Credit Access in Côte d’Ivoire
Recent reports indicate that the economic performance of the country of Côte d’Ivoire’s is improving.  In 2016, the Ivorian government committed to a National Development Plan designed to transform the country into a middle-income economy by the year 2020. A quick analysis indicates that these efforts have been successful so far. In fact, the country’s economic growth between 2016 and 2017 has it ranked among the most booming economies in Africa. Unfortunately, this growth has not translated into increased credit access in Côte d’Ivoire.

The Importance of Credit Access

In 2017, only 1 in 7 Ivoirians had an account with a financial institution. This statistic has remained unchanged over the past year. Since banks and other formal financial institutions are the primary providers of credit, a lack of access to these institutions can have major effects. Credit is often used to fund education, pay medical bills and purchase property. It is an essential tool in working toward socio-economic mobility. Thus, increasing credit access in Côte d’Ivoire is a crucial step toward improving the lives of the 46 percent of Ivorians currently living in poverty.

Limitations on Credit Access

According to the 2017 Global Findex Survey, the greatest obstacle preventing Ivorians from opening a bank account is a lack of sufficient funds. Roughly two-thirds of Ivorians cite this as the primary reason they do not have an account. Associated account fees are an additional barrier for nearly a third of the population. Other obstacles include a lack of necessary documentation, distance from a physical bank and a lack of trust in these institutions. As a result, more than half of the adult population has never used formal financial services.

The prospects of obtaining an account are even grimmer among disadvantaged populations. The poor are twice as likely as their more prosperous counterpart to be excluded from using formal financial services. Women are 45 percent more likely to be excluded than men; the gap between men and women’s access to financial institutions has risen by 90 percent in the last three years.

Even if an individual overcomes these obstacles, the possession of an account does not guarantee access to credit. Although 15 percent of Côte d’Ivoire’s adult population had a financial institution account in 2017, only 3 percent of Ivorians have borrowed from a financial institution or used a credit card. If a loan is needed, the most common solution among Ivorians is to borrow from friends and family. In fact, only 34 percent have ever borrowed outside of the household.

Mobile Money as an Alternative

While participation in traditional financial institutions remains low, Ivorians are finding other digital means to manage their money. Over the past decade, mobile money has been on the rise. Mobile money is essentially a digital wallet – its basic functions allow users to store, send and receive money as though it were cash. As of 2017, roughly 42 percent of Ivorians have a mobile money account. Moreover, statistics show that mobile money accounts are more accessible to disadvantaged populations.

While mobile money has helped circumvent the barriers associated with traditional banking, it is not designed to offer credit access in Côte d’Ivoire. Digital credit lenders are operating in several sub-Saharan economies, but they have yet to emerge in the Ivorian economy.

However, surveys suggest that Ivorians would welcome these new services. 59 percent of Ivorians express interest in using a digital credit product. Their decision to participate would depend on interest rates and associated fees, the feasibility of the repayment plan and the speed at which they can access the loan. Half of the Ivorians surveyed indicated they would be willing to pay 10 percent interest for a six-month loan if a CFA 100,000 digital loan was made available to them.

The introduction of these new digital credit services could have a profound impact on the Ivorian poor. However, in order to maximize the impact, additional materials must be provided to address low rates of technological and financial literacy. Although 87 percent of Ivorian adults have access to mobile phones, only 50 percent possess a feature phone or smartphone, which is necessary to access the digital financial services. Even fewer know how to navigate the phone’s interface, and even if they can navigate the interface, only 33 percent are considered financially literate. This means that a large group of new credit users in the country may be vulnerable to hidden fees and marketing fraud. Nonetheless, if provided with the proper assistance to improve financial and technological literacy, these digital alternatives to traditional banking could prove to be an effective solution to limited credit access in Côte d’Ivoire.

– Joanna Dooley
Photo: Flickr

Mobile Money Transfers
One in seven people worldwide gets labeled as a migrant worker. Migrant workers are individuals who move from their home country to a different one for work purposes. These workers often face difficulty when it comes to sending money home to their families. They often have to take time-consuming or costly routes to accomplish this. With the help of mobile money transfers, migrant workers now have an easy and cost-efficient way to transfer their earnings.

Limited Storage Options

Before mobile transfers, workers had limited options on how to send their money home. They could take the money themselves, but this required them to take large amounts of time off work and spend money on transportation. Another method used was to send money home with a third-party. However, if there is no nearby agency, workers might end up relying on an unregulated corporation. Using these services can be costly and risky. Even worse is that companies can charge a high fee depending on the amount getting transferred.

