Mobile banking closes poverty gap
Mobile banking has transformed the way people in the developing world transfer money and now it is poised to offer more sophisticated banking services which could make a real difference to people’s lives.
Currently 2.7bn people living in the developing world do not have access to any sort of financial service. At the same time 1bn people throughout Africa, Latin America and Asia own a mobile phone.
As a result, mobile money services are springing up all over the developing world. According to mobile industry group the GSMA there are now 65 mobile money systems operating around the globe, with a further 82 about to be launched.
Most offer basic services such as money transfers, which are incredibly important for migrant workers who need to send cash back to their families.
M-Pesa in Kenya is perhaps the most famous of these and it has attracted 9.4 million Kenyans in just under three years.
Now it is ready to move to the next stage. M-Pesa, has recently partnered with Kenya’s Equity Bank to offer subscribers a savings account, called M-Kesho.
Money Matters
It means their M-Pesa accounts will no longer be just about money transfer. Instead, they will become virtual bank accounts, allowing customers to open saving accounts, earn interest on their money and access credit and insurance products.
It is an extension to an earlier agreement with Equity Bank to allow M-Pesa customers to access their funds at ATMs around the country.
CGAP, a financial think tank based at the World Bank, was at the launch of M-Kesho.
“Kenya is sending a message to the world: poor people want savings accounts. Mobile banking is a powerful way to deliver savings services to the billion people worldwide who have a cell phone but not a bank account,” said CGAP chief executive Alexia Latortue.
Meanwhile in Uganda, MTN, a mobile firm that runs a similar mobile money service has ratcheted up 890,000 users in its first year of operation. This is double what it forecast.
Richard Mwami, head of mobile money at MTN predicts the service will have 2m users by the end of the year, and 3.5m by 2012.
He admits that one of the biggest challenges of setting up the system was regulating the agents that provide the cash.
“We have had liquidity problems where customers walk into the shop and there is no money,” he said.
And fraud is also a problem, running to one or two cases every couple of weeks.
Some 60% of users live in rural areas, where literacy rates are low and agents are often local shopkeepers, authorised to take deposits and issue cash.
“There is ignorance about how the service works,” he said.
MTN has now begun an education programme, promoting and explaining the service on national radio.
Only 38% of Ugandan citizens have a bank account. Micro-economy
Gavin Krugel, head of mobile money at the GSM Association (GSMA) believes agents are more trusted than traditional banks.
“Banks have revolving doors and armed security guards. Consumers believe they are for the rich only,” he said.
By contrast, agents tend to be trusted retailers who have been selling airtime to the same customers for the past ten years.
“Every one of the agents are trained and those that misbehave are taken out of the system,” he said.
Aletha Ling, executive director of Fundamo, the platform behind MTN Uganda’s mobile system, said the challenges are worth it because it is easy to see how it is benefitting customers.
“Money gets sent from the cities to the rural areas where it is required. Less cash passes hands so it is much more secure. Previously people were travelling with huge amounts of money,” she said.
“In one fishing village I visited it had created its own micro-economy,” she said.
In Uganda the banking population is low with only 38% having a bank account and only 7% using more than one banking product.
Mobile banking can also provide a route out of poverty, according to the newly-appointed UK International Development Secretary Andrew Mitchell.
Speaking at the GSMA’s mobile money summit in Rio de Janeiro this week he said:
“Access to basic financial services – the ability to save, transfer and invest even small amounts of money – can make a huge difference to people around the world. It can help a farmer to survive a bad harvest, or provide a slum-dweller with the vital capital needed to start a small business,”
This is a view echoed by Mr Mwami.
“The mobile phone is demystified. People are confident about using it and the market is there for the taking,” he said.
Disruptive technology
Last year Bill Gates pledged $5m to help the world’s poor access banking accounts. The Mobile Money for the Unbanked Fund is being administered by the GSMA Foundation.
It has announced the projects which will benefit from the money.
