Live debate on the Guardian – can the poor bank on financial services?

M-PESA Mobile Money Transfer in Kenya

M-PESA Mobile Money Transfer in Kenya (Photo credit: Erict19)

The Guardian debate on the best ways to provide financial access to the poor in the developing world begins on Thursday 9th of May at 1pm. Click here to join the debate.

According to the Guardian, some of the questions posed will be:

How best do we address the challenges in creating affordable financial services? What are the most effective and sustainable ways to provide the kind of access that can reduce income inequality and increase economic growth? And after the global financial crisis, the recent critique of microfinance and the promising but uneven ascent of mobile money, will the poor be able to bank on financial services?

My response would be as follows:

There are no doubt security risks and concerns around privacy that need to be looked into when it comes to the phenomenal growth in mobile banking. However the positives outweigh these and haven’t we faced such security risks in the developed world? Surely the fact that increasing numbers of people no longer have to carry money around means they are at less risk of robbery, which is potentially more of an immediate concern? Opening up access to the financial system acts as an incredible tool of empowerment for the previously ‘unbanked’.

We are seeing an exponential uptake of the mobile phone in the developing world and this represents an opportunity to both communicate with people and give people access to financial services, where traditional ‘bricks and mortar’ banks are either not available or out of reach. Surely this is a tool of empowerment that needs to be embraced and promoted? The key is not to leave those without a mobile phone behind, and government initiatives should support the uptake of mobile devices even further.

In addition, mobile devices can be used to circumvent corruption, whereby bosses and managers have used the traditional pay packet to siphon off ‘tips’, leaving workers underpaid. Recent reports highlighted a case study in the Ivory Coast which saw state workers increase their take-home pay packet significantly after introducing mobile payments. Another report highlighted the fact that police officers in Wardak province in Afghanistan saw their take-home pay go up 30% when their salaries changed to mobile payments.

Finally, mobile payments can be a way to drive financial access for women in parts of the developing world where purse strings are traditionally controlled by men.


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