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digital finance sourcesIt is no secret that cash is becoming more and more obsolete in developed nations. Venmo, Cash App, Square, PayPal, Zelle and Google Pay — none of these popular money transfer services require a physical transfer of cash. The onslaught of a global pandemic has only accelerated the shift to cashless transactions amid efforts to minimize physical contact. China is rapidly moving forward with central bank digital currency (CBDC) trial rollouts while the United States Federal Reserve is conducting ongoing research to potentially develop its own CBDC, a “Digital Dollar.” In lower-income nations, digital finance sources have the potential to transform economies.

Digital Finance in Developing Countries

In developed countries, the notion of an entirely cashless society is not far out of reach. However, the story is very different in developing nations. Many individuals are excluded from participating in even the most basic financial systems and instead rely primarily on physical cash. As of 2017, about 1.7 million adults globally were “unbanked.” This means they lacked any account with a financial institution or mobile money provider. This is nearly one-fourth of the world’s population.

Some of the most commonly cited barriers to account ownership include insufficient funds and inaccessible banking services. Virtually all unbanked adults live in developing economies, with women over-represented among this cohort. Digital finance services delivered via mobile phones, the internet or cards, function as a means of including these unbanked populations. The benefits of digital financial inclusion are prolific.

Digitizing Financial Inclusion

The strong link between financial inclusion and a wide array of global development goals is becoming increasingly clear. Significantly, seven of the 17 U.N. Sustainable Development Goals for 2030 explicitly mention financial inclusion as central to achieving these objectives.

Digital technologies offer financial services at lower costs, fostering opportunities for large-scale inclusion by enabling institutions to serve lower-income customers profitably. Such broadened financial access can sustainably transform emerging economies. A 2016 report by the McKinsey Global Institute estimated that digital finance alone could boost the annual GDP of all emerging economies by $3.7 trillion by 2025 due to productivity gains of businesses and governments.

Digital services include those such as M-PESA, a mobile phone-based transfer, payment and micro-financing service. Mobile money has lifted an estimated 196,000 Kenyan households out of extreme poverty from 2008 to 2016.

The Benefits of Digital Finance Sources

  • Increased Security: Digital footprints provide greater transparency and hold individuals and institutions accountable, reducing vulnerability to fraud and corruption.
  • Time and Cost Savings: Digital services are quicker and more efficient, lowering costs for both providers and consumers.
  • Financial Inclusion: The lower costs and convenience of mobile services make them accessible to more people, including those living in remote or rural areas.
  • Women’s Empowerment: Women with access to financial services like loans, savings accounts and mobile payments can achieve independence. It has been found that women with digital savings accounts also spend more on development endeavors like education.
  • Higher Tax Revenues: Digital finance has been proven to increase tax-paying compliance, and in turn, government revenues.

Given the wide-ranging benefits of digital finance sources, it is clear why many organizations are attempting to accelerate the transition from cash-based to digitized economies in the developing world. A growing number of groups such as the U.N.-based Better Than Cash Alliance are working to extend the reach of financial services by using digital technologies to go where physical banks cannot, bringing access to mobile money, savings accounts, credit and insurance to the under and unbanked. Digital finance is more than a trend of modern societies. It is a vital tool for achieving inclusive and sustainable development in emerging economies that are still far from being cashless.

Margot Seidel
Photo: Flickr

Digitization in Sub-Saharan AfricaThe COVID-19 pandemic has shoved decades of progress in mitigating poverty at risk and has already led to a great loss of life and long-term socio-economic damage in sub-Saharan Africa. The U.N. Secretary-General states that the global poverty rate is predicted to increase for the first time in 30 years, which will thrust 500 million people back into poverty. Implementing further broad-based digitization in sub-Saharan Africa can jump-start its economy and fight back against the plunging poverty rate.

