Gates Foundation funds mobile phone banking in Haiti

June 9, 2010
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, WASHINGTON, Jun  9 – The Bill and Melinda Gates Foundation pledged 10 million dollars Wednesday to coax telecommunications and finance companies to set up mobile phone banking services for Haiti\’s poor.

"After the earthquake on January 12, we saw huge demand from Haitians who needed to receive money from family and aid organizations, but we also saw a severe reduction in the capacity of the banking system to get the cash into their hands," Amolo Ng\’weno of the foundation\’s Financial Services for the Poor unit told AFP.

The powerful quake in Haiti killed up to 300,000 people and knocked out a third of banks, ATMs and money transfer outlets, according to the Gates Foundation.

Its fresh multi-million-dollar pledge will offer cash incentives to companies that set up mobile financial services in Haiti, the poorest country in the Americas.

The first company to launch a mobile money service that reaches certain benchmarks within six months will receive 2.5 million dollars, and the second operator to launch and reach the same targets within 12 months will receive 1.5 million dollars.

The remaining six million dollars will be awarded as the first five million transactions take place.

The US Agency for International Development (USAID) will contribute five million dollars to the fund, for technical and management assistance.

While the incentives are hefty for such a poor country, the Financial Services for the Poor unit\’s director Bob Christen said the project will be carefully monitored to avoid scams and corruption.

Phone service providers, banks and technology companies can bid to provide M-banking services in Haiti — and compete for the Gates Foundation incentives — provided they have "a track record of commitment to the country that goes beyond the emergency period and a strong likelihood of success," Christen said.

For the program to work, he said, it must get off the ground rapidly and be deployed on a very large scale.

The Gates Foundation hopes at least one company will provide mobile banking services — also known as M-banking — in Haiti within a year and that five million mobile phone transactions will take place on the island nation within two years.

Around 40 percent of Haiti\’s population of nine million have mobile phones, and those who don\’t usually have access to one through a friend or relative, the Gates Foundation said, citing aid organizations on the ground.

Ng\’weno and Christen expressed hope that mobile phone financial services will enjoy the same success in Haiti as Kenya\’s M-PESA mobile money service, used by nine million Kenyans just three years after its launch.

That\’s 40 percent of the east African country\’s adult population — the same percentage as Haitians who have a mobile phone.

Anyone who can receive a mobile phone text message can receive money by M-PESA, and then merely have to go to the retail outlets of the mobile phone service provider that runs the M-banking program, or to a gas station, supermarket or local shop, to withdraw their cash.

M-PESA has caught on so dramatically in Kenya that everything from taxi fares to school fees is paid by mobile phone, according to the Gates Foundation.

In Haiti, the foundation hopes M-banking will not only help people get much-needed cash but also stimulate local economies because "people who receive money on their phones, in their communities, are more likely to spend it there," said Ng\’weno.
 

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