It includes Bangladesh’s Grameenphone which hopes to enhance its mobile money service with services such as a mobile ticketing service for Bangladesh Railways.
Money will also go to Orange Money to introduce more advanced financial services in Western Africa, where less than 4% of the population have banking.
Safaricom, the mobile firm behind M-Pesa, will get a grant to help non-government organisations and the Kenyan government get much-needed money to vulnerable households in informal settlements in Nairobi.
In Cambodia, the majority of payroll is given in cash and Cellcard is hoping to set up money transfer, bill payment and airtime top-up to urban migrants desperate to send money home to famiies in rural areas.
Similar projects in Pakistan, India, Sri Lanka and Fiji will also also benefit from the fund.
Mobile banking is a slow burn, said Mr Krugel, but a potentially revolutionary one as long as it is born from what consumers ask for.
“In many of these markets offering a fully-fleged bank account would be a waste of time. Consumers need to understand the basics first,” he said.
“At first they don’t trust the system. Then they can see that it works and eventually they start to leave some money in their account. This is how they start lifting themselves out of poverty,” he said.
The next stage is more sophisticated services such as funeral or hospital insurance.
“In African culture, for example, they believe strongly in respect and funeral insurance is extremely important,” he said.
Traditional banks are now beginning to wake up to the threat posed by mobile services and are increasingly partnering with the mobile firms to tap the potential of a whole new market.
“M-Pesa was sufficiently disruptive that it forced the banks to respond. If the banks do see these services as a threat they will realise there is opportunity at the base of the economic pyramid and that is a job well done by the mobile industry,” said Mr Krugel.
Reference Link
http://news.bbc.co.uk/2/hi/technology/10156667.stm
Courtesy
BBC News
Family friendly: Brazil's scheme to tackle poverty
In the countryside in Maranhao, one of the poorest states in Brazil, life moves slowly in the stifling morning heat.
At her home, not far from the capital Sao Luis, Francineide Da Rocha nurses her baby son Josue, born just 15 days ago, and she stops only to drink water from a freshly-cut coconut.
In this region, some 50% of the local population such as Francineide are on a form of family income support, known as Bolsa Familia, literally the Family Grant.
The cash transfer scheme puts money directly into the hands of some of Brazil’s lowest income homes.
Across the country, some 12 million families receive the benefit. It is sometimes described as the largest programme of its kind in the world.
The money is generally given to mothers, who get up to $115 (£80) a month, depending on their income and how many children they have.
The aid is conditional. In return, children must attend school and receive the proper vaccinations.
Commercial success
“I think it is good and it helps a lot,” says Francineide.
“When the money comes it is always better because there are many families in Brazil that depend on it, and even though it is a small amount, it makes a big difference.”
My life is different because today I have the means to buy the goods I need
The new baby is Francineide’s second child, and the monthly assistance she receives from Bolsa Familia will now rise to $66.
It helps to supplement the meagre income she gets from selling vegetables.
Further up the road, her father Joao works on a small plot of land and also receives a helping hand from the state in the form of low interest loans.
Critics say the family grant his daughter receives offers financial help, but no clear route to escape from poverty.
Now Bolsa Familia is being tied in to existing projects which target small investors in both the countryside and the city.
Joao is using the money, which he gets from a scheme known as AgroAmigo administered by the state-run Bank of the North-East, to buy the materials he needs.
“It helps me to get water, to buy seeds,” he says.
“In the past we used to collect them but you can’t do that any more. And this money helps to make things better.”
In nearby Sao Luis, the district of Liberdade is often in the headlines for its high rate of crime and other social problems.
The challenge here is also to give people the means to improve their lives, a chance that some are eager to seize.
Ruti Cunha’s husband is disabled and she is now the lead provider for her family of three.
The main thing is that it is a very small fiscal cost. That is the big advantage of Bolsa Familia
She already receives the Bolsa Familia grant to help her raise the children.
But after her husband was obliged to stop working, they opened a small clothes shop to make ends meet.
