I‘ve always taken my bank for granted. Sure, they annoy me from time to time, but it’s only because I expect to be able to get to the little money I have 24 hours a day, 365 days a week without having to carry it around with me all the time.
But, according to UN figures, having a bank account is rare across Africa, as 80% of the population remains unbanked and in Kenya this figure hits a staggering 90%. This means that most people in Africa have nowhere to deposit their vital savings and are left to keep their assets in the form of cows and chickens that are prone to sickness or accidents. They’re left unable to ever get a loan or credit in times of need or to invest in property or their business.
It’s for this reason that we need to see access to banks and savings as a part of the fight against poverty.
As can be seen from the video above M-Pesa from Safaricom has provided an innovative solution. The system is simple: the user visits an M-Pesa agent and deposits cash; they receive an e-float on their mobile which can then be transferred to another user’s mobile; the user at the other end can visit their local agent and withdraw the cash. The system also works by providing a rudimentary savings account for the users, as money can be stored in their M-Pesa account.
For many people in developing countries their mobile is their lifeline to information, and so has become a vital trusted asset to them, so the power of integrating this system on a wider scale is immense as it will give people a way to manage their money without having to make lengthy and often costly trips to find a bank.
The benefit this will provide to the sphere of microfinance is a good example of how this technology can help end extreme poverty. Users can receive the loan into their M-Pesa account and visit the local agent to withdraw the money. Then, rather than having to stop working in order to make trips to the bank to repay the loan this can be done via few button presses on their mobile phone, and they can continue their work, increasing their amount of time to earn money.
Clearly this technology is a great tool towards the achievement of MDG 8 and the end of extreme poverty overall, and its wider adoption across the developing world is something to be encouraged.