The Roots of Digitization in Africa

Kenya has effectively implemented mobile money solutions and established a digital finance ecosystem. This is due to ethnic-based violence that took place in 2008. This turbulence curbed many people’s ability to travel safely, forcing them to adapt to a new way of transferring money without cash: Safaricom’s M-PESA. Swahili for mobile money, M-PESA is a service that enables its users to store and exchange monetary values through a mobile phone. It is a convenient resource that allows users to pay bills. It also allows them to access merchant accounts and create savings and digital credit accounts.

By 2014, M-PESA had more than 120,000 agents who offered guidance for customers unfamiliar with the process. Over 25 million Kenyans weathered the financial uncertainties exacerbated by poverty. Ghana is another country that has successfully developed digitization in sub-Saharan Africa. The use of mobile accounts in Ghana increased access to formal financial services from 41% to 58% in just three years.

Ability to Decrease Poverty

Tavneet Suri is an Associate Professor at the MIT Sloan School of Management. William Jack is a Professor at Georgetown University. They both collected 1,600 surveys of Kenyan households between 2008 and 2014. The surveys examined the effect of increasing numbers of services. The study showed that an increase in the number of mobile services, or agents, incited a rise in consumption and market participation.

Interestingly, the study also noted that female-headed households are utilizing these agents in a more enthusiastic manner. These households experienced a 22% increase in savings and improved ability to manage finances. Furthermore, 3% of women were driven to choose occupations in business or retail rather than farming, which is not as complementary to mobile transfers. Mobile money services are estimated to have the potential to lift 194,000 Kenyan households out of extreme poverty. They are also estimated to initiate 185,000 into the workforce.

The Impact of Expanding Access to Mobile Money Networks

Mobile money networks have spurred a financial technology revolution. It has led to a more modernized financial system for those living in sub-Saharan nations.  This comes with the bona fides of many developed economies such as access to healthcare. Furthermore, digitization in sub-Saharan Africa has led to increased access to pension schemes such as the People’s Pension Trust.

However, even though nearly 46% of global mobile money accounts are based in Africa, only 10 percent of all payments and transactions are done using technology, leaving substantial room for growth. Furthermore, digital infrastructure is often weak in remote or rural areas. This is due to the insufficient returns on capital along with firm regulatory barriers and expensive deployment costs.

Mobile Money Networks Can Elicit Economic Recovery from COVID-19

Small and medium enterprises that were able to digitally diversify have comparatively been far more resilient during the COVID-19 crisis. Therefore, the disaster caused by the COVID-19 pandemic has severely limited the movement of people and cash. This can serve as a launch base for furthered digitization in sub-Saharan Africa. The Kenya Commercial Bank (KCB) has already slashed additional fees for mobile transactions and urged people to steer clear of using cash.  This is part of a plan to “accelerate migration” towards more widespread digital banking platforms. Sonatel, the main provider for telecommunication services in Senegal, is offering no fees for 30 days for digital payments. Meanwhile, MTN Zambia has generated a “no cash, no germs, go MoMo” campaign to encourage people to go cashless and transition to mobile money services.

According to the International Telecommunications Union, augmenting digitization in sub-Saharan Africa by 10% would cause a 2.5% increase in GDP per capita. The U.N. Broadband Commission for Sustainable Development approximates that a $109 billion investment is needed to achieve internet access in Africa by 2030. COVID-19 poses a threat to this estimate. The virus has provoked a $100 billion outflow from emerging markets. It is also important to avoid hastening the existing 34% gender gap in access to digitization in sub-Saharan Africa. Nonetheless, there are governments and companies that remain motivated. They are currently working to propel digital growth in sub-Saharan Africa in order to ensure equal access to connectivity and to mold more vivacious and thriving societies in those that are developing.