Bank accounts are also unsuitable for migrant workers. Most migrant workers are employed in rural farm areas while banks operate in more populated places like cities or towns. Banks can also charge high fees that low-income workers cannot pay. In fact, 42% of the world’s farmers are unbanked.

Mobile money transfers provide an easy and quick way to send money home at a cheaper rate than previous systems. Money transfers can be done at any time of the day and take only seconds. Moreover, unlike banking apps, they are not limited to smartphones and can be done on any mobile device.

Xpress Money & TerraPay

Xpress Money is one money transferring company that recently partnered with TerraPay, a mobile payment switch. Originally used to send money directly through 200,000 agent locations in 165 different countries, Xpress now looks to expand with mobile transfers. TerraPay connects money transfer services with banks, payment card issuers and mobile wallet systems through its technological services. These services enable migrant workers across the world to send money home instantly.

By providing poor migrant workers with a safe, cheap and easy way to manage their money, they are getting introduced into the formal financial sector. Now, these migrants can begin to have savings and dictate where they wish to spend their money. Having control over their earnings can give these workers the capability and means to rise out of poverty.

Hannah Kaiser

Photo: Flickr

An issue that humanitarian organizations abroad have always faced is distributing aid to people that live in areas where bringing supplies in is difficult. Sometimes, once the aid is there, it may not entirely meet the needs of the people living there. Especially in the case of dealing with the aftermath of natural disasters, sometimes the roads are blocked or large shipments of food and supplies cannot safely travel within the country.

In the aftermath of the 7.4 magnitude earthquake in Guatemala in 2012, international aid organization Oxfam decided to try out a new idea for distributing aid. They teamed up with Tigo, a mobile service provider, to deliver financial aid through text messages to get to people who were physically out of reach. This money gives the recipient the freedom to allocate the money within their family in the way they best see fit.

The concept, known as mobile money, is a form of electronic currency. This electronic currency is sent to the mobile phones of people in need and can be distributed quickly in the wake of a natural disaster. It is stored on the mobile phone and is accessed using a personal identification number similar to a debit card, but can be used by people who don’t have a bank account. Mobile money can then be converted to cash at designated points or can be transferred to another person or used to buy supplies.

Miguel Angel Avendano, the head of financial services for Tigo Guatemala, says money aid is better than something like food aid because money aid can be used to fit individual needs and help restore the local economy. He adds, “The problem with food bags is that in most of the cases its contents are already sold within the local market at lower prices. Sometimes the type of rice, corn and beans from the food bags are not the ones the families use–or they already have grains in their homes but need meat instead. Additionally, food bags are expensive to make, transport, store and distribute.”

So far, Oxfam has distributed over 282,000 dollars in mobile money to 1,700 families.

Colleen Eckvahl

Sources: Christian Science Monitor, Latinalista
Photo: Oxfam

Mobile Phone Consumers Poor
Developing nations have become the mobile phone industry’s biggest new consumer. Some of the poorest countries in Africa have seen a meteoric rise in cell phone use in recent years. Since the invention, cell phones have enabled users to connect across geographic boundaries in ways that were impossible before. Additionally, cell phones are now used in developing for monetary exchanges that have fueled growth.

A vast majority of the population in Africa do not have bank accounts. Instead, their populations are increasingly reliant on “mobile money”, often in the form of pre-paid airtime minutes. Mobile handsets can be acquired at a relatively cheap price and they allow their users to make financial transactions in a way that is independent of inflation or economic stability. Airtime can be transferred between handsets or converted to cash by airtime dealers.

In Botswana, approximately 30% of the population over the age of 16 have a bank account, however nearly 60% have mobile phones. In Cameroon, the difference is even greater, with 7.1% with bank accounts and 36.5% operating mobile phones.

This pattern continues across much of the African continent. The airtime economy offers monetary independence for Africans living on minuscule incomes. Though the cost of entry still prevents the poorest communities from entering the market, handset manufacturers have taken notice of these emerging markets and are developing cheaper, more rugged handsets for poorer communities.

