Can cell phones help reduce world poverty?
by. Henry Meier
I’ve always loved the expression that if you give a man a fish he eats for a day, but if you teach a man to fish he eats for the rest of his life. But let’s remember that no matter how good the teacher or how eager the student , if no one can afford to buy a fishing pole the best training in the world will go to waste.
Can cell phones help solve this dilemma? According to researchers at the Bill and Melinda Gates Foundation, yes. They argue in the most recent issue of Foreign Affairs that mobile phones have the potential to drive down the costs of serving the poor in developing nations; help these citizens save by ending their reliance on cash and, most intriguingly, by providing data on the unbanked and under banked that will enable financial institutions to develop products that cater to their unique needs and create underwriting models that will allow financial institutions and burgeoning financial cooperatives to lend to the poor with more confidence. Although the analysis deals with world’s poorest nations, there are lessons for both credit unions and bureaucrats seeking to serve people of modest means in this country.
According to the researchers, many of the 2.5 billon persons who live on no more than $2.00 a day have capital they would like to save but no institutions in which to deposit it. Branches are expensive and reaching out to the poor can be prohibitive. As a result, 77 percent of the world’s poor have no access to basic banking services. This means that if they have to get money to a sick relative or hope to send money earned working away from home back to their family they have to rely on someone to physically deliver their money.
It doesn’t have to be this way. The World Bank estimates that 89% of people in developing nations have access to mobile technology. Properly harnessed the sick relative can have money digitally delivered to her hospital, money from a far away job can be quickly and safely sent home and financial institutions can cost effectively offer bank accounts and other products as they gain knowledge about these new customers.
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