A financial adviser from the Bank of the North-East arranged a low interest loan under the scheme CrediAmigo, and the money helped to refurbish the store.
“My life is different because today I have the means to buy the goods I need,” says Ruti.
“I sell by credit card, or offering credit deals – things that I used to dream of, and now I am able to do it. I started with a loan of $340 and now I have $2,800.”
Bank officials say few people fail to make repayments on these low interest loans while many – especially women – have gone on to commercial success.
At the local market in Liberdade, the results of some of this investment can be seen.
Stall owners who, with a bit of a support, have managed to start out their own business, however small the venture.
‘Small fiscal cost’
However the picture is not universally positive.
A short distance from Ruti’s home, thousands of families live in what are called “palafitas”, houses built on stilts to keep them above water level.
Brazil is finding new ways to confront old problems
The families have little access to even basic sanitation or water, and there is a strong smell from the waste that culminates below the fragile wooden houses.
Children play amid the dirt and heavily-armed police officers can be seen patrolling the unpaved lanes.
Nearly 300 families were recently moved out of the area to brightly-painted and newly-constructed flats, but the local residents’ association claims this project has stalled, at least for the moment.
They also complain that in an area like this it is hard to get access to Bolsa Familia.
But analysts say, despite enormous challenges, Brazil is becoming a more equal society.
Bolsa Familia in particular is a cost effective way of helping the poor, says Marcelo Neri, chief economist for social policies at the Getulio Vargas Foundation.
“The main thing is that it is a very small fiscal cost,” he says.
“That is the big advantage of Bolsa Familia. You spend 0.4% of GDP, and reach 25% of the population, which are the poorest.
“Since they are the poorest, a little money can really make a big change in these people’s lives.”
In this year, when Brazil will elect a new president, there seems to be a fairly broad consensus in support of such initiatives, with the only argument about who should get the credit for projects, some of which have been in existence for many years.
The government of President Lula insists the investment is much bigger now, and that in recent years 20 million Brazilians have been lifted out of poverty.
It remains all too easy to find evidence of the poor social conditions which disfigure large parts of Brazilian life, such as can be found in parts of Liberdade.
But a picture is also emerging of a country confronting old problems in new ways, helping to improve the lives of many of its citizens.
Reference Link
http://news.bbc.co.uk/2/hi/world/latin_america/10122754.stm
Courtesy
BBC News
Life-saving stoves in Congo
 Fuel-efficient stoves could save the lives of displaced women and help the environment in eastern Democratic Republic of Congo, aid workers say.  Conflict has consigned hundreds of thousands of people to camps. The demand for firewood – to use as cooking fuel – is causing severe deforestation. And as trees are cut down, women venture into more dangerous areas.
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Fighting poverty one campus at a time
FREDERICKSBURG, Virginia (CNN) — Shin Fujiyama’s life has been highlighted by second chances.
Shin Fujiyama‘s organization, Students Helping Honduras, has raised more than $750,000.
Born in a fishing village in Japan, Fujiyama, 25, recalls a childhood dominated by health concerns. Doctors told his parents that he had a hole in his heart and “they didn’t think I had lot longer to live.” But during a later visit to the doctor, Fujiyama says, his family learned the hole had closed.
“Somehow I was cured and I became a normal kid,” Fujiyama says. “And I had a second chance.”
During his sophomore year at the University of Mary Washington in Fredericksburg, he volunteered in Honduras with a campus group and was struck by the extreme poverty he saw — barefoot children collecting cans and sleeping in the streets. Fujiyama says he realized he could help give other children their own second chance.
Today, his organization, Students Helping Honduras, brings education and community projects to children and families in need through student service trips and fundraisers. Do you know someone who should be a CNN Hero? Nominations are open at CNN.com/Heroes
“Seeing the country and being able to make a difference really opened my eyes to a lot of things,” he says. “I saw such a great need. I wanted to keep helping.”
He started by telling his friends about his experience and collecting spare change at his two campus jobs, but Fujiyama found that organizing other students didn’t happen so easily.