Natasha Nath
Photo: Flickr

Kenyan mobile money system M-Pesa Reduces Poverty in Kenya
Experts argue that expanding access to financial systems and services are an indispensable component of reducing poverty. However, Kenya offers only limited access to banking services outside of central cities. Fixed-line telephones are largely unavailable, and minimum fees for banking services pose an impediment to the rural poor and can deter use. Due to these facts, many rural and poor Kenyan households traditionally lacked access to proper finance-management resources. However, mobile money transfer service, M-Pesa, now provides Kenyans with an alternative to traditional banking. Mobile money reduces poverty in Kenya by creating a simple and accessible resource for individuals and families to manage their finances. In under a decade, the expansion of M-Pesa’s simple SMS-based system changed household finance so drastically that nearly 200,000 Kenyans—around 2% of the population—were able to break out of poverty.

Establishing Financial Resilience

M-Pesa allows individuals to send and receive payments via text, as well as deposit and withdraw cash from M-Pesa agents stationed in villages. With 110,000 agents located throughout the country, M-Pesa helps Keynan households overcome the country’s lack of accessible financial services. Now, there are 40 times more M-Pesa agents stationed throughout Kenya than ATMs. Users can easily and inexpensively store savings by depositing cash into their mobile phones via M-Pesa agents. Increased access to savings helps Kenyan households weather unexpected economic hurdles. One study found that following a financial shock, the per-capita spending of households using M-Pesa was 12% higher than households that didn’t use M-Pesa. The discrepancy is likely due to the increased saving capabilities of M-Pesa users.

Long-Term Implications for Poverty in Kenya

An MIT study in 2016 examined the long-term effects of using M-Pesa’s service. They found that between the years 2008-2016, per capita consumption of goods increased by approximately 18.5%. The mean of the households in the study spent $2.50 per day, which is well above the $1.25 or even the $2.00 per day that constitutes extreme and general poverty. According to the study, M-Pesa directly helped as many as 194,000 Kenyan households escape poverty between 2008 and 2016.

Financial Independence for Women

Additionally, the MIT study found that M-Pesa helps Kenyan households run by women in particular. Between 2008 and 2016, the savings of women-headed households using M-Pesa grew by 22% compared to those who did not. Furthermore, nearly 185,000 Kenyan women using M-Pesa could switch from subsistence farming to more economically productive activities, such as sales or business. This economic freedom came regardless of whether their home had a female or male head. For households with two incomes, M-Pesa gives women the ability to store savings, allowing Kenyan women to gain newfound financial independence and opportunity for their own economic pursuits.

More Resources from M-Pesa

Since MIT’s 2016 study, M-Pesa has increased the number of Kenyans with access to formal financial services from 75% to 83% in 2019. Along with personal banking, M-Pesa helps Kenyan households with a wide array of financial services. These include taking out loans, actively managing savings and collaborating with local banks. With the introduction of M-Pesa, the number of bank accounts held by Kenyans grew from 14% in 2007 to 41% by 2019. Largely due to this mobile money service, Kenya is now ranked third in the continent in citizen access to financial service, behind only South Africa and Seychelles. Researchers hope that M-Pesa’s success in Kenya will encourage further study of how mobile money reduces poverty in other countries.

 – Alexandra Black
Photo: Flickr

Mobile Technology Solutions for Developing Countries
Mobile line subscriptions in developing countries are at 98.7 percent. In fact, nations with lower economies have more access to mobile devices than to water or electricity. Here are five mobile technology solutions for developing countries.

