Pension-Network-Service platform

Lack of systematic saving for old age in developing countries, leave segments of the elder population with reduced ability to cope with illness or poor nutrition.

Based on access to 1) trust-based saving-groups, 2) mobile- communications and money-transfer technology, 3) combined with user-knowledge of same, a Pension-Network-Service(PNS) is under development, to establish a pan-African pension system inclusive of informal sector workers.

Core elements of PNS are operating in our cloud/mobile based Insurance-Network-Services(INS) in Kenya. 10% of all Kenyan customer payments on INS is already dedicated to customer pension saving. INS, built on a micro-service and container orchestration architecture, is scaling in Kenya, and prepares for duplicating to Ghana through our pan-African trust-based saving-groups aggregators. INS expanding to PNS includes developing pension-saving-ledger-, transactions- and compliance modules, digital pension micro-learning tools, and APIs towards national ID databases, fund management-, salary- and translation-management-systems.

Scaled regionally PNS will alleviate old-age poverty.

According to the Commissioner General of Ghana Revenue Authority - Mr. Emmanuel Kofi Nti, 2% out of 70% of people in the informal sector pay their tax. Although self-employed persons are required to pay income tax it is mainly people who have formalized their businesses or are in formal employment that pays -- letting over 80% of the workforce off the hook. This means that 80% of the workforce do not pay the 5% of salary mandatory occupational pension contribution, and as such do not save towards old age pension. 

This affects about 19 million informal sector workers in Ghana. 

If we assume the scale of the problem is proportional across West Africa, about 250 million informal workers do not save towards old age pension.

The Pension-Network-Service platform will serve low income populations in the informal sector.

Through our servicing of informal sector worker customer and their trust-based saving-groups, within the Insurance Network Service in Kenya, we have earned an initial holistic understanding of the social security needs in this segment.

For Ghana specifically, meetings and dialogues in Ghana with The National Insurance Commission (NIC), The Ministry of Finance and Economic Planning (MOFEP) and Ministry of Gender, Children and Social Protection (MOGCSP) in Ghana, have to a large part confirmed our understanding of social protection needs in the target population in Ghana.

For West Africa, dialogues and/or cooperation with the Ghanaian offices of the pan-African organisations CRS, AGRA and FSD have to a large part confirmed our understanding of the target population needs also in West Africa.

The solution is and will continue to be developed in close engagement and cooperation with members of trust-based saving-groups and our pan African trust-based saving-groups aggregators.

The solution will lessen old-age poverty through providing an additional source of income for elderly.

Through training within trust-based saving-groups and use of simple USSD phones, our Insurance-Network-Service already services persons of limited literacy/numeracy levels in areas with limited internet coverage. Expanding the Insurance-Network-Service platform to also become a Pension-Network-Service platform, include incorporating pension micro-learning tools into our training programs also for this target population.

The trust-based saving-groups are based on formal rules/structures and frequent training of group members, ideal for explaining and encouraging continuity of pension contributions. Combined with micro-learning and micro-mentoring tools (behavior tools) to be part of the PNS platform, our solution also meets the first listed Challenge dimension.

The Transportation-Network-Services (Uber) and the Accommodation-Network-Services (Airbnb) transformed their industries. 

The Insurance-Network-Service (DataDrivenFinance) is an enabler of sustainable national insurance market systems enabling lowest-cost underwriters-to-consumer transactions of simple risk covers. The Pension-Network-Service under development, is an integrated extension of INS and will become an enabler of national pension market systems.

Low-income economies operate within a culture of collectivism whereby people depend upon each other to survive; 1) The collective mindset is based on trust and social reputation within groups, and 2) the group context provides strong individual incentives for consistent trustworthy behavior.

The core economic unit in INS and PNS digital operating environment is the group. Individuals act in concert with and is constrained by the group dynamics. To mirror this reality on the ground, DDFinance has developed the Collective-Based-Insurance (CBI) model, where individual low-cost finance products are accessed and offered through group membership, i.e. through ‘Collectives’. Within Collectives, explicit expressions of trust are invoked, on simple mobile phones, through product services interactions, and will be captured on network graph(s) for analysis, which enables low cost automation of the entire insurance and pension work-flow process.

10% of all customer payments within INS, is by DDFinance already dedicated to individual pension saving and will forms the initial base for encouraging continuity of pension contributions on the PNS.

