Posts

Mobile BankingMicrofinance programs are a popular development tool that gives poor households loans and access to formal banking and other financial services so that they can generate income and market their enterprises. Others have questioned the true extent of the effectiveness of this bottom-up approach to development in actually reducing poverty in recent years. However, the rise in access to mobile banking in the developing world brings hope of a new generation of microfinance.

Microfinance as a Development and Poverty Reduction Policy

Mobile phones have been one of the fastest-growing devices in the developing world. International reports found that global mobile phone ownership is growing exponentially, especially among young people in emerging economies. Although ownership is higher in developed economies, a median of 45% of people in developing countries now owns a cell phone compared to only about 25% 10 years ago. The new groups of people with access to technology have created opportunities both for investors and the world’s poor.

Mobile banking accounts and transactions are now accessible in two-thirds of the developing world. Moreover, they are beginning to exceed the number of traditional banking methods in some regions. This growing market is not only multiplying the success of banks but also giving entrepreneurs new ways of selling and profiting from their labors. Through mobile banking services, customers are also gaining access to loans and insurance to protect themselves and their families if they become vulnerable to falling back into poverty.

Mobilizing Myanmar

Mobilizing Myanmar is a prime example of the impact of these new financial programs. A woman from Myanmar started this program to increase tech and communication access for women and the poor with the support of the Bill and Melinda Gates Foundation. She was inspired by having limited connections during her childhood in Myanmar. In 2013, the program noted that SIM cards cost over $2,000 USD and now, thanks to its hard work and partnerships with the Myanmar government, over half of the adult population has a cell phone. The successes of this approach to microloans and development has gained the attention of major international aid organizations due to its potential to boost people out of extreme poverty. This is because reports have indicated that users had better health outcomes, more financial stability and security and new sources of income.

Benefits of Mobile Banking

Mobile banking has also been more accessible for users who are illiterate as many apps are pictorial, especially those pertaining to farming. Agricultural productivity is yet another opportunity for mobile finance services to increase market access and demands. Mobilizing Myanmar also cites access to a phone and mobile money as an opportunity for online learning for children unable to attend school. It also presents new opportunities for women in the developing world as approximately 42% of women across the globe are not incorporated into the formal financial system. Mobile banking can help women gain control of their household finances. It has also proven effective as a means for group savings in parts of Myanmar.

While questions remain in many regions of access to a cell tower of even basic electricity to power cell phones in order to operate mobile banking, the cost of setting up these systems is a relatively low-cost investment. Also, once set up, these financial systems and microcosms, with regulations in place, can sustain themselves and reinvest in their communities. Thus, although mobile banking is by no means a perfect solution to lifting the world out of poverty, it has proven to be an effective development tool and a reliable investment. Mobile banking is just one way that modern technology can help the world’s poor lift themselves out of poverty.

Elizabeth Stankovits
Photo: Flickr

Mobile BankingMobile banking is a clear step toward financial literacy and freedom. It allows users to access and manage accounts without needing physical access to a bank. It is a huge asset and accepted norm in countries like the United States, where it is used by over three-quarters of the population. By 2021, there will be an estimated 7 billion mobile banking users. But in countries where much of the population doesn’t have access to financial institutions, mobile banks presents an option that allows users to gain the financial freedom they wouldn’t otherwise have. Traditionally, without access to banks, there is no access to bank accounts. This makes it not only difficult to save and protect money but also nearly impossible to access loans. Below are three countries where going mobile improves financial inclusion.

Kenya

In 2011, around 80% of the Kenyan population didn’t have a bank account. This was revolutionized by the introduction of mobile banking, resulting in an incredible increase in financial accounts up to 75% in 2014. The percentage of Kenyan’s with a mobile account has since jumped to around 80% in 2019, with that number still growing. Though mobile banking is taking hold in many African countries, Kenya leads the charge of mobile adaption. This success is evident through the country’s recent economic growth, averaging 5.7% in 2019, one of the fastest-growing economies in Sub-Saharan Africa. Mobile banking has been succeeded so rapidly and fruitfully in Kenya due to its incredibly low cost and user ease. After the infrastructure is created, all that’s needed is an old flip phone and a banking SIM card. These products are relatively easy and inexpensive to get, even in countries with fewer resources. Mobile banking has allowed Kenyan’s to save money, send and receive it with ease, apply for loans, and has led to financial inclusion. Kenya acts as a clear leader in developmental growth through mobile banking.