5 Mobile Technology Solutions for Developing Countries

  1. iCow: A Kenyan farmer named Su Kahumbu Stephanou created an application called iCow. One can easily download the app to a mobile device and run it off of SMS, which can make it accessible to the vast majority of people. The app helps farmers and shepherds track the gestation periods of their cows. It can also connect farmers to each other so they can offer advice on taking care of their animals. The app provides the user with helpful locations such as insemination centers and veterinarians. Moreover, the system has a menu so the users can select what they need wherever they are. This improvement makes it much easier for users to monitor the health of their cows. The regions using iCow the most are Kenya, Ethiopia and Tanzania. App usage has resulted in both income and productivity. In addition, it serves to improve milk, poultry, eggs, crops, soil fertility, mortality rates and overall health.
  2. RapidSMS: RapidSMS is an open-source platform that UNICEF and Pivot Access developed in 2007. It originally emerged to collect data and create activities for children. However, it adapted to its user bases’ needs over time. Now, RapidSMS lets users make data collection and SMS services in its communities. This makes information available over the internet to all users. The app is also able to register births, monitor nutrition and remotely diagnose patients. The regions using RapidSMS the most are Uganda, Kenya, Nigeria and Ethiopia.
  3. M-PESA or Mobile Pesa: This application works with money. It is a mobile system that helps users transfer, deposit and withdraw money. M-PESA is for people who cannot access these services because of their location. The application works through SMS by loading money onto a SIM card and sending it to its desired phone. The minimum amount of money is KSHS 101 and the maximum is KSHS 70,000. In addition, it converts the amount into cash at any legitimate establishment. Then, the recipient receives said funds in their country’s currency. Villages in Kenya mostly used M-PESA, but it has expanded to countries in Eastern Europe, Africa and Asia. If one wishes to send money to someone in South Africa, they must first enter a secret word. Additionally, the recipient must know this word in order to receive the money. App usage resulted in an increase in income and a decrease in petty crime related to money.
  4. WorldReader: WorldReader is an NGO, with the support of USAID and other institutions, that distributed upwards of 30,000 e-readers in 16 African countries. Its application translates books into 52 languages. Also, the application makes education and reading much more prevalent in developing countries. So far, it has 35,000 titles for its user base of more than 10 million.
  5. Malaria-Diagnosing App: An upcoming application has the design to detect malaria in patients. More people will be able to use the application because it will be automated and mobile. The system uses Giemsa-stained peripheral blood samples, light microscopy, AI and image processing techniques to find Plasmodium falciparum species, a parasite that carries malaria. Concepts from the integral image and haar-like features inspire the algorithm. Thus far, its accuracy is 91 percent. Once released, it plans should be easily accessible through health centers and mobile devices. In addition, its automation makes it much easier for medical professionals to diagnose malaria without expensive equipment or much knowledge of malaria itself.

These five mobile technology solutions each allow a unique benefit to challenges that developing countries face. Through technology like iCow, M-PESA and WorldReader, farmers can maximize their crops, those with limited access to financial institutions can still deposit and transfer money, while people can access multitudes of books in their chosen language.

– Nyssa Jordan
Photo: Flickr

Technological Advancements in Africa
Technology
plays an important role in a nation’s modernization. Through health, communication and economical advances, all nations benefit from the inclusion of tech. The world’s leading nations are also synonymous with technological innovations, emphasizing the effect and power of focusing on technological integration with society. Promoting technological advancements in Africa has benefitted them greatly. 

Looking at the Numbers

Africa has seen a dramatic spike in mobile phone users from 330,000 in 2001 to 30 million users in 2013. However, the first piece of technology that has made a large impact and that one can consider a mark of technological advancement in Africa is the internet. In 2014, Africa Renewal, a United Nations magazine, concluded that the main issue in technological penetration of Africa would be in the rural South African regions outside of the scope of major cities.

However, the data that Pew Research showed that in six African countries, South Africa, Ghana, Senegal, Nigeria, Kenya and Tanzania, internet usage increased by 2 to 16 percent from 2013 to 2017, leaving South Africa the highest at 59 percent. This data shows that even if the median percentage usage, 41 percent, is not nearly as high as more developed nations like the U.S.’s 89 percent, sub-Saharan countries are still increasing in internet usage.

Pew Research has shown that younger people are the ones utilizing the internet more. From Tanzania to South Africa, 34 to 75 percent of people aged 18-29 utilize the internet. This group of users is breathing life into technological advancements.

