Gates Foundation and USAID Fund to Boost Mobile Money Services in Haiti
Published on: 9th Jun 2010
Note -- this news article is more than a year old.
The Bill & Melinda Gates Foundation and the U.S. Agency for International Development (USAID) have announced a $10 million incentive fund to jumpstart financial services by mobile phone in Haiti and expedite the delivery of cash assistance to victims of the country's devastating earthquake by humanitarian agencies.
"Out of the ruins of Haiti's tragic earthquake, there is an unprecedented opportunity to improve the lives of millions of Haitians and unlock the country's economic potential through mobile money," said Mark Suzman, acting president of the Global Development Program at the Bill & Melinda Gates Foundation. "Making financial services widely available to the poorest families in the developing world can help break the cycle of poverty by giving them a safe place to save, guard against risks, build assets, and provide opportunities for the next generation."
"This partnership provides a unique opportunity to put much-needed cash in the hands of Haitians as they continue to advance on the long road to recovery," said USAID Administrator Dr. Rajiv Shah. "Before the earthquake, fewer than 10 percent of Haitians had ever used a commercial bank. A mobile money system can restore and remake banking in Haiti and serve as an engine of inclusive growth."
Shah noted that in other countries' experience with mobile banking, users start keeping money on hand in their mobile "wallets" for emergencies, setting up a pattern of savings that leads to other benefits. "Encouraging savings and increasing access to credit through these mobile services will help Haitian families improve their financial stability and look toward a better future," said Shah.
The fund will offer cash awards to companies that initiate mobile financial services in Haiti. The first company to launch a mobile money service that meets certain criteria in the next six months will receive $2.5 million. The second operator to launch and reach these benchmarks within 12 months will receive $1.5 million. Another $6 million will be awarded as the first 5 million transactions take place, divided accordingly between those operators that contributed to the total number of transactions.
In the short term, mobile money services have the potential to accelerate Haiti's recovery. The destruction of more than one-third of the country's bank branches, ATMs, and money transfer stations in the earthquake has meant that cash shortages for Haitians have been severe. Mobile money services will help families and friends, humanitarian agencies, charities and donors get billions of aid money and remittances into the hands of Haitians.
In the long term, mobile money could help millions of Haitians improve their lives through easy access to savings accounts and other financial services. One example of this is in Kenya, where mobile money is already having a dramatic impact. Just three years after its launch, Kenya's M-PESA mobile money service now has more than 9 million users (40 percent of all adult Kenyans), who pay for everything from taxi fares to school fees via mobile phone. The transactions are much safer than carrying cash, and rural households using M-PESA saw their incomes increase by 5 to 30 percent, according to early results of a recent study by the University of Edinburgh. Just last month, M-PESA customers were given the option to link their mobile phones to bank accounts, further increasing their opportunity to overcome poverty.