Imagine, for a moment, that you do not have a debit or credit card, or access to a checking or savings account. Imagine that you are paid in cash, albeit irregularly, because your work hours vary day to day, week to week. Imagine that your family depends on you financially, that they live hundreds of miles away, that sending them money costs you an arm and a leg, and a quarter of the time, it does not reach them. How would you manage your money? How would you invest in your future? How would you support your family? This is not a thought experiment for the 2.5 billion adults who lack access to basic financial services. It is reality.
It is often cited that half the world’s population lives on less than $2 a day. But we’ve learned through years of research that this statistic obscures more than it reveals. The $2 figure is an average. In economies dominated by the informal and agricultural sectors, part-time and self employment is the norm. You might make more than $2 some days, other days you might make less, and often you won’t bring home anything at all. If you don’t know how much you will make today, how can you plan for tomorrow?
At the same time, the poor lack access basic financial services. While we put our money in checking and savings accounts, half of the world uses mudjars and mattresses. While we use debit and credit cards, half of the world pays someone in their village an exorbitant rate to simply hold on to their money. With these tools, it is nearly impossible for the mother to plan past the next meal, the father to save for the inevitable health expense, the farmer to invest in new seeds or the small business owner to expand his or her stock. They can only glimpse their future.
This is why the Mobile Solutions team is so excited about mobile money. All of a sudden, we live in a world where you do not need to build a bank to serve families with financial services. Today, people can store money safely using their phone, as well as send money instantaneously to friends and family in need. It puts the opportunity to plan for tomorrow quite literally in the palm of the one’s hand. In a world with 500,000 bank branches and 4 billion phones, this changes the game.
In Afghanistan, we launched a $ 5 million Mobile Money Innovation Grant Fund to expand the reach of mobile money to 100,000 Afghans by next year. We’re using mobile money to collect electricity payments, pay teacher salaries in rural areas, and help microfinance institutions collect loan repayments. We already helped the Afghan Government to use mobile phones to pay government employees and police officers—when we did, the employees thought they had received a nearly 30 percent raise. In reality, they just received their salary in full for the first time.
In Haiti, 10 percent of the population had access to a bank account even before the January 2010 earthquake destroyed nearly 40% of the country’s banking infrastructure. In response, USAID and the Bill & Melinda Gates Foundation launched a joint program through Hi-FIVE to bring financial services to Haitians through mobile phones. If successful, this effort will result in 5 million transactions.
We’re doing so because we believe that mobile money not only empowers people to send money home, save money, pay for unexpected medical costs, school fees, or invest in their business, but it also allows the poor to reclaim a sense of stability, security, and connection in a world often characterized by pervasive anxiety, insecurity, and alienation.