One such case is Peter Kariuki, a Kenyan native, who recognized the growing issue of road accidents in Africa. Road accidents are now the eighth leading cause of death in all of Africa, at 1.35 million deaths in 2016, beating tuberculosis. Peter Kariuki has created CanGo (formerly SafeMoto), a ride-sharing app that links a user with a safe and experienced motorcyclist in the hopes of lowering the rate of traffic accidents 

CareAI

Outside influence has trickled into Africa. One such influence comes in the form of the European Commission and CareAI. CareAI is a computing system that can diagnose diseases anonymously using blockchain. Blockchain is a decentralized growing list of records or blocks that cryptography links.

Malaria, typhoid fever and tuberculosis are some types of diseases that CareAI can test and identify and can do so in an anonymous manner. This anonymity allows migrants, minorities and those without health care to receive the diagnosis without the fear of others outing or persecuting them. The next step after the diagnosis is for CareAI to prescribe an individual with a prescription through an NGO, a nonprofit organization that operates independently of any government or even an NGO doctor. 

M-Pesa

Technological advancements in Africa have helped regions connect via the internet and mobile devices. Widespread use of the platform has increased communication and facilitated technical improvements that improve internet connections.

An offshoot of this connectivity has brought an age of innovation, such as the app M-Pesa which acts as a digital wallet that allows for remote withdrawals without having to visit a bank. With this increased acceptance of technology in Africa, outside organizations have begun to invest in helping Africa, such as U.S. company Zipline. Zipline’s partnership with Rwanda delivers blood and plasma via drones. Technology has aided Africa’s ascent to modernization and will keep improving as long as innovation exists.

With health care innovation, Africa can easily provide medical attention to those living in remote areas. The increasing connectivity of African society benefits not only the welfare of the nation but computer media connections. Outside of health care, technological advancement in Africa has improved manners of access to finances, ridesharing and social media. Africa has taken a step in the right direction in focusing on technological improvements, and people can provide assistance through the African Technology Foundation with its mentorship or partnership programs that focus on providing the education and resources necessary for technological advancements in Africa.

– Richard Zamora
Photo: Flickr

Mobile Software Platforms in Developing Countries  The creation of mobile phones is not only beneficial for everyday usage but also for the livelihood of communities in developing countries. As mobile phones continue to advance, the creation of software applications that are easily accessible can make a difference in the developing world. Whether it be a mobile banking platform, a market information system or an EMS service for desolate regions in developing countries, these types of mobile software are undoubtedly effective in helping those they serve.

3 Mobile Software Platforms in Developing Countries

  1. M-Pesa: In 2007, Kenya launched the mobile banking platform, M-Pesa, with the help of a one million pound grant from the United Kingdom’s Department for International Development. M-Pesa is a money transfer service dedicated to allowing its users to transfer money to relatives in other locations through text, pay for everyday necessities and take out and repay loans. This software plays a significant role in reducing poverty. Studies show that there was a “6 percent increase in per capita consumption, enough to push 64 (or roughly 4 percent) of the sampled households above poverty levels.” Often referred to mobile money, this software gives the opportunity to separate cash and manage a source of income, especially for women. Considering most of the households are male-headed, women who are secondary income earners are unable to save adequately since most of the cash is used by the house. But M-Pesa creates financial independence and allows women to start their own businesses, bringing more money into families.
  2. MISTOWA: Market Information Systems and Traders Organizations in West Africa, MISTOWA for short, is an application created to provide statistics on agriculture to connect small farmers in remote areas with potential buyers at a fair market price. Created by the United States Agency for International Development and launched in March 2005, MISTOWA uses a web platform called TradeNet where buyers and sellers can upload and send agriculture information through text and SMS subscriptions. MISTOWA is partnered with a company named Esko in Nairobi, Ghana where rural farmers are sent price information, weather alerts and crop advice. After launching this mobile software, there was a 9 percent increase in profit for the farmers who used the software.
  3. Beacon: In rural areas, such as the countryside of the Dominican Republic, many citizens are unable to dial 9-1-1 for a medical emergency due to emergency services being too far away. Trek Medics International, in partnership with Google and Cardinal Health, created a lifesaving software program called Beacon. Through this mobile software, residents in the Dominican Republic can contact the nearest firehouse station where an alert will be sent via Beacon to a volunteer dispatcher who is first-aid trained. This volunteer travels to these regions on inexpensive motorcycles and transports the injured person to the nearest hospital.

