digital payments should be straightforward: promising better service for staff and operational efficiency in return for a modest increase in costs. 
• Health ministry officials should easily be able to argue that digital payments promote more effective campaigns to reach coverage targets, wherever campaign workers can use digital payments at the point of sale or access cheap cash-out services for digital payments. 
• The main political opposition to transition away from cash disbursement could come from local offices, either in government or healthcare, who have hitherto been responsible for disbursing cash to frontline staff. When payments are centralized, power shifts away from the local office. There could be pushback as a result. 
• Nonetheless, the shift to timely and accountable payments will work to the advantage of frontline staff, who will greatly reduce the risk of losing balances entrusted to them for campaign operations. 

Digital payments will, in the aggregate, reduce or eliminate the lag between when payments are promised and when they are received.