India

In 2017, India had the second largest unbanked population, second only to China, with 190 million of its citizens left without access. In the same year, around 48% of India’s banks were inactive, only adding to the inaccessibility. Despite such a large number of citizens left without a bank account, over 50% of these individuals do have a mobile phone. With the proper infrastructure, mobile banking could revolutionize the way Indians send, receive and save their money. For low-income populations in India, most financial transactions occur in cash, a method that is not conducive to economic growth for poor families. With more universal access to banking, low-income populations could receive their income through direct deposit and pay their bills directly from their account, using their phone. This system promotes saving and also allows tracking of financial habits, producing an easier system for low-income individuals to amass credit and become eligible for loans. As the internet becomes increasingly accessible in India, mobile banking is expected to rise, and with it, financial inclusion.

Indonesia

In opposition to the other nations discussed, Indonesia has a much lower prevalence of mobile banking, but just as it has in Kenya and India, going mobile could revolutionize financial inclusion in Indonesia. Only about 20% of Indonesian’s currently have a bank account, but almost 40% of the population have mobile subscriptions, suggesting mobile banking has huge potential in the country. In 2020, an unexpected source has begun to jumpstart the exponential growth of mobile banking in Indonesia. In the wake of COVID-19, many physical banks are closed, and even those who previously had access are unable to interact with their finances. One bank, namely Bank Rayat Indonesia has even seen a 10% month to month increase in mobile banking, an unprecedented growth. Indonesia presents as a nearly perfect candidate for a “mobile revolution” given its high mobile penetration, low banking rate, and the recent inability of traditional banks to function. Despite the many challenges and tragedies COVID-19 has caused, it could be the driving force for a mobile revolution in Indonesia

— Jazmin Johnson

Photo: Flickr

Afghanistan's Technology Is Growing and Developing
Thoughts of Afghanistan generally focus on the Taliban, harsh restrictions and a war-torn country; but in actuality, the nation has dramatically changed in the last 15 years with a huge contributor of such change being the introduction of technology in the country.

From 2001, when even phone usage was limited, to 2016 when 73 percent of the government receives its pay electronically, Afghanistan’s technology is growing in a unique way that is creating more jobs, a higher standard of living and improved relations between Afghanistan and other nations.

Technological Life under the Taliban

The Taliban is an Islamic fundamentalist group that ruled Afghanistan from 1996 to 2001. The militant organization was outed by U.S. military for providing support and shelter for Al Queda after the 2001 terrorists attacks. Life under the Taliban has been highlighted for its injustices towards women, but it expands to a set of strict restrictions for all citizens that reaches so far as to ban the internet.

The Taliban took Shaira, an Arabic word for path (or the way to live life), and fed its interpretations through this mantra. Anything that was deemed “un-Islamic” was banned, which meant no music, movies or internet for anyone since these could act as means of spreading Western “propaganda.”

Major Technological Advances in Afghanistan

Afghanistan’s technology is growing largely through its payment sector. Innovation in banking through the introduction of mobile pay has improved the systems and lives of those using it. In 2009, mobile pay was suggested for use on a trial basis; and as of 2016, 97 percent of the police force were registered in the system.

It seems strange that it’s in Afghanistan — where only 5 percent of citizens use a bank account and over 70 percent are unable or read or write — that this technological advancement would find its footing.

Mobile banking — transferring funds to a mobile account, paying with that account, and then being able to lend, pay off loans — has cut costs in the police department by 10 percent which is a measure largely associated with avoiding corruption. Since payments can be traced and tracked more accurately, it makes it more difficult for a someone (i.e. a corrupt officer) to take a cut.

Afghanistan and E-Governance

Along with using technology to create mobile pay, Afghanistan’s technology is growing through E-governance. E-governance is implemented by creating a centralised system of ‘Presidential docs.’ This allows the cut down on paperwork and has reduced processing time from weeks, to a maximum of 48 hours.

