Archive for: Aid Effectiveness

Last week a group of the world’s 25 leading medical doctors, public health professionals, development agency staff and analysts gathered in Bellagio, Italy to debate the future of mHealth, or the use of mobile phones in health systems.

This emerging field resembles mobile banking circa 2002. There are uncoordinated and relatively small pilot projects, regulators and policymakers have thought precious little about the topic, donors have no organized mechanisms for support, and there is scant public attention to the opportunities to deliver healthcare or track health information with mobiles. In a previous post, Jim Rosenberg characterized this state of play as the “technology trigger,” the first stage in the maturing of a new technology approach.

Mobile banking has clearly moved beyond that phase – indeed, with regular appearances in publications like the Financial Times, Economist, Wall Street Journal, New York Times, and trade press such as The Banker, mbanking is now farther along the lifecycle towards the “peak of inflated expectations.” (See Jim’s post)

What caused this maturing of mbanking during the past 5-6 years? For one, “mobile financial services” isn’t a new topic and has been hyped before, so we may just be following a pattern. But I’d like to share one theory that I discussed this week with the mHealth experts as they think through how to advance their field. My argument consists of six different reasons.

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Mobile banking, access to finance, and the attendant challenges and opportunities are all on the agenda at the Mobile Money Summit, which takes place May 14 – 15 in Cairo. This is an opportunity to hear from innovators, meet new partners, and engage with leaders from finance, telecom and the development community. CGAP is proud to co-organize this event with DFID, IFC, and the GSM Association, which represents more than 700 mobile network operators.

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Word today that IBM, which has been touting its foray into open source solutions, will partner with Grameen Foundation to help expand its MIFOS solution for information systems. In a joint press release, Grameen and IBM note that

…MFIs (microfinance institutions) are inhibited from extending their reach because they lack a flexible, cost-effective technology infrastructure that enables them to expand their operations to provide loans to more people and to develop new products and services. Many MFIs are still using pen and paper or simple spreadsheets to process loans. A 2004 study by the Consultative Group to Assist the Poor (CGAP) showed that just half of all MFIs around the world have automated information systems, and those that do invest in technology spend duplicative resources on custom-built systems that are extremely costly and difficult to maintain.

No doubt. We hear this all the time from MFIs - its hard, if not impossible to roll out electronic channels on the front end without improving the back end first. 

Want to know more? We’ve got lots of research…..

For some, El Salvador is famous for some of the best surf spots in Central America. For others it is the kilometer-long black-sanded beaches that come to mind. This week, for the Latin microfinance community, San Salvador will be famous for one of the largest and most reputable microfinance events of the region: The 10th Inter-American Forum on Microenterprise.

Looking at the agenda, the three day conference brings together an amazing group of around 1,500 of the region’s microfinance providers, its networks, governments, donors, and even the royals with the participation of H. M. Queen Sofia of Spain.

CGAP is organizing a panel on technology’s potential to increase outreach and depth of access to finance. Our project partners Visa Credibanco and GXI, as well as Opportunity International will share their lessons learned and challenges to implement technology projects.

Watch this space for more.

Happy Monday…this Monday is more auspicious than most because it’s the start of our three day conference looking at how technologies such as card-based networks and mobile phones could increase access to finance. IFC is a co-organizer, and Visa is a sponsor.

Want to know more? Visit here for the full agenda.

We’ll be posting presentations as we get them…and this link should take you to a live video stream of the event.

Great news…several of CGAP’s publications have been released in Chinese and are now available online. Here are two of our favorites:

Using Technology to Build Inclusive Financial Systems
Focus Note No. 32, January 2006 (Chinese, pdf)
Some of the innovations commercial banks need to service poor clients may be found in information and communications technologies (ICTs).This Focus Note addresses the following questions: Can banking technologies, applied innovatively in developing countries, make microfinance profitable for formal financial institutions? Will they reduce costs to such an extent that banks could profitably serve even those whom MFIs have mostly excluded to date, such as very poor and remote rural customers? Will these customers be comfortable using technology?

Use of Agents in Branchless Banking for the Poor: Rewards, Risks, and Regulation
Focus Note No. 38, October 2006 (Chinese, pdf)
Use of Agents in Branchless Banking for the Poor: Rewards, Risks, and Regulation
This Focus Note examines the experience of five pioneering countries–Brazil, India, South Africa, the Philippines, and Kenya–where agent-assisted branchless banking that targets poor customers is already a reality. It introduces the main issues involved in regulating branchless banking, particularly regarding the use of retail agents.

Stefan Staschen works with CGAP’s technology and policy teams. He presented on CGAP’s behalf at the Third African Microfinance Conference in Kampala late in August, and shared with us his impressions of the conference.

Not one or two or three, but four presentations at the AMC in Kampala, Uganda, dealt with the use of technology for increasing access to financial services. Richard Ketley from Genesis Analytics talked about Alternative Service Delivery Mechanisms and the card and phone revolution in Africa. His main conclusion was that African microfinance institutions (MFIs) can leverage existing technology such as mobile phones, ATMs and the internet to counter the negative impact of operating in a high cost environment and more often than not using inefficient business models.

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Emergency aid used to be a short-term fix to a grim situation: handouts of food and other needed goods to alleviate the suffering of some of the world’s poorest beset by famine, drought or flood. Now, aid agencies increasingly deliver cash in continual social protection payments which help the poor build safety nets and avoid crises. And a few pioneering thinkers in the aid industry realize that cash + technology can also = infrastructure for financial services. Donors and governments can not only get social payments to the right people, but improve access to finance for entire communities historically off the radar screen of traditional banks.

Aid agencies are wising up to new ways of delivering help. They’ve realized that smaller amounts of aid, spread out over time and in the form of cash, can help poor people build there own safety nets, before a crisis hits. Cash is also much cheaper and more efficient way of delivering aid. Some 65% of America’s US$ 2 billion food aid program is eaten up by red tape and logistical costs, according to a US government report.

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September 2004
Breaking Down the Walls between Microfinance and the Formal Financial System
(adapted from Elizabeth Littlefield and Richard Rosenberg, “Microfinance and the Poor: Breaking Down the Walls between Microfinance and Formal Finance,” Finance & Development 41, no. 2 (June 2004): 38-40)
There is a dawning understanding that developing countries’ financial systems need to be more accessible to poor people and that there are practical ways to make this happen. All kinds of financial institutions–regulators, mainstream rating agencies, commercial and state banks, insurance companies, and credit bureaus–are starting to play a part in developing sound, inclusive financial systems that serve the majority of poor countries citizens.

English pdf | French pdf | Spanish pdf | Russian pdf | Arabic pdf