Enterprises in Afghanistan face many constraints, some common to all Low Income Countries (LICs), and some specific to fragile and conflict affected states. In Afghanistan, imperfect government control, rampant corruption, poor infrastructure, and weak growth-supporting state institutions all interact to impede private sector development. Even something as apparently straightforward as paying wages is complicated. Currently, most Afghan firms pay their employees by cash transfers, given the limited penetration of electronic bank deposits. This is plagued by inefficiencies resulting from: (i) an underdeveloped banking sector which reaches less than 5% of the population and is in a state of crisis because of the 2011 Kabul Bank failure; (ii) leakage/graft of employee salary by supervisors; and (iii) high costs of currency transport, due unreliable transport infrastructure and concerns of physical security.
This research will examine the extent to which these constraints can be relaxed through technological innovation in the form of a mobile phone-based salary payment system. Roshan, the largest mobile phone provider, is just beginning to deploy the Mobile Money Salary Disbursement Service (MMSDS), which allows Afghan firms to pay employee's salaries by directly transmitting balance to the employee's mobile phone. This has the potential to dramatically improve the security, reliability, and efficiency of salary payments. The researchers address the following questions, using the information generated by the initial deployment of MMSDS in one or two large firms:
During the exploratory phase, the team will use this information to inform the design of the research and data collection in a large scale Randomized Control Trial.