This system also allows government officials to connect with each other through video conference calls which helps in decreasing the amount of time and money spent in travel. Again, such efforts serve as an example of how corruption has decreased, transparency has increased and money evades hands that would take it illegally.

Technology Connects Afghani Citizens to the World

Afghanistan’s technology is growing and connecting the country with its neighbors and Western countries like the U.S. The innovative boom also provides more opportunities for often overlooked demographics, such as women. For instance, with the online hemisphere hitting homes, technology has come to provide women, like Roya Mahboob, opportunities to educate themselves and even open new businesses.

Even with the Taliban gone, the predominantly conservative society still possesses obstacles for growing technology, but Mahboob is an example of how the technology available is working to create jobs, educate citizens and connect the world.

Mahboob now lives in New York with businesses in Afghanistan and hopeful expansions into Mexico. She is an amazing example of the positive impacts of technology, and Afghanistan’s government is ever-increasingly recognizing the benefits of technology and is working to more extensively incorporate it into Afghani society.

– Natasha Komen

Photo: Flickr

Mobile Banking in Southern Africa
The World Food Programme (WFP) is unveiling a new initiative to make mobile banking in southern Africa more accessible.

The World Food Programme is a humanitarian agency dedicated to fighting hunger worldwide. They work to provide food both during and after emergencies and international conflict. For the former, they provide the necessary sustenance where it is needed by victims of war, disaster, and such. Once the conflict has passed, the WFP continues to provide food to help communities rebuild themselves. However, their work extends beyond just providing people with access to nutrition.

In the case of their newest initiative, the WFP will also be providing money transfers and mobile banking in southern Africa. The cash-based transfers will allow people in eight countries to more easily access the money they have to tap into local markets. Increasing cash availability and access in developing countries have been shown to allow local economies to flourish. A study by the WFP showed that for every U.S. dollar made available boosted the local economy by up to $1.95.

In their 2015 Annual Letter, Bill and Melinda Gates argued that mobile banking in developing countries will revolutionize the way in which the global poor raise themselves out of poverty. The poor, Gates explained, not only lack money but when they do have it, they often lack the means to access it. Now, mobile phones are changing the way they do business.

Between the marginal costs of digital transactions and the fact that more than 70% of adults in many countries have mobile phones now, mobile banking in southern Africa can be highly profitable. This provides incentives for companies to get in on the ground floor of these services, where competition between them will no doubt foster faster innovation and better technologies to address the challenges unique to global poverty.

The WFP has had success with mobile banking in the past. Recently, they unveiled a similar, pilot program in Ghana.

In an interview with the WFP, Adams Inusah, a farmer, said, “I like receiving money through my mobile phone because I can go and cash the exact amount I need for food and save the rest to buy seeds for my farm.”

Both the World Food Programme and the Gates Foundation believe that mobile banking in developing countries will pave the way for stronger economic growth and prosperity.

Sabrina Santos

Photo: Flickr

The Growth of Mobile Money in Africa
Millions of Africans utilize their cell phones to manage their finances. Mobile money in Africa is currently in use in 36 of the 47 countries in Sub-Saharan Africa and is used prominently throughout East Africa.

Mobile financial services (MFS) have become increasingly popular across the continent for many reasons. Many economists cite safety, efficiency, transparency, and ease of the services as reasons for the increased usage.

MFS include more than just cash transfers but have also expanded to utility bills, shopping, investment, taxes, and more. The services have also allowed easier cash flow across borders and between family members in times of crisis, which economists have cited as major motivators in service usage in the region, according to a report in All Africa.

One of the most prominent mobile money services in the region, M-PESA, was developed in Kenya. Since 2007, Safaricom and Vodafone’s M-PESA application has allowed users in Kenya and beyond to store funds on their mobile devices in order to transfer funds to other users, pay bills, and make other purchases.

The country now tops the global charts, with 58 percent of its adults having mobile money accounts. 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.

