UGANDA
Uganda: Workers paid by smartphone not cases of cash dropped from a plane
Every 15 days, the cash to pay the wages for tea workers in McLeod Russel’s Uganda farms falls from the sky. Literally so. A plane flies west from Kampala to the mountain locations, carrying two bags full of money. If the weather is bad, payday must be postponed, a crisis among a labor force living on the edge of permanent penury.
Sometimes, a bag doesn’t quite land where it should. The tea garden manager breaks every speed limit to chase it down by car. Security is tight. McLeod Russel employs 95 staff to handle payroll delivery and 64 of these are heavily armed security guards.
McLeod is the largest tea production company in the world. It has joined the growing number of firms that are switching to digital cash. The smartphone replaces the plane, bank, and paper notes. The cultural and procedural changes are complex and involve many parties, but the benefits for workers and company are clear and proven. McLeod has so far institutionalized digital cash in two of its Uganda gardens.
The direct savings are substantial: the cost of cash is estimated at 6.5% of salaries. McLeod expects to save productive time equivalent to 25 full-time workers once it completes the digitization. Fraud, theft, and leakage are commonplace in the paper environment. McLeod eliminated payments to “ghost workers” and now have records for tracking and accounting for payments.
For the workers in Malawi, there are savings, too. For social reasons, the local population disdains the seasonal work so that over half the workers are from remote regions. The nearest bank or money exchange center is typically half a day’s walk away.
Sending money home is a time-consuming chore. Cash is also marked by danger. Gang ambushes are not infrequent along the roads workers must walk to reach a bank or store.
An additional benefit that is routine now with smartphone accounts is that workers can build savings safely. One McLeod worker states that he is now able to put away 20% of his salary: “It will come in handy in the future.”
McLeod’s partners include UNCDF MM4P (Mobile Money for the Poor), Mobile Network Operators Airtel and MTN, and merchants and Cash-in-Cash-Out services that issue old-fashioned cash to meet special needs.