Thanks to the masterminds behind mobile software, communities in developing countries are beginning to make use of the technology that is available to them through their mobile phones. Although these mobile software platforms in developing countries don’t tackle every issue, it is just the beginning of how advanced technology can make an impact.

– Jessica Curney
Photo: Flickr

Impacts of Cell Phones
Since its invention in 1973, the presence of the cell phone has become practically unavoidable worldwide. As of 2019, there were approximately 4.68 billion mobile phone users globally. Although many worry about the adverse effects of the overuse of the device, one cannot overstate the positive impacts of cell phones, especially in the developing world. From mobile banking to health care, the cell phone has left an incredible footprint on the world despite its relatively short existence. Here are the top five impacts of cell phones in the developing world.

Top 5 Impacts of Cell Phones in the Developing World

  1. Mobile Banking: For many people living in the remote regions of third world countries, traditional brick and mortar banks are often out of reach. Mobile banking, however, is helping initiate financial inclusion. By connecting major banks to online banking networks, individuals can now easily transfer money with even just a flip phone. For instance, M-Pesa, a Kenyan mobile phone-based financial service, operates through the usage of banking SIM cards that allow the user to transfer monetary assets via SMS. This way, a flip phone would be all one would need to start with this service. As of 2016, an average of 19 million Kenyans sent the equivalent of $15 million on a daily basis. Through such services the number of people with financial accounts in Kenya has jumped from 21 percent in 2011 to 63 percent in 2014.
  2. Education: One can increasingly find the cell phone utilized for education in the schools of many developing countries. The utilization of mobile apps has transformed teaching in such places. For example, in parts of Africa, the EDC (Education Development Center) is currently experimenting with sending podcasts of interactive instructional materials to students. Furthermore, cell phones have increased literacy rates. The landmark 2014 UNESCO study, “Reading in the mobile era,” surveyed over 4,000 individuals in regions with low literacy rates and where people are unlikely to text. The study showed that many people have resorted to reading stories and books on their mobile devices. Additionally, a third of the study participants read stories to their children via their devices.
  3. Disaster Relief: Today mobile devices are a unique communication tool for disaster relief in developing countries. For example, in August 2017, Ncell, a Nepalese-based mobile operator, was able to provide warnings to vulnerable populations prior to the deadly floods and landslides. On the other hand, after the disastrous 2017 Hurricane Maria incidence in Puerto Rico, AT&T deployed Flying COWs (Cell on Wings). These Flying COWs were cell sites connected to wings that provided cell service to disaster-stricken areas temporarily and allowed residents to gain contact with loved ones and relief organizations.
  4. Governance: In countries and regions with low population densities, it has traditionally been exceedingly difficult for governments to reach out to the individuals residing there. However, mobile technology has simplified seemingly impossible tasks such as long-distance polling and voter registration. In 2018, the local government of Quezon City, Philippines even initiated a mobile app that serves as an online database of the city’s ordinances.
  5. Health Care: The impact of cell phones in the developing world has also stretched to the area of health care. Currently, mPedigree, a Ghanian nonprofit, is using cell phones to authenticate drugs to safeguard consumers against counterfeit and substandard products. The World Health Organization estimates that over 10 percent of global medications are fake so this new technology should be able to save countless lives on a daily basis.