The latest mobile money statistics indicate that users in East Africa have largely continued to shift GDP to be transferred via various mobile money platforms. According to All Africa, mobile transactions amounted to $45.75 billion for East Africa, comprising 32 percent of the region’s combined GDP.

This is a significant increase from the $4.86 billion transacted via mobile services in 2009, which only comprised 3.4 percent of the region’s GDP. In Zimbabwe, 45 percent of the country’s GDP is transacted via MFS.

In its 2014 State of the Industry Report, the Groupe Speciale Mobile Association (GSMA) stated that MFS are ingrained in the majority of developing markets, with over 250 mobile money services available across 89 countries.

In 2014, almost 300 million users were registered for mobile money accounts. 2014 marked 16 markets with more mobile money accounts than regular bank accounts, “indicating that mobile money remains a key enabler of financial inclusion.” Furthermore, as smartphone access increases, the GSMA expects MFS usage to continue to increase rapidly.

Because of the prevalence of MFS through non-bank providers throughout the region, government regulators are passing guidelines for mobile money service provision in order to allow better financial inclusion for all members of society.

While competition has grown steadily between bank and non-bank mobile money service providers, regulations like these aim to maximize the reach of the services to the widest audience possible. The GSMA report marks that 47 of the 89 markets with mobile banking have regulations to allow both banks and non-banking services to sustainably provide for their markets.

The GSMA outlined in its report that there are still obstacles in helping mobile money services achieve their full potential in the region. The report states, “Regulatory barriers, low levels of investment and lack of industry collaboration limit the ability for mobile money to reach scale.”

Despite these obstacles, economists widely expect mobile money to continue to grow in order to meet eager markets across the continent.

Arin Kerstein

Sources: Africa Focus, All Africa, CommsMEA, GSMA, IT News Africa
Photo: Flickr

South Africa and Mobile Money
The matter of mobile money becoming popular in South Africa was not a question of if, but when. This claim is supported by South African payment experts who believe that the current local market factors support mobile wallet adoption.

Some believe that mobile money does not have a place in the developing world. Countries that have a smoothly running banking system like card payments and ATMs. There is no room for the digital use of money.

However, mobile phone usage in South Africa has soared. The country’s high rate of mobile phone users suggests that user education is not a barrier.

Consumers have become comfortable making payments online as well as on mobile devices. This fact supports the mobile wallet service as a viable option for many individuals.

The First National Bank’s mobile wallet is an example of how banks are looking to have access to low-cost channels to serve under- and un-banked customers. In South Africa, a key focus is on the seven million people who earn salaries but do not have their own bank accounts.

“The World Bank 2014 Global Financial Development Report estimates that about 2.5 billion people in the world do not have access to banking services.” Mobile money could change this.

In the United States, T-Mobile has introduced similar services to serve the needs of unbanked individuals. Romania faces the same challenge. There is a huge population of unbanked individuals that mobile money could help.

But it does not stop with mobile money: other services are likely to be incorporated within the banking infrastructure. In China, a mobile banking service lets brands reach consumers via mobile banner ads.

“A diversified offering will unlock value in a South African market that is socially savvy and has an appetite for integrated services,” says Mustapha Zaoiunu, the CEO of PayU, a mobile banking company. “It is an inevitable progression for large third-party players like Apple or PayPal to offer a suite of services through their wallets.”

Some of the integrated services could include price comparisons, relevant product information, the ability to make reservations, split billing and digital tickets for movies or concerts.

The world is starting to notice the role mobile money pays, including its efficiency, speed, access, reach and revenues. Mobile money is becoming the new way to be part of the banking network.

Because smartphone usage has soared in the developing world, mobile money will surely become a popular banking option. With its easy access and acceptance, it is predicted to become favored with the unbanked and banked individuals of the developing world.

Kerri Szulak

Sources: IT News Africa 1, IT News Africa 2
Photo: Meme Burns

mobile_banking_impact

Mobile banking and money transfers are growing in popularity. Kenya has more active accounts than it does people. But how exactly can mobile banking make a positive impact on the developing world?

The total value of worldwide transactions made on mobile phones in 2013 was $24 billion. The top five countries with the highest number of active bank accounts are all in the developing world: Kenya, Tanzania, Botswana, Zimbabwe and Cameroon.