“When I had my very first meeting, I got all dressed up. And only two people showed up,” he says. “I knew I had to keep fighting.”
He enlisted his younger sister, Cosmo, then a student at the College of William & Mary in Williamsburg, Virginia, to the cause.
“She’s dynamite,” he says. “When she talks in front of a crowd, she can move mountains. Knowing that she was behind it, I knew I could do anything.”
Since 2006, the siblings’ grass-roots campaign to help Honduras has grown to 25 campuses and raised more than $750,000 to fund projects, including the construction of two schools and the establishment of scholarships to help young women attend college.
Fujiyama says students are deeply committed to the organization because they are involved on every level: They raise money and then travel to Honduras to help build houses.
“We make friends with all the kids, all the families — no matter where we’re from. We’ve had people from all over the world come to Honduras with us. And it’s a great network we’ve made,” he says. 
Watch Fujiyama and his group in action »
While Fujiyama spends his summers in Honduras working alongside volunteers, he spends a large portion of the year on the road visiting colleges to organize chapters and raise funds. Cosmo Fujiyama, 23, lives in Honduras full time to coordinate the group’s building efforts on the ground.
Students Helping Honduras is working with community members of Siete de Abril to build a new village. Many of the families lost their belongings to Hurricane Mitch in 1998.
“A lot of them are single mothers. They don’t own the land. They all live in cardboard houses. They don’t have access to clean water [or] health care, and they didn’t have a school,” Shin Fujiyama says.
Fujiyama’s group helped villagers purchase a new plot of land to rebuild. Its members have helped build 44 homes in the village that has been newly named Villa Soleada (“Sunshine Village”). The organization also is raising funds to build a water tower, an eco-friendly sanitation system and a library and to help provide electricity. Watch Fujiyama describe how the village came to be »
For Fujiyama, who deferred medical school to dedicate himself to his mission in Honduras, the lifestyle is a far cry from private practice, but he says he loves what he is doing. Watch Fujiyama describe how a second chance and a trip to Honduras changed his life »
“I feel like we’re making a huge impact. Some people might think that you have to be somebody famous or a millionaire or a doctor to do something,” he says. “But we’re just everyday students — people in their 20s. We can do so much. We’ve got so many things going for us. … It’s just about leveraging what we have. And we have done a great job at that.”
Reference Link
http://www.cnn.com/2009/LIVING/05/11/cnnheroes.shin.fujiyama/index.html
Courtesy
CNN
How to help when you're too poor for school?
Zambia fights poverty with schooling
In the dark, cramped room she shares with her three younger siblings, 15-year-old Christine Makiya rises from her bed on the floor and kneels to say her prayers.
It is 0500 in Mpika, Zambia. Outside in the twilight, the wind whips dust against the family’s mud hut. It won’t be long before the rainy season arrives.
She wraps up warm and goes outside to sweep the yard and wash the dishes, scrubbing the pots and pans, not with water, but with sand.
For Christine, each morning begins the same way.
Christine has many household duties
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Christine’s father died three years ago.
To put food on the table, her mother and grandmother are often away, working on the family’s small patch of land. It is 18 kilometres from home, a full day’s walk.
So, they often stay there for a week or more at a time, leaving Christine, the eldest, to look after her younger brothers and sisters.
“It’s very hard to get by,” says Christine. “If my mother doesn’t sell anything at the market, or get something from the farm, then we have no food.”
“It hurts me to think of the way we live. It makes me think that if I could finish my education it would improve things for my family.”
But with all her household duties, Christine is struggling to keep up at school.
For poor families like hers, long-term goals often give way to these short term needs.
Grass-roots approach
But Christine is luckier than many. She is being helped by an organisation that strives to break this cycle by financially supporting poor young African girls through school.
At Musakanya Basic School children are keen to learn
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In Zambia, basic education is paid for by the government, but only up to Grade 7, or about 13 years old.
After that, parents must pay for all school fees, uniforms and books themselves.