Mobile devices are popular in remote areas to cheaply or freely offer daily texts and voicemails about common medical conditions. For example, in Mozambique, Absolute Return for Kids, a British nonprofit, is fighting HIV/AIDS by using mobile messaging to remind enrolled patients to take their medications as well as about appointment dates.

Conclusively, the range of the various impacts of cell phones globally in developing countries has been both deep and wide. The device has proven itself to be both an efficient yet inexpensive solution to many day-to-day problems. It is not too optimistic to say that in the near future even more creative uses for cell phones will surface.

– Linda Yan
Photo: Flickr

How Mobile Phones Help the Poor
Mobile technology has been shown to have a tremendous effect in helping alleviate global poverty. Over six billion of the approximately seven billion people in the world have access to mobile phones, as shown in a 2014 UNESCO report. By 2016, it is estimated that there will be one billion mobile phones in Africa. Such widespread access opens up a window of opportunity to utilize mobile technology as an instrument in improving the lives of users in developing countries.

According to UN Millennium Project Director Jeffrey Sachs, cell phones are the key instrument in transforming poverty-stricken lives.

“Poverty is almost equated with isolation in many places of the world,” he said, as quoted in a CNN article. “Poverty results from the lack of access to markets, to emergency health services, access to education, the ability to take advantage of government services and so on. What the mobile phone — and more generally IT technology — is ending is that kind of isolation in all its different varieties.”

From the educational sphere to the economy, access to mobile technology has already significantly improved the lives of many across various aspects of life.

 

4 Ways Mobile Phones Help the Poor

Literacy and education
Where there are no books, there are still mobile phones. Utilizing mobile technology is one of the easiest ways to increase literacy rates simply because phones are already in the hands of members of developing nations. Mobile reading provides a much cheaper and more convenient alternative to reading from books. While cell phones cannot teach users how to read, they are shown to significantly increase literacy retention rates. Several mobile applications and programs exist to increase access to mobile reading in the developing world. Programs such as MobiLiteracy Uganda provide parents with daily reading activities to complete with their children via audio SMS so that illiterate parents can still work to improve their children’s literacy. It is not necessary for users to own smartphones because even the cheapest mobile models allow access to mobile reading.

Agriculture
Mobile technology has completely transformed the lives of farmers in developing nations, as it allows them access to market prices without the timely concession of long-distance traveling to faraway markets. Additionally, access to weather information can help farmers prepare for in-climate conditions that may affect their crops. Several mobile applications exist to provide farmers with information about nearby markets and prices, mapping to potential clients, feeding schedules for cattle and local veterinary information.

Banking
Millions of Africans utilize mobile technology as a banking instrument. Since 2007, Safaricom and Vodafone’s M-PESA application has allowed users to store funds on their mobile decides in order to transfer funds to other users, pay bills, or make other purchases. In 2009, a 10th of Kenya’s GDP was being circulated via M-PESA. Former Safaricom CEO Michael Joseph noted that mobile technology has been transformative for the informal business sector, which comprises about 70 percent of jobs in Kenya. This increase has been instrumental in helping surge GDP rates throughout the developing world.

Health
Mobile phones allow endless distribution of health resources, which has led to the development of mHealth, or mobile health, programs. Field workers can use their mobile devices to work with experts to determine what conditions are treatable at a local level and what patients need to be transported to a hospital. This increased communication saves time and money and also helps to ensure appropriate treatment. Text messages have also shown to be vital in communicating stock levels of medications and resources in remote locations. Additionally, public health organizations have organized text message campaigns to increase preventative habits against fatal diseases.

– Arin Kerstein

Sources: CNN, Fortune, National Geographic, UNESCO, USAID,
Photo: Sustainable Brands

Mobile_Financing
It can get hard to save for the future, plan and invest in a business and survive economic reversals if one lacks access to finances or bank accounts. This is a reality for many individuals who live in poverty.