Such is the potential of mobile banking that Bill and Melinda Gates have made it their next target, believing that “mobile banking will help the poor transform their lives.”

Instead of storing wealth physically, with things like livestock, jewelry or even stuffing money in mattresses, mobile banking enables people a safer and more “mobile” way to manage their money. There is less potential for depreciation or loss of wealth when money is stored in a bank – a bank cannot get sick and die, unlike a cow.

Furthermore, if only a small amount of money is needed for a minor home repair or a few groceries, it makes sense to use a small amount and pay through a phone connected to your bank instead of taking a cow or piece of jewelry however far is necessary to sell for more money than might be needed in the immediate future. Mobile banking also makes the opposite more possible – again, livestock can die which makes saving money for the long term more difficult, but access to a mobile bank makes it simpler to save for children’s education, a payment for a car or just a rainy day.

Another positive impact of mobile banking is that it reduces the amount of time spent and distance traveled to go to a physical bank, sell livestock or make a payment. Transfers, deposits and payments can be completed in an instant instead of walking to the nearest bank or market.

In the same way, mobile banking also benefits farmers. Without mobile banking, farmers bring crops to town and leave them with a seller who has a vegetable stand before returning home. The farmer then has to return to town, hope that he can find the seller and collect his money. This whole scenario has the potential for loss of money and long journeys. Plus, what if the farmer needs money before he can come to town to collect it?

Mobile banking can eliminate all these potential issues if brought into play. Instead of the farmer making a second trip to collect his money, the seller can transfer it to the farmer as soon as his produce sells, from phone to phone in an instant.

A perfect example of the positive impact mobile banking is capable of having on the developing world is M-Pesa, which was one of the first systems to start enabling payments by mobile phone. Based in Kenya, the company “developed a system for transferring micro-credits via cell phones supported by a network of agents. This system was initially intended to drive local development and its objective was to reduce funding costs, but it found its real niche for its use with the payment options it offers.”

This way of making payments moved around the obstacle of cash access in Kenya, which is relatively difficult due to the technology and infrastructure needed to set up an ATM system. Instead, making a payment via an SMS text saves time and is easier for individuals – the way forward for banking and improving lives in the developing world.

Greg Baker

Sources: Huffington Post, New York Times, BBVS Innovation Center, CNN, The Economist
Photo: AVG Now

Technological Solutions to Poverty
Technology is everywhere. Electronic dispensers squirt a predetermined amount of soap on our hands. Cell phones connect us to people across the world. Dishwashers wash our plates, planes transport us across the globe and video games entertain us. But technology has more uses than just entertainment or convenience. Modern technology can radically change the lives of the world’s poor by empowering and equipping them. Modern technology is one of the most effective solutions to poverty.

 

Innovative Aid: 10 Technological Solutions to Poverty

 

1. Mobile banking

Mobile banking offers the poor access to banking without transaction costs and without the need for a traditional, physical bank. A Brookings Institute Policy brief reported that access to banking helps the poor protect their assets and invest wisely. It allows them to save money without fear of theft.

Brookings reported that, “One study from the Philippines found that access to formal savings increased women’s economic empowerment by raising their influence over household consumption choices, children’s education and use of family planning.”

Furthermore, mobile banking makes direct cash transfer programs for aid organizations easier and more efficient.

2. Mobile health care

Cell phones offer access to medical information otherwise inaccessible to impoverished people. A recent Ghanaian project, for instance, targets pregnant women who lack access to information on how to promote healthy fetal development, reports the Research Council of Norway. Mothers receive weekly, automated messages designed to help counterbalance superstition and pregnancy-related myths.

“All they need to receive these messages is an inexpensive mobile phone,” says Jacqueline Møller Larsen of the Grameen Foundation in Ghana. “The health information they receive in this way can make a real difference in the health of both mother and baby.”

3. Access to clean water

Globally, more than 748 million people do not have access to clean water and more than 2.5 billion people have inadequate access to sanitation. More than 1,400 children die every day of diarrhea caused by unsafe water and improper sanitation. WaterAid, an organization dedicated to providing access to safe water and sanitation, writes that access to safe water would not only slow such diseases, but would also return an average of $4 of increased productivity per dollar invested.

