One Cell Phone at a Time: Countering Corruption in Afghanistan

12 Comments

When Americans first entered Afghanistan in 2001 there was little infrastructure and no banking system in an entirely cash economy. Nine years later it is still a cash economy and 97% of the country remains “unbanked”, but Afghanistan’s thriving telecom industry offers a way to minimize graft. From a standing start, Afghanistan now boasts a cellular network of 12 million cell phones in country of 28 million. Mobile technology is the largest legal, taxpaying industry in Afghanistan and the single greatest economic success story in the country since the fall of the Taliban. The existing network also offers a proven way to help defeat corruption.

In 2009, the Afghan National Police began a test to pay salaries through mobile telephones, rather than in cash. It immediately found that at least 10% of its payments had been going to ghost policemen who didn’t exist; middlemen in the police hierarchy were pocketing the difference.  Salaries for Afghan police and soldiers are calculated to be competitive with Taliban salaries, but beat cops and deployed soldiers had been receiving only a fraction of the amount paid by US taxpayers because of corruption in the payment system.  Most Afghan cops assumed that they had been given a significant raise, when, in fact, they simply received their full pay for the first time--over the phone.

As the US enters a critical year in Afghanistan with unprecedented amounts of international assistance and contracting dollars on the table, mobile money allows Afghanistan to immediately leap from a cash economy to a mobile money e-commerce system. The existing national cellular network can create a banking system without bricks, mortar—or corruption. There is no better system than mobile currency for transparency to monitor transactions at every level of government, from the military to civil servants. Mobile currency in Afghanistan has already demonstrated the capacity to support salary payroll, limited merchant payments, peer-to-peer transfers, loan disbursements and payments. The gains from mobile money far outweigh the risks and costs, many of which can be easily mitigated. As mobile money becomes the “e-hawala”, it will be secured by Know Your Client (KYC) and digital encryption to match payments with intended recipients while also logging all transactions for full transparency.

The US cannot continue to support the status quo in a corrupt Afghanistan. Using mobile technology to transmit all US government payments from secure banking facilities to dispersed recipients in theater would have an immediate and dramatic impact on the economy and efforts to reduce corruption going forward.  This system has significant positive implications for Afghan capacity building and governance.

Imagine if the US required that all payments to Afghans be made by mobile funds transfer. The soldiers and police, as well as their families, their friends and the entire economy, would adopt it in order to prosper. The 243,000-strong Afghan National Security Forces can lead their nation into a mobile banking system that will set conditions for many other positive second and third-order effects by increasing the speed, security, convenience and reliability of salary payments for Afghan workers.  Mobile currency pilot programs have demonstrated a clear path that improves conditions for Afghans today and establishes credit necessary for Afghans to build an economic foundation for tomorrow.  Increased transparency and effectiveness that will follow from e-currency will help the US gain legitimacy as an honest broker while making serious progress in curtailing existing predatory practices. By mandating mobile money for all Coalition payrolls in Afghanistan, we could truly begin to win the trust and good faith of the Afghan people, one cell phone at a time.

Dan Rice is the President of Sundial Capital Partners.  Guy Filippelli is the CEO and President of Berico Technologies.  Both are West Point graduates who have served as Army officers in Iraq and Afghanistan respectively.

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  • This commment is unpublished.
    anotherScott · 8 years ago
    Would this work if many of the Afghan soldiers/police are illiterate?
  • This commment is unpublished.
    Stephen Pearson · 8 years ago
    I think your blog is very imformative I do have a couple questions. Where did you get you stats on the Afghan cell system, and what type of phone is popular in afghanistan, Blackberry, throw away phone etc.
  • This commment is unpublished.
    Luke Ruppersburg · 8 years ago
    I would like to learn more about this issue. Please expand your article.
  • This commment is unpublished.
    Jeff · 8 years ago
    @ Stephen and Luke: You should probably know that Michael didn't write this article. Those questions would be better directed to Small Wars Journal, as indicated in the last link of the post.
  • This commment is unpublished.
    Super Mike XXXXXXX · 8 years ago
    A cell phone provider / service called 'Roshan' seems to be the service of choice over here. Still use big brand phones like samsung, nokia, etc.
  • This commment is unpublished.
    Habibullah · 8 years ago
    While cell phone distribution of pay makes it more difficult for easy corruption to take place, it is not the panacea. Commanders will still confiscate cell phones, mandate the payments go to cell phones bought by the recipients but controlled by the commanders or sent to false or compromised phones. Cell phones are a different animal over here and while I applaud all attempts to reduce corruption, caution should be exercised when a single possibility is exhorted as THE solution. Never underestimate the entrepreneurial spirit of corruption in this country.
  • This commment is unpublished.
    Super Mike XXXXXXX · 8 years ago
    I agree with the above comment. If there is one thing I have learned, is that Afghans are not stupid. They take our handouts all day long, let other countries build up their cities and infrastructure, take day jobs on the FOBs, serve us food, clean the johns, eat the free chow in the DFAC's, drive trucks, you name it. Then when the sun goes down they bring the mortar equipped trucks and RPG's around for some fourth of July.
  • This commment is unpublished.
    Kimberly Snow · 8 years ago
    While I appreciate the authors' enthusiasm, I think they may be missing a very basic point. That is, I think one of the things we as Americans in general and specifically, we as the American military, need to understand is that people of other cultures often don't think like us. And they're never going to. We look at their corruption as a bad thing and something we must "fix." Afghans and Iraqis and many others in that part of the world, however, simply look at "corruption" as how they do business. Rather than trying to get these people to see things from a Western mindset, perhaps we should try to understand how we can adapt to their systems and cultural norms and find an acceptable middle ground from where to begin finding a basic understanding of one another.
  • This commment is unpublished.
    Acera · 8 years ago
    I just hope they are not "test marketing" that system for possible employment elsewhere, like the US. A lot of what I read is happening over there would be a dangerous threat to the liberty of Americans if it were ever employed over here. Corruption must be dealt with as the crime which it is. Technology can help, but if they are not ready to accept an honest form of society, what good are we doing for them? I am beginning to feel that even with our best efforts, some peoples are just ready for what we are willing to help them obtain.
  • This commment is unpublished.
    Habibullah · 8 years ago
    Kim and Mike, agreed. Corruption is different here and takes many forms. We are not in the West and many here fool themselves into thinking that we are, or should be. One way to think about it is, in the West, everyone charges fees for everything. Is this corruption or a service fee to recoup expenses? I think the low level corruption here is more along the service fee line. However, the broader, more systemic issues are what is eating this place alive. ANSF pay confiscation is part of the larger, more insidious form, but other lower level things are not. A certain amount of this must be tolerated and understood. We must be remember that when a policeman makes $50 dollars a month, he must make ends meet. Not excusable, but understandable.

    All these things we must come to grips with if this country is to succeed.
  • This commment is unpublished.
    Zee · 8 years ago
    http://www.csmonitor.com/World/Africa/Africa-Monitor/2010/0924/South-Africa-strike-sends-students-beyond-the-classroom-to-learn
    What to do when all the teachers are on strike - go for the solution via cellphone. The best news is the complaint from students: " ... the only bad thing about Dr. Math is that it can't help you cheat."
  • This commment is unpublished.
    shah · 8 years ago
    The problem is Not courruption which is intended to be solved by this step, but the bigger problem is the the devaluation & instictive liquidity of dollar.STATES can not afford the one-way flow of the dollars to that country on the moon without returning back & that also in an endless chain procedure.....

    What we are told is not always the truth....
    thaink again.>
    miss you peace

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