Alice Liu came to our class to preach the benefits of information and communication technologies in the world of banking, particularly in e- and m-banking for those in the developing world. While the benefits and possibilities of e- and m-banking in the developing world are many, perhaps most fundamentally important is the potential for women in often rural communities to experience a greater deal of control over their own lives, and garner greater respect and ultimately equality within their community. Along with allowing those poor in the developing world to lift themselves out of poverty and maintain safe and legitimate banking accounts, electronic banking gives women a power and responsibility that would perhaps otherwise remain predominantly within the family and home.
Banks are not found in many rural areas of the developing world. Banks tend to be unwilling to offer accounts to the poor as they can be unable to maintain a mandatory minimum amount in their account, lacking a steady stream of income to ensure the bank’s borrowing capability. As we read in Wyeth’s 2010 blog/report from the Mobile Money Summit, while corporations may understand they need to market to the “base of the pyramid” few understand how to do so effectively, and regulators (particularly in the world of finance) care first about stability, and only then about inclusion. Banks therefore continue their reluctance in providing services to the poor in the developing world.
Without banks, the options are few and risky for poor people in the developing world to store or send their own money. Individuals need to find trustworthy couriers to take their money elsewhere (who may want a fee, turn out not to be so trustworthy after all, etc.). Or they can take the funds individually via personal travel (often on foot) but this can take time – and in so doing decrease the individual’s earning potential for the hours, or days that they are in transit. Also, as always, the possibilities that an individual could be robbed or otherwise lose their funds in transit is a distinct possibility, especially in relatively rural and off-the-grid areas.
With the rapid spread of electronic finance, somewhat safer options have emerged. In Latin America particularly, correspondent agents who work at a local shop like a gas or bus station are able to provide the service of depositing and withdrawing money as a bank would. These agents are hooked up to mobile operators or to actual banks in other locations, and such operations are multiplying, as they are less risky for the operators than opening a traditional bank branch.
Mobile phones and m-finance have also allowed for breakthroughs in not only how banking is done by the relatively poor in the developing world, but also in how they do business. Montez and Goldstein remark in their 2010 article on Tanzania for the Africa Development Research Project that most users of m-finance are recent adaptors (3) and that by far the top reason for not using m-finance services was simply a lack of knowledge about how to do so – not a lack of desire (4). These are promising signs for mobile finance in Tanzania in particular, and the developing world as a whole. As the poor and relatively disconnected become more familiar with m-finance through the explosion of mobile-phone availability in the last few years, surely this trend will increase.
As Heeks et al. make clear in The impact of mobile telephony, reducing the presence of intermediaries in small business operations is fundamentally essential to better functioning on both the supply end of things as well as for the eventual producers. Using the case study of the aso oke weavers in Nigeria, this report showed that while intermediaries still remain powerful within the trade (and perhaps more necessary due simply to the geographic distances often separating suppliers from small business people), mobile phones have saved a massive amount of time and money by substituting for personal travel that used to be required of large suppliers, merchants, and the artisans themselves (57).
While the mobile network may have actually entrenched the role of intermediaries and middle-men, m-finance has allowed a new type of intermediary to emerge – the “coordinator weaver” who builds a larger network of weavers and can connect them to a broader array of suppliers and sources of material (58). While middlemen continue to be a drain on the fundamental supply-demand chain of the aso oke weavers, there is also a great deal of hope for how m-finance in particular can be taken advantage of to benefit the suppliers and artisans.
At this point in time, through programs like M-PESA in Kenya, G-Cash in the Philippines or EasyPaisa in Pakistan, billions of dollars have been transferred electronically, with millions of participants in the developing world alone. From relatively simple uses such as depositing and withdrawing money from separate locations, or sending it to family and friends geographically separated from the source, electronic finance has grown to include some very hopeful trends. Among these new uses for electronic finance in the developing world are opportunities to safely pay bills (avoiding the utility cost of lost time), send international remittances in Kenya and Pakistan, and receive one’s government salary and social welfare payments in India and Brazil amongst other countries. Also life and weather insurance have been provided via electronic financing through M-PESA and other programs in developing nations.
However before traditional banks and banking services get entirely involved with e-finance in many particularly rural and underdeveloped villages and regions of the developing world, the basic money exchanges and withdrawals as well as transport will still need to be done with a great deal of support and participation from local people.
Utilizing an already-trusted person in the community to provide leadership, responsibility, and oversight to the processes is essential to a well-functioning financial hub in any village or small town. And throughout much of the developing world, the respect and cultural importance of women offers an intriguing opportunity to broaden the social, political, and especially financial roles and responsibilities of women. Uplifting the status of women is possible through e-finance, and as Liu made clear, once a woman became the central financial hub of her community (operating a trading kiosk of sorts) her status was automatically lifted. As the great John Legend says, Let’s get lifted.