Such advances are not out of reach and modern technology can create achievable goals for water and sanitation. Practical Action, for example, partnered with Kenyans from the dry, arid Turkana region to develop a solution to the area’s drought problems.

“We developed a solar-powered water pump that uses locally-sourced equipment to pump 30,000 clean litres of clean, safe water to the village every day,” the organization reported.

4. Improve farming techniques

Most of the 1.4 billion people who live on less than $1.25 per day rely on agriculture for their livelihoods, according to the United Nations. Technological advances in agriculture, from better plowing techniques to rice adapted from saltier water, can reduce hunger for millions.

“If we could get and invent new seeds, new mobile technology and open new data centers to help farmers connect their crop prices and understand weather variability we can do something transformational against hunger,” USAID administrator Dr. Rajiv Shah told TIME. “And not just reach a small percentage of the people that are hungry with food.”

5. Increase access to education

Many children, especially disadvantaged girls, in rural areas have limited access to education. And many of the schools that rural children can attend struggle with poor-quality teachers and limited resources. But new technology like solar-powered computers and projectors allow students to participate in real-time, interactive lessons with quality teachers. Ghana recently started its first interactive, distance learning project, Making Ghanaian Girls Great! (MGCubed,) with the support of the British Department for International Development in Ghana, reported Ghana Web. This program uses new technology to provide access to education impossible before now.

6. Better waste management

The ever-increasing urbanization in many cities of developing countries, such as Nairobi, Kenya, has overburdened solid waste management facilities and created littering problems. From recycling plastics to managing human waste, technology has the potential to transform the life of the urban poor.

7. Empowering through information

By 2015, it’s possible that everyone in the world will have access to a cell phone. The United Nation reports that more people in the world have access to cellphones than justice or legal services. Currently, more than 5.4 billion people have mobile phone subscriptions. Since mobile phones require only basic literacy, phones offer almost everyone in the entire world access to information and the opportunity to make their voices heard.

8. Improved transportation

Especially for the poor living in villages miles away from large towns, trips to town for water and food can take hours. Often, in medical emergencies, they cannot make it to hospitals in time. Many villagers that have bicycles cannot use them to transport the ill. Practical Action works with villagers to build bicycle trailers to transport up to 200 kilograms of water, food or passengers.

“…Whether its bringing clean water, removing waste or sludge, the bicycle still has the power to transform poor communities,” wrote Matt Wenham of Practical action.

The simple creation of a bike trailer has the potential to save thousands of lives.

9. Disaster relief and management

Natural disasters like tsunamis and earthquakes affect the rural poor most, as they often have no idea anything is happening. Using mobile phones to alert them of impending disaster can give them enough time to flee to safety. Bangladesh, one of the most at risk countries in the world for natural disasters, has implemented a mobile alert system in an attempt to save lives.

“This new initiative will mean that people will get an alert on their phones warning them that they are likely to face flooding or a cyclone,” Syed Ashraf, communications specialist for the country’s Disaster Management Bureau, told Reuters. “So they will then be able to take action like evacuate their homes and seek shelter in assigned places.”

10. Sustainable energy

Access to energy enables people to work their way out of poverty, access education and improve their own health. New technologies, such as solar and hydro power, can provide access to energy without building expensive power plants. Even simple technological advances, like fire-less cookers that rely on stored heat, can save the poor money and time.

“Just providing a few hours of solar lighting alone improves the human condition,” Justin Guay, associate director of Sierra Club’s International Climate Program, told Take Part.

Further investment in technological solutions by both private donors and the federal government could radically change the lives of the global poor.

– Sally Nelson

Sources: Brookings, Ghana Web, Practical Action, Reuters, Take Part, Science Nordic, TIME, Water Aid, IFAD, United Nations Development Programme
Photo: Businessweek

mobile banking
More often than not, adopting a pre-existing idea is easier than creating a brand new one. The mobile phone is an example of this. In recent years, there has been an explosion in the adoption of mobile phones among people living throughout Africa. The impact of mobile phones includes paving a more secure form of mobile banking, and ultimately creating a shift in African culture.