– Andrew Rasner 
Source: The Economist, TechCrunch, IST Africa
Photo: Smart Mobile Solutions

A Solution to Global Poverty: Mobile MoneyKenya has recently gained attention for its successful adaption of mobile money. A majority of its population, two-thirds of which live on less than $2 a day, are able to manage their finances using cell phones. Through this service, which does not require a bank account, millions of customers are able to send a text message to banks to pay bills, receive payment, and transfer money. Given that nearly 2.5 million people in the world do not have bank accounts and 2 billion people have cell phones, the program will make it easy to include a large number of people previously without access to finance management. As of now, there are 15 million mobile money customers in Kenya.

The impact of mobile money on people living in developing economies is vast. They now can boast financial independence, control of their funds, and the ability to assist family members and friends with ease. Mobile money can also improve financial security and local economic activity for small, low-income villages.  Most importantly, this is all available with the convenience and simplicity of a cell phone.

Safaricom developed the mobile money service in Kenya in 2007 and named it M-Pesa. Since then, many other companies have been eager to join the mobile sensation. However, despite the success seen in Kenya, mobile money providers have not been able to reproduce its effects in other countries like Afghanistan and Zambia. Many other factors contribute to mobile money besides technology. One reason why the Kenyan program has been so successful is due to its regulatory policies. The Kenyan government employs flexible regulatory rules after the innovative process occurs in order to ensure protection for customers and service providers.

Before this phenomenon, those living in poverty had little access to financial services. There are now 150 money mobile services throughout the world, which means that every day more and more impoverished people are able to benefit from mobile money. Little by little, one village at a time, we can hope to see improving economies in developing countries thanks to this innovative money service.

– Mary Penn
Source: Brookings
Photo:Business Daily Africa

Mobile Money Africa Set To Return In 2013
The fifth annual Mobile Money Africa Conference is projected to gather over 400 mobile banking industry leaders in Johannesburg, South Africa to discuss ways to move the market forward.

Mobile Money is a mobile banking concept that has taken root in African communities in rural areas where the nearest bank is often several miles away. Mobile bankers use their cell phones to transfer money from one person to another with only the use of a SIM card.

While Mobile banking continues to spread slowly, primarily throughout the developing world, its biggest markets are in Africa. 15 of the top 20 Mobile Money-using countries are located on the African continent. Generally about 10% of people in these countries use Mobile Money, but in Kenya the number of users reaches 68% of people.

Mobile banking continues to spread through developing nations because the fees for banking are too high and the locations are too sparse. Mobile Money Africa works to help alleviate these problems and develop a stronger market, possibly in alliance with traditional banking methods.

This year, Mobile Money Africa will be hosting the Mobile Money Awards – a contest in which Mobile Money innovators are recognized and rewarded by the industry. The conference is slated for the 28th and 29th of May.

– Pete Grapentien

Source: BizCommunity
Photo: IT News Africa


Mobile money, or mobile payments/mobile banking, is a rapidly growing industry that serves as an alternative to traditional banking. What is mobile money and why is it important is a question most acutely significant to those in developing countries.

Of the 2.6 billion people in the world who live on less than $2 a day, about 80 percent of them do not have access to a bank account. This is completely understandable due to banking fees and lack of access to banks. Thus, for this population, all transactions are chiefly done through “informal financial tools.”

Payments are made in cash or through physical bartering (e.g., food, livestock, traded goods, etc). Or, for bigger expenses, people are forced to go through other informal means of acquiring money like money lenders and payment couriers although these methods are unreliable, hard to access and can carry even higher fees. Meaning that those living in poverty are further hindered in breaking away from their circumstances.

At the Bill & Melinda Gates Foundation, the Financial Services for the Poor (FSP) team believes that given the right financial tools like mobile money, poor households can capture more opportunities. Mobile phones serve as virtual devices for holding money and making payments electronically, like a bank account and/or credit card. Paychecks can even be credited to mobile devices. Access to mobile phones is widespread in all regions of the world, far more than traditional banks.

In an effort to further develop these technologies, FSP has partnered with the Electronic Transactions Association (ETA) and created an industry-wide competition for finding new and innovative electronic payment methods via mobile banking.

This has “the potential to make a profound impact on the global market, particularly to un-banked or under-banked consumers in the developing world. Thus far, we have seen a large drop in costs and increased access when mobile channels are used,” says Megan Oxman, a program officer with the FSP.

It is expected that the mobile money market will grow from a $13.8 billion dollar business in 2013, to $278.9 billion by 2018. The more the industry grows, the more reliable and accessible this form of “banking” will become, allowing for more stability and development within impoverished communities.

– Mary Purcell