When the concept of microfinance was developed, people with extremely low incomes had the opportunity to acquire small loans with which they could start businesses and generate income. A revolution at the time, microfinance gave the poor a chance to get loans without a credit history and large collateral needed by the traditional banking sector. However, these kind of loans are still hampered by access and the need to handle finances which can drive up costs and interest rates. This hole is now being filled by mobile finance.

Electronic solutions are making banking options much more accessible across the world. They reduce the cost of infrastructure needed, and the administrative costs associated with maintaining financial accounts. Such remittances can be much more secure than traveling long distances to deposit cash in a bank. Government disbursement programs can also use mobile financing to directly remit payments to the welfare dependents. This cuts out the intermediaries, reduces opportunities for corruption and allows the beneficiary to get their monies quicker.  Worldwide, 170 million people who receive payments directly from their governments stand to benefit from this approach.

M-Pesa, launched in Kenya by Safaricom, is one of the most wide-reaching mobile financing solutions. Over 17 million people in Kenya now use this product and over 25 percent of their GDP is moved through this system. Originally designed to facilitate microfinance loan repayments, M-Pesa allows cash deposits, withdrawals and cash transfers between people in the same way you would credit a phone with talk time. It has now expanded to Tanzania and Afghanistan.

Some of these initiatives are supported by development organizations. For instance, Bangladesh based Bkash is supported by BRAC Bank, IMF and The Gates Foundation among others. The Gates Foundation and other such organizations are closely involved in the process of making these solutions hit their stride.

The Gates Foundation assists in finding innovative new solutions and researches factors that would encourage their adoption. The foundation also works with governments to develop and implement policies that would stimulate this sector and develop suitable methods for oversight and accountability among the providers. As the technology slowly becomes mainstream and more competitors enter the market, governmental regulations will start to become more and more important.

In the words of Jim Kim, President of the World Bank, “More than one in three people on earth now lacks access to basic bank accounts or any kind of credit. Our goal is to bring that number to zero in just five years. Doing so will be an incredible challenge, but the reward will set us on a path to end extreme poverty by 2030.” Mobile financing is going a long way to bridge this gap and help achieve this goal.

Mithila Rajagopal

Sources: Bkash, Economist, The Gates Foundation, LinkedIn Pulse, World Economic Forum
Photo: flickr

Bitcoin has recently been a hot topic of discussion for many popular radio and television programs—including NPR’s Planet Money and The Colbert Report. Now the question is, what exactly is Bitcoin?

The U.S. has the dollar, Mexico has the peso, the United Kingdom has the pound. The creators of Bitcoin wanted to invent a currency that was not tied to any country or government. Bitcoin acts as cash for the online universe that can be transferred to anyone, anywhere in the world.

The online currency, that began as a mere hobby for tech entrepreneurs and pioneers of finance, has landed in Kenya. The Bitcoin transfer service will be an addition to M-Pesa, the country’s highly successful mobile banking platform. The service, called Kipochi—Swahili for “purse”—will allow Kenyans to transfer money abroad while avoiding the large transaction fees of companies like Western Union and MoneyGram.

Kipochi describes itself as a faster, easier, and cheaper way to transfer money, compared to banks and money transferring services. All that is required for users to sign up is an email address, phone number, and passport or national identity number. Users can currently transfer one bitcoin a day—the exchange rate is currently 99 USD=1 BTC. However, the transfer amount is expected to increase overtime.

M-Pesa is a system many Kenyans already use to transfer money by text message within the country. Kimpochi will link to this system and allow Kenyans to send and receive Bitcoin internationally, converting it to and from an M-Pesa balance. Since Bitcoin only charges $0.04 per transfer, exchanging money will be made cheaper and more affordable to Kenyans.

In a country where 70% of the population does not have a bank account but does have a mobile phone, it makes sense that a non-governmental, cashless system like M-Pesa, and potentially Bitcoin, will thrive.

– Scarlet Shelton

Sources: All Africa, Wired, NPR, Mashable