The Pension-Network-Service (PNS) platform solution will be/is embedded in our  proprietary digital Insurance-Network-Service (INS) platform. PNS will be part of the INS distribution platform and equipped with digital pension micro-learning and mentoring tools, and embedded in the extensive INS partner ecosystem. The Go-To-Market strategy includes scaling through pan-African distribution partners and a multi-country Franchise Business model.

The Franchise Model: DDFinance has contracted a considerable network of Kenyan, Pan-African and global partnerships within underwriting, technology, teaching, distribution, business service providers as well as good relations with three national insurance/pension regulators. In concert with this partner ecosystem, new sustainable national franchisees (DDFinance-Fs) will be built at an estimated  cost to sustainability of MUSD 1.2 each, by re-use of the CBI concept, by choreographed interactions of the digital platforms, national communication infrastructure and by re-deployment of the numerous standardized DDFinance AS’ contracts and standardized commercial frameworks.

In 2019, we piloted and ruggedized INS, the customer journey and teaching/training material. During 10 months of operation we on-boarded 12.000 users in 500 saving groups, sold 1.400 insurance covers and paid out 26 claims and mostly within 48 hours.

The solution for pension contribution is currently limited to 10% of all customer payments on INS being dedicated by DDFinance to forms the initial base for encouraging continuity of pension contributions on the PNS.

Based on this hands-on-learning experience, DDFinance moved from initial analogue one-to-one training of trainers and customers, to deploy digital one-to-many learning tools in third-party aggregator channels. Currently 131 partner trainers are active.

The solution is part of the social protection and service delivery of Catholic Relief Services (CRS) in Kenya, and CRS, CARE and AGRA in Ghana have all been positive to a cooperation within a similar DDFinance framework in Ghana.  

Open APIs are provided for integration with other systems, for data portability and to avoid vendor lock-in.

The solution is built with an micro-service architecture in mind. This means that part of the system is separated into several standalone containers, that each can be restored on failure or scaled horizontally - when needed.

Through training within trust-based saving-groups and use of simple USSD phones, our Insurance-Network-Service already services persons of limited literacy/numeracy levels in hard to reach areas with limited internet coverage. Expanding the Insurance-Network-Service platform to also become a Pension-Network-Service platform will carry on and include this functionality.

The USSD interface is an endpoint that communicates with our 3rd party pan-African teleoperator-integrator Africa’s Talking. On an incoming USSD connection from the customers phone, our endpoint is contacted with relevant information from Africa’s Talking. This information is then stored in a distributed caching solution to provide state for the connection - allowing us to provide the correct view to the customer, on simple USSD menus at any time.

Currently serving: 14.000 people

Serving in one year: 450.000 (total for 3 countries)

Serving in five years: 27.000.000 (total for 10 countries)

DDFinance, a pan-African franchise business, built from the start to reach with basic health insurance and defined contribution pension, 27 million people within 5 years and 100 million people within 7 years.

The franchise model is built for global scaling; At investments of USD 1,2 million each, new national DDFinance-Franchisees will be built to profitability, by methodically deploying the DDFinance AS and DDFinance-Kenya Ltd Business Frameworks and Partner Ecosystem including:

• The Collective-Based Insurance concept
• The Insurance Network Service cloud-to-phone-based digital platform expanded to include PNS
• A Micro-learning digital platform
• The standardized contracts and commercial frameworks
• The pan-African and global
  • technical partnerships
  • teaching and distribution partnerships
  • business service provider partnerships

Following the successful launch of the blueprint franchisee in Kenya in 2018, DDFinance AS now leverage its franchise framework and its growing pan-African partnership structures, to establish similar operational franchisee units in Ghana and Uganda. This is part of the pan-Africa and beyond strategy to grow into a sustainable global franchise operation.

Expanding from Kenya, DDFinance AS and DDFinance-K Ltd jointly combine the best of their practice learned, including the sociology behind groups as effective insurance mechanisms, the use of human centred design, customer journey and customer engagement strategies integrated with how best to deploy its Insurance Network Service and INS digital platform. Combined with DDFinance’s strong ability to build partnerships and engage with pan-African and global market actors, will ensure that suitable insurance and pension products and services become available for poor individuals and households in the countries DDFinance operate.

Funding and regulatory challenges 

Use the now rapid and strong accelerating customer growth in Kenya to confirm the goodness and must de-risked business case to impact investors, and from this increase access to good funding partners and funding.

Cooperate with national, African and global entities on securing sound regulatory frameworks for new innovative micro-insurance and micro-pension solutions and approaches.

