A lot has been written lately about the delivery of microfinance services to nearly a quarter of the global population that lives at or below the poverty line of $1.25 per day*. Loans, savings, and other banking services, are increasingly recognized as part of a necessary and sustainable solution to financial exclusion.
Mobile technology has emerged as a viable way of reaching those without access to formal financial services in rural areas of the world. With this blog post, I'll focus on how mobile technology plays a vital role in lowering the barriers to accessing financial services no matter who you are or where you live.
Empowering Individuals To Escape Poverty
The limited availability of computers, Internet access, and fixed landlines, has traditionally posed significant barriers in the takeoff of fixed broadband in the world's poorest regions. This means that billions of people around the world are not only unable to connect to the rest of the world, but lack access to the technological advancements that have been designed to make their lives easier. Mobile technology enables the delivery of vital microfinance services by serving people and small businesses in emerging markets, where access to formal banking institutions is rare. This is often due to prohibitively high transaction costs or geographical limitations.
The Mobile Economic Revolution
Of the 2.6 billion people in the world who do not have access to banking services, 1 billion of them have access to mobile phones. The spread of mobile technology is mainly due to favorable regulation in emerging markets, as well as supportive government policy, reduced ICT costs, and of course recognition of the potential that mobile technology has to enrich billions of people's lives. Widespread adoption of mobile devices is helping to forge a new enterprise culture in emerging markets – especially in sub-Saharan Africa – with banking, agriculture, and even healthcare services becoming more available there.
In the Mobile Economy Project report by The Brookings Institution, a private US organization devoted to analyzing national public policy issues, Darrell West explores how mobile devices enable individual entrepreneurship and small business development. Despite the presence of barriers such as corruption, lack of transparency and capital, and poor infrastructure in many parts of the developing world, there are successful ventures enabled by mobile technology."
Entrepreneurs, such as small producers and service providers, in less-developed countries, have begun to form joint arrangements, "such as warehouse-receipt systems in which stored produce is used as a collateral guarantee to obtain short-term credit, or loan guarantee funds which are designed to reduce the risks for lenders by providing insurance for loans against potential losses," says Eve Crowley, in an article for The Guardian.
Mobile technology is beginning to improve access to capital and market information, and help entrepreneurs serve broader geographic areas to stimulate economic development. What do you think about operators working to promote financial inclusion? Do you have an experience (direct or indirect) of mobile initiatives designed to help people in emerging markets?
Ashish Beri: Specialist, Ericsson GSC Operations, Ericsson. Ashish is involved in process design, implementation and improvement for Operations in Managed Services. He currently handles Ericsson's Multimedia operations in India and works closely with different teams, such as Incident Management, Problem Management, and Change Management Teams, under the ITIL framework. Ashish holds B.Tech (Electronics & Communication Engineering) and M.BA (Operations) degrees.