It’s not surprising that this is when children are most likely to drop out.
Girls are most at risk. Is this because African families are opposed to educating their daughters?
That was the question Ann Cotton, founder of Camfed, wanted to answer when she visited Africa in 1991.
“All the reading I’d done led me to expect that I would find a great resistance to the education of girls on the part of families,” says Ann.
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CAMFED
Founded in 1993
Has supported 500,948 children
Raised $11 million in donations in 2008
100 paid staff and over 50,000 volunteers
Source: Camfed
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“But in fact I didn’t hear that. I found the primary constraint was poverty and the reality was that boys had a much better chance of paid work in future, so this was the family’s security.”
Back home in Cambridge, Ann started raising money by baking and selling cakes.
With the $3,000 she raised, she sponsored thirty-two girls, paying for their education.
Since then, Camfed has grown dramatically, supporting more than 500,000 children so far.
But, despite this rapid growth, the organisation retains its grass-roots approach.
They have relatively few paid staff, but more than 50,000 African volunteers who run the schemes on the ground.
Few opportunities
In the classrooms of Musakanya Basic School, children dressed in maroon uniforms listen intently to their teachers and applaud their fellow students when they produce the correct answers.
There is a real hunger for learning.
But Christine is distracted. She finds it hard to concentrate. Her results are not good.
School is only paid for by the government up to 13 years of age
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But Ann says Christine has as much right as any other girl to a good education.
“Christine really hasn’t had the chance yet to grow through the problems that she faces at home,” she says. “She has been selected like all the other girls on the programme on the basis of need, and I have every confidence that she will grow and change over the years.”
It will be a difficult process. The town of Mpika is a tough place to grow up.
It is a major junction on the Great North Road that runs from Cairo to Cape Town. Most people just want to pass through.
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FEMALE EDUCATION
Of the 110 million children that don’t attend school worldwide, 2 out of 3 are girls
There are 42 million fewer girls than boys in primary school education
In sub-Saharan Africa, 24 million girls cannot afford to go to school
If you educate a girl, she will earn up to 25% more and reinvest 90% in her family
Sources: UN, World Bank, Unesco, Camfed
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For an uneducated girl, there are very few opportunities. Many are married off as young as 13.
Some sell what they can in the market place or at the side of the road, while others sell themselves to the truckers.
Prostitution is a major problem. One in six Zambians is HIV-positive and Mpika is one of the worst affected places in the country.
Yet the figures show that almost all these social problems can be turned round by improving the rates of female education. “When you educate a girl, everything does change,” says Ann.
“You find that maternal mortality falls, that child mortality falls. You find HIV rates dropping. Everything improves with girls’ education.”
Doubling her money
But even well-educated girls can struggle to find jobs.
That’s why Camfed set up CAMA, a self-supporting network of ex-Camfed girls, who receive training in business skills and social outreach.
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CAMA, the Camfed Association
14,005 members across Africa
Supports the education of 118,384 children
Trained 1,504 members as community health activists
Source: Camfed
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They start businesses, community support groups and other projects such as nurseries.
Zambia’s national chairperson of CAMA, Gift Namuchimba, opens her front door with obvious pride.
She built her home, one of the best in the area, from scratch with the profits from her business.
Gift, dressed in a sharp trouser suit, explains how, with Camfed’s help, she finished school and then, with a small grant, set up a stall selling shoes in the local market.
Quickly doubling her money, she has gone from strength to strength and today employs a friend to run the stall full time.
Now she provides shelter, food and clothes for her whole family.
A small miracle
Can Christine achieve as much? Six months after our first visit, Alvin and I return to see how she is getting on. It’s a transformation.
Christine is participating more in class and her results are much better.
“I’ve improved in everything,” she says proudly. “I used to lag behind, but now I’m at the top of the class.”
This small miracle was achieved because Camfed paid for extra tuition and gave her mother a new bicycle.
This simple intervention allows her mother to travel between home and the farm in a single day, so she can spend more time looking after the family.