Over the past decade, the use of mobile phones has increased in both developed and developing countries. According to the World Bank, mobile subscriptions have been increasing around the world every year – and African countries have made the biggest gains. In 2009, the US had 89 cellphones per 100 people, and 96 in 2013. Nigeria had 48 per 100 people in 2009, with 73 in 2013. South Africa had 91 cellphones per 100 people in 2009, and 147 in 2013. The greatest strides were made by African states.

According to The Economist, three phones exist for every four people, which describes the accessibility of these products. While mobile devices were initially created to function as telephones, Africans do not use them solely for communication. Just like people with iPhone’s in developed nation, Africans have access to a whole range of activities via their phones, including secure banking and e-payments.

According to Paul Edwards, the CEO of Emerging Markets Payments (EMP), only 15 to 20 percent of Africans have bank accounts. This number contrasts sharply with developed countries, where almost everyone has or is expected to manage a bank account as an adult.

Mobile banking has created a shift. Africa has a different banking culture than that of developed nations.

Furthermore, making e-payments and using mobile banking allows for less corruption. As all money transfers are electrically handled, transactions are instant and, therefore, significantly reduce the number of delays in payments.

Many Africans have used cash to fuel their informal sector jobs, but using less cash and more e-payments allows governments to track tax-able profits. Ultimately this creates a more regulated, tax-paying economy that will generate revenues for the state and further establish self-sufficiency.

The growing popularity of mobile phones displays a tangible shift in Africa’s culture. A public relations company named Portland conducted a survey of Twitter in Africa. They used devices that allowed for geo-location; by examining the hashtags in Tweets, they were able to look into the interests of Africans. Subjects ranged from Nelson Mandela’s death to football to public dissatisfaction with the government.

As Africans continue to use mobile phones for various purposes, the rest of the world will watch to see what this will mean for the development of Africa.

– Christina Cho

Sources: Foreign Policy, The Economist 1, The Economist 2, World Bank, Foreign Policy 2
Photo: CNN

Latin_America_Mobile_Banking
Mobile banking technology may be the latest in services to improve social inclusion in Latin America. Due to the extensive penetration of mobile phones in Latin America, a region where there are more phones than people, mobile banking can be used to promote financial transactions.

Approximately 65 percent of Latin Americans lack access to a banking service, and many are hoping that the ubiquity of cellphones will permit the unbanked to open up a bank account remotely and to send and receive payments and utilize other financial services.

The idea of using a phone as a “mobile wallet” ensures the safety of the money compared to a traditional physical transfer of cash. It also helps the government reduce corruption and waste and improves efficiency and transparency. All governments in Latin America offer citizens Conditional Cash Transfers, a concept that rewards citizens with cash upon the completion of a certain condition, like sending their kids to school or getting vaccinated.

Many countries in South America could reap the benefits of mobile banking technology. In Uruguay, for example, mobile phone penetration is at 132 percent while only 16.9 percent of the population uses a banking service. In Argentina, mobile phone penetration is 142 percent while only 24.4 percent of the population is banked.

Bolivia is leading the trend in mobile banking technology, with 6.8 percent of its population using mobile phones for a banking service, compared to 3.1 percent in Mexico and 1.8 percent in Peru.

The mobile banking service has great opportunity to grow, with just 1.8 percent of the total population using a mobile phone for banking purposes. Mobile phones can be used for more than banking purposes to promote social inclusion, however.

Local businesses can advertise through the use of mobile phones, bringing in more customers and generating more income for the region. Product promotion by businesses could also increase, giving consumers greater access to products. Paying bills would also become more simplified, cutting through red tape that exists in the system and allowing for a more timely delivery and payment of a bill. Moreover, electronic identification removes the necessity of carrying physical identification.

Mobile phone banking in Latin America is a powerful trend that could bring in greater social inclusion if it is harnessed properly. Its convenience allows it to be the catalyst for significantly reducing poverty on the regional level.

Jeff Meyer

Sources: BN Americas, Banking Technology, WorldBank, Forbes
Photo: Into Mobile