Can Mobile Money Transform a Country?

January 17, 2012
Customer Signs Up for Mobile Banking in Port-au-Prince

Two years after the earthquake, Haiti is rebuilding not just brick by brick, but click by click.

The earthquake left behind a government in rubble, an economy in shambles, and a people living in makeshift camps, coping with enormous loss. Against this backdrop, the possibility of progress lives not just in the resilient spirit of the Haitian people, but also in the simple power of their mobile phones.

In June 2010, USAID and the Bill & Melinda Gates Foundation launched the Haiti Mobile Money Initiative (HMMI). This program leveraged the private sector and the ubiquity of mobile phones to bring financial services to Haitians, 90 percent of whom didn't have access to a bank account before the earthquake destroyed nearly one-third of the country's bank branches, ATMs, and money transfer stations. Put simply, mobile money gives Haitians access to banking without building a single bank.

It worked. In January 2011, one year after the earthquake, HMMI awarded Digicel and its partner bank, Scotiabank, a "First to Market" Award of $2.5 million for "Tcho Tcho Mobile." Five months ago, HMMI awarded mobile operator Voila and their bank partner, Unibank, $1.5 million for "T-Cash." While verification is still underway, data reported by the industry indicate that there are nearly 800,000 registered users. Moreover, there are over 800 agent locations now available to serve clients. In a country where there are fewer than two bank branches per 100,000 people, this represents a near doubling of accessible financial services.

These numbers are significant, but what do they mean for the people of Haiti? Why should we care about the growth of mobile money in Haiti and the rest of the developing world?

First, mobile money accelerates access to financial services for the 1.8 billion people with access to a phone but not a bank. It allows people to safely store and send money to friends and family in need. Today, 15 million Kenyans, or 70 percent of the country's adult population, use Safaricom's mMoney product, M-PESA to manage their money. Five years ago, only six million Kenyans had access to basic financial services. This is a vast improvement when the alternative is sticking money in a mudjar or under a mattress. Payments also become the rails upon which other financial services -- savings, remittances, credit, and insurance --can ride. It allows the poor to reclaim a sense of stability and security in a world often characterized by uncertainty and vulnerability.

Second, it also serves as the lynchpin in government efforts to improve transparency, mitigate corruption, and enable responsive government. Take Afghanistan as an example. When the Afghan government started paying government employees and police officers through mobile phones, the employees thought they had received a nearly 30 percent raise. Instead, they were paid what they were supposed to be paid for the first time but without middlemen taking a percentage as it passed through their hands. These payments can also be quickly disbursed and tracked, which engenders accountability and responsiveness across government.

Third, mobile money helps unlock the private sector to create sustainable fee-for-service models. In Kenya, 700 innovative businesses exist because they integrated with M-PESA to lower transaction costs enough to profitably extend critical services to people in remote areas. In agriculture, UAP Insurance and the Syngenta Foundation partnered to offer farmers index-based insurance using M-PESA to collect small premiums and issue payouts. In health, Changamka Microhealth Ltd. is using M-PESA's bill pay function to help expectant mothers save for maternity health care. In water, Grundfos LIFELINK levered M-PESA to create a fee-for-service model whereby rural communities access safe water and pay for it using M-PESA.

It is no doubt going to take time and effort for Haiti to follow in Kenya's footsteps. And it is certainly true that mobile money cannot transform a country by itself. We still need the bricks. We still need the human ingenuity and resilient spirit evident all across Haiti. But two years after the earthquake, we're making real progress, click by click.

Editor's Note: This entry also appears on the USAID Impact Blog. Learn more about USAID's work in Haiti here.



District Of Columbia, USA
January 23, 2012

Sauce in Washington, D.C. writes:

I say NO to electronic currency.

Ashim C.
January 19, 2012

Ashim C. in India writes:

One does not know how deep and extensive is mobile telephony infrastructure in Haiti. If mobile can improve delivery of social and financial services so effectively here, certainly mobile telephony in countries with deeper and more extensive spread and IT infrastructure, it can do so very much more to deliver health, updated agricultural practices, transfer of knowledge of laboratories to field and related services in developing countries for their inclusive growth. USAID ought to explore this field. Effort in Haiti is indeed laudable.

United States
January 22, 2012

Dickens in the U.S.A. writes:

Good stuff you have here. I was going to mention this to a good friend of mine.

Massachusetts, USA
January 22, 2012

Maureen in Massachusetts writes:

For those that enjoyed the informative "Mobile Money" post like myself perhaps the link below could be of interest:

"What Does Your mobile phone usage say about your credit-worthiness"-Scott Kirsner.

January 23, 2012

John in Canada writes:

@ Maureen in Massachusetts

Sorry, a bogus service that fills the need in a country unable to provide proper services to the people is not innovation.

Under our economic system - CASH IS KING. Responsible people pay with cash.If more people and business refused the cashless system we would have a much more stable economy.

This phoney cashless cash transaction system has a BIG part to play in the economic failures in the west. It will be just as destructive elsewhere.

In the 40s, 50s the banks had few outlets to create fake money value - people used cash and banks had to have the cash to provide to the people. What was the ratio of physical dollars to people then? what is that ratio now?(you would be shocked)Its a HUGE problem that cannot and should not be ignored.

Look at today in comparison - debt card (credit cards) debit cards(cash cards)..on and on... have allowed the banks to move away from holding cash - 90 percent of what is valued in cash - there is no cash to pay. (never mind debt)

This has contributed greatly to the financial problems we see today including higher numbers of poverty.