Christine can now really concentrate on her studies. And, as Alvin observes, she just seems happier in herself.
Now perhaps she can really fulfil her dreams of a better life, not just for herself, but for her whole family.
Alvin’s Guide To Good Business will be transmitted on BBC World News on 27 March at 0130 GMT and 0830 GMT and on 28 March at 1530 GMT and 2130 GMT.
Reference Link
http://news.bbc.co.uk/2/hi/business/8587236.stm
Courtesy
BBC News
Can palm oil help Indonesia's poor?
Panorama last week reported on the disturbing destruction of orangutan habitats in Indonesia for palm oil plantations. But are there benefits from these plantations for local people?
Environmentalists have long decried the destruction of Indonesia’s rainforests, first for timber and more recently for palm oil.
The logging was a one-time deal that mostly benefitted the country’s corrupt elite and foreign corporations.
But does palm oil have the potential to generate new wealth for this nation of 250 million people?
There is one key fact that is often overlooked in the debate.
Rural middle class
Of the more than 7 million hectares (17.2 million acres) in palm oil cultivation, nearly half is in the hands of smallholders, ordinary folk trying to better themselves and look after their families.
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“We are seeing the emergence of a rural middle class,” says John McCarthy of the Australian National University.
He is an economist and expert on the Indonesian palm oil industry.
“I was doing research in a town in Sumatra and I went to a local school and nine of the 13 teachers had oil palm plantations,” he said.
Intrigued, Mr McCarthy carried out a survey in several villages in the region. What he found startled him.
Villagers with four hectares (10 acres) or more were earning on average $12,000 (£7,775) a year. A second group with 2 hectares were earning much less -$2,000 (£1,300) a year – but were still enough to provide financial security for themselves and their families.
Villagers without palm oil all fell below the poverty line.
The growth of this new middle class has profound implications for both prosperity and the prospects of furthering democracy in Indonesia.
Fairer
There are huge abuses. Plantations continue to be opened up that flout the laws. Corruption flourishes. Local communities are being marginalised, habitats terribly degraded. So what is the way forward?
In the often polarised debate about palm oil, it is rare to find converging views between activists and owners.
Sawit Watch is an Indonesian NGO that has campaigned for several years on the palm oil front.
Achmad Surambo is the executive director of Sawit Watch.
When I meet him he is happy to make one point clear to me: palm oil in itself is not a bad thing for Indonesia. But the system needs to change.
Laws have to be enforced, people and the environment need to be protected, the land rights of local communities must be respected.
“We have to make the system more fair, accommodate the interests of farmers, communities and labourers,” he says.
“The system right now is tilted toward the big companies and that has to change.”
Increase productivity
Lyman Agro is a small plantation company managing 60,000 hectares in West Kalimantan (Borneo).
Steaven Halim of Lyman Agro points to the roads, schools and health clinics that have been built as proof of the company’s commitment to its social responsibility.
Steaven Halim is sure that productivity can be increased instead of acreage
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“We have also helped (smallholders) build up cooperatives so they can handle their own business,” he says.
The government and the industry until recently talked about doubling the land area in production.
Sensitive to negative press about deforestation, they are now talking instead about doubling the output in 10 years from 20 million to 40 million tonnes to help meet world demand.
When I ask Mr Halim whether this can be achieved with existing plantations he nods vigorously.
“Yes, indeed. Indeed it can,” he says.
The key for him is increasing productivity for smallholders.
“If we can get them to 35 tonnes a hectare per year [it now is about 20 tonnes] we can do it.”
That is not far off what Sawit Watch wants. It has called for a moratorium on expansion, as well as more support and better treatment of farmers and labourers.
Steaven Halim acknowledges there are “some bad guys, no doubt” in the industry, but that the time is now to talk.
“Let’s sit down together and try to find the way out. People have to be fed.”
Reference Link
http://news.bbc.co.uk/2/hi/asia-pacific/8534031.stm
Courtesy
The BBC
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