Full-time staff: 14, Full-time contractors: 1

1. Catholic Relief Services (CRS), www.crs.org,  Access to Saving Groups,  Global, MOU in Kenya, good dialogue Ghana
2. Local Links, Access to 2.800 trust-based saving group trainers, East Africa, On contract
3. CARE International, www.care.or.ke, Access to Saving Groups, Global, MOU renewal Kenya, good dialogues Ghana
4. Duvi AS, www.duvi.no, Access to pension saving technology, Tools in cloud, On contract
5. CIC Life Assurance Ltd, www.cic.co.ke, Underwriting of insurance products, Pan-African (semi), On contract
6. Africa 118,  www.africa118.com,  Call Center Services, Pan-African, On contract
7. Africa's Talking, www.africastalking.com,  Mobile Money/SMS/USSD integrations, Pan-African, On contract
8. Kuza, www.kuza.one, Micro-learning, Micro-distribution tools, On MOU contract
9. Swiss Re, www.swissre.com, Regular Technical Support, Global, On MOU contract
10. Insurance Regulatory Authority (IRA, NIC) www.ira.go.ke, www.nicgh.org, Providing regulatory framework National, Active and good dialogues Kenya, Ghana
11. Busara Center for Behavioral Economics, www.busaracenter.org, Support on Behavioral Science, Pan-African, Active and good dialogue
12. B Lab, www.bcorporation.net, B Corp Certification, Global, On contract
13. Swiss Re Foundation, www.swissrefoundation.org, USD 0,65 million funding of Randomized Controlled Trial, Global, On contract, Switzerland
14. Grieg Foundation, www.griegfoundation.no, 4 grants a USD 50.000, continued dialogue, Norway
15. Norwegian Research Council, www.forskningsradet.no/en, SkatteFUNN, total USD 0,5 million, On contract, Norway
16. NOREC, www.norec.no/en, USD 0,25 million funding for personnel exchange, Global, On contract, Norway

DDFinance as a franchise business model has legal entities with mutually dependent integrated tasks:

Franchisor DataDrivenFinance AS's main product is the delivery of the INS infrastructure to national DDFinance Franchises.

DDFinance Franchisee(s) Ltd has as its main product the operation of the INS, and under development PNS, infrastructure in its national market, which gives Customer access to insurance and pension products

The first blueprint franchise is DDFinance Kenya Ltd, which currently distributes: 

1) the combined CBI product HC / LC to the low-income segment at cost of USD1 per year for pay-out of USD 5 per day if hospitalised, as well as USD 100 in case of death, and

2) inclusive of 10% of all customer payments on INS being dedicated by DDFinance to forms the initial base for encouraging continuity of pension contributions on the PNS.

DDFinance will remain dependent on sustained grants and raising investment capital until we have passed 175000 customers served mark in any country where we establish a national franchisee. From that point onwards the companies can be financially sustainable.

At investments of USD 1,2 million is required for a new national DDFinance-Franchisee s to be built to the 175000 customers served mark and profitability.

At this point we have raised a total of USD 2 million in grants and investment capital to reach the current stage of readiness.

Grant sources so far include:

• Innovation Norway, www.innovasjonnorge.no/en
• Swiss Re Foundation, www.swissrefoundation.org
• Grieg Foundation, www.griegfoundation.no
• Norwegian Research Council, www.forskningsradet.no/en
• NOREC, www.norec.no/en
• NORAD, hwww.norad.no/en

DataDrivenFinance AS, being a Certified B Corporation®, is only engaging with impact focused funding sources. 

Funding needed for completing ongoing and planned development work is MUSD 2.7.

In addition, the pan-African expansion and scaling program is budgeted to MUSD 1.2 setting up a national market system in an additional country and reaching profitability.

Type of funding is grants and equity. We prefer not using debt as a funding source, since this will add additional financial risk into the de-risked but still high current risk level.

USD 1.2 million

Primarily for access to additional development and growth needed funding.

Assuming also that with World Bank funding as part of the total funding, this will potentially give access to World Bank support in dialogues with regulators.  

Fund management of pension savings in Sub-Saharan are often limited to placements of the saved funds in national bond and stock markets. Due to inherent political,- currency fluctuation,- and inflation risks, this adds unnecessary and potentially costly risks to the pensioners saving balance. We would like to connect pension saving in African countries to global financial management and risk structures, to maximize future pension pay-outs for the elderly in African markets.

Partners that can support this issue is of particular interest.

World Bank

Norfund

Financial Services Deepening Africa