A cashless society so to speak is really not the problem - the problem is that we do live in a world with everything valued in cash and no where near enough cash to pay for what we value in cash. Never mind debt.

Whats something worth - what someone can or is willing to pay. If the cash doesn't exist can it be paid? Our current banking systems are in fact built on a house of cards - with no cards(laugh)

By allowing these cashless systems into a system that is underpinned by REAL cash we have created a devaluing of purchasing power while increasing the value of cash goods and services at the same time.

In many ways if you look at the cashless systems here in the west before we had widespread credit/debit card use = a house was worth 9000 dollars/ today $300000 - things were affordable then (40, 50s) and doable on a 1 person salary. It was much more balanced.(not perfect)

If you were to draw two lines - one representing the cashless system uptake/advance in the west and what is called inflation - you would notice that the two lines move in a very stark way that cant be ignored.(its surprising that people don't speak about this)

So NO IMHO a bank pushing a cashless payment system because the bank and the government are unable to provide cash to the people in a reliable way is garbage and should not be applauded.Unless financial ruin is your goal.

Americas and the global financial decline is much more than just mortgages as main stream media reports.The so called cashless society has a big part to play in creating artificial value while at the same time affords a select few to pull the real value out - creating an ever increasing black hole for everyone else.(including governments needing more and more tax to function - but its like crack, there is never enough - and thats by design)

I understand that for the people it may seem good but 99% don't know Jack about money.People forget that ALL products and services are sold to you - if you don't understand the negatives - you cant make an informed decision. The car company does not advertise the car deficiencies - the banks are the same.

And most folks in government don't understand money any better than a beggar.

Massachusetts, USA
January 23, 2012

Maureen in Massachusetts writes:

@ John in Canada

You have an op-ed subject.

You have definitely brought some negatives out in the open with regard to a cashless society John but nonetheless, this service is available now which probably means all the difference for the poorest in need of everything but not excluding investment in innovation. It is not a cure all but works in conjunction with other initiatives providing food, water, shelter sanitation. As a participant it is fair to recognize the efforts put fourth by the US government and philanthropic foundations who seek to improve lives--despite the global economy.

Therefore, I applaud USAID and the Bill and Melinda Gates Foundation because each is making a difference by stepping up to these problems of now and in this case working to get cash into the hands of the people even if this cash is a mobile wallet. And The William J. Clinton Foundation which has been stepping up for Haiti long before the earthquake--despite the global economy-I double applaud.

Keep in mind that the Haitians had few banks to begin with. The already existing inadequacies of the banking system could benefit from some stimulation. Creating jobs and improving lives with the innovations that bloom out of the original concept- that should be celebrated. The goal is particular to the immediate need to spur recovery but also for the “transformative” potential that lies within. That is the key.

Through the use of the networks created by mobile phones people have a chance to rebuild part of what they lost or simply did not have in the first place. Look for example to the new apps created to improve health access in Africa or to aid poor farmers to get better prices. They are calling this the “mobile explosion” This access to information by phone will hopefully create better opportunities for people to sustain their families and empower them as small farmers. Isn't it worth a try?

Another thing to consider is the authors' reference to mitigating corruption. Baksheesh is is not being collected resulting in people actually receiving their proper salary. That is striking.

The mobile money initiative is at the very least a slight improvement to the alternative of no banks within miles -it helps instead to fulfill particular needs which could be conducive to potential growth as a whole. Something to think about.

January 24, 2012

John in Canada writes:

Sorry if I come across as negative but it is true.

The problem is not with the technology. The problem is not even with a cashless society.

The problem is with the economics, monetary and cash systems that we use everywhere - their structure and function.

If Bill and Melinda wanted to do the most good - champion and change our global monetary systems. There is a better way that is quite simple but beautifully complex.

This IS "the" silver bullet to ending poverty, increasing innovation, healthcare, education, environmental issues, lessen taxes,smash all manners of debt - global peace. It is the embodiment of "smart power".

It would solve the problems of both the left and the right in America and countries around the world.

We can no longer pretend that an outdated monetary system that repeatedly fails is fit for a modern society - not even Haiti.

This would be the game changer - change the monetary system in the correct manner and it will make the .com bubble look pathetic.

I don't know everything but what I do know I am certain - and I am certain of this.

Talking money with people is always interesting - everyone has a different take on what it is - its just not always completely right. I bet if you sat and talked with me for an hour - you would not look at money the same way.

Look at the likes of Mitt Romney, perhaps he thinks the 99% is lazy (chuckle) now imagine if the 99% were to go out and make money like Mitt has? What business would be left standing? Not very sustainable or realistic is it? Perhaps Mitt could teach the 99% to be vulture capitalists ..oops sorry venture capitalists. (laugh)

If no one lost anything - why not make the change?

What would be the problem - the money systems are man made - all the problems because of them are also man made. The solutions are ours to make, they wont fall from the sky.

Our current money systems are neither communist nor are they free enterprise - they are a tool -the same tool is used the world over from London, new york, Moscow -the same game - the same problems.

If we make the right tool - the art of life will come alive in the most brilliant of ways.

This should be priority number 1 - retooling the monetary systems. It is far more important than Iran, Israel, Palestine or any other conflict issue of the hour.

Oh, if Bill reads this - some people are thinking of this issue right now - get involved and help make it happen.

Go BIG or - learn the Chinese national anthem (laugh)


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