Fund Set Up to Spur Mobile Banking in Haiti
Below is an article by Jacqueline Charles on a joint USAID/Bill and Melinda Gates Foundation (BMGF) Grant established to promote mobile phone banking in Haiti. In Haiti, use of mobile phones has become widespread. For far too many, the only options for saving money have been to: (1) travel to urban centers; (2) utilize the services of a close by but questionable cooperative or Caisse Populaire (Popular Bank), or (3) to keep hard earned funds under the mattress. This grant could create quick and convenient access to financial services from reputable institutions. You can read more about this welcome initiative at the BMGF website.
The U.S. Agency for International Development and the Bill & Melinda Gates Foundation have launched a $10 million incentive fund to encourage mobile banking in the quake-ravaged country to help Haitians rebuild their lives. Already working in parts of Africa, the new financial services program would allow Haitians to send, receive and even save money via their cell phones. A person would go to an agent, request an amount of money be placed on their cell phone, then upload that amount via their cell phones. The money could then be sent to another cell phone, where it can be banked or spent.
After the magnitude-7.0 quake on Jan. 12, Haitians experienced a severe cash crisis as money was lost in the rubble, and 40 percent of bank branches toppled. "When we realized how the cash crisis is hampering the ability for Haitians to get back to normalcy without being able to pay for everyday goods ... USAID really wanted to take some risks and push smart technology that could help build Haiti better," Priya Jaisinghani, a senior adviser to USAID Administrator Rajiv Shah, told The Miami Herald.
Still, in a cash society where mattresses - not bank accounts - have been the primary mode of saving money, the program has its challenges.That is where the $10 million incentive fund comes in, say Jaisinghani and Amolo Ng'weno, a deputy director with the Gates Foundation.The fund offers incentives to providers to enter the mobile money business by providing $2.5 million to the first company to launch the service. The second company to do so will receive $1.5 million.
Meanwhile, another $6 million will be awarded as the first 5 million transactions take place, a goal to ensure that the program has enough outlets and is sustainable. Also to help the program grow, the U.S. government is considering paying Haitians in the cash-for-work program via "mobile money," Jaisinghani said. Ng'weno said the foundation hopes to find in Haiti what officials found in Kenya. Three years after the program was launched there, it has nearly 9 million users who pay for everything from taxi fares to school fees via mobile phone. Rural households using the service in Kenya have seen their incomes increase by 5 to 30 percent, according to early results of a recent study by the University of Edinburgh. "We are basing a lot of hope and expectation on what we've seen happening in" Kenya, Ng'weno said.
"They had a small minority of people having bank accounts, credit cards were almost unknown, and the mobile money services worked for people who are not in the banking system. We are hopeful and optimistic we'll see the same in Haiti.