Merchant Mobile Payments Nearly Doubled in 2021, According to GSMA's Annual Report on the Mobile Money Industry

"Over the past decade, mobile money has expanded from a niche offering in a handful of markets to a mainstream financial service, moving millions of households in low- and middle-income countries (LMICs) from the informal cash economy into a more inclusive digital economy," according to GSMA's State of the Industry Report on Mobile Money 2022. Available in English and Français, the GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change, adds: "In 2012, there were 169 mobile money deployments in 71 countries. Ten years on, the number of live deployments has almost doubled to 316 and expanded to 98 countries worldwide."

A product of GSMA's Mobile Money program, which works to accelerate the development of the mobile money ecosystem for the underserved, the report examines the following major industry trends of 2021:

1. A trillion dollars transacted as the industry diversifies. "In 2021, the mobile money industry processed more than $1 trillion in transactions. The year-on-year increases in transaction values have been driven by new customer uptake and a growing number of mobile money use cases. For example, in 2012, ecosystem transactions such as bill payments, bulk disbursements, merchant payments and international remittances accounted for less than 10 percent of overall transactions. Ten years on, this has risen to 20 percent, a clear sign that mobile money providers are embracing diversification."

2. Mobile money adoption and activity continue their upward trajectory. "In 2021, the number of registered accounts reached 1.35 billion globally, up 18 percent since last year and 10 times more than there were in 2012 (134 million). 518 million of these accounts were active on a 90-day basis and 346 million on a 30-day basis, growing nearly 15 times and 13 times respectively since 2012. The volume and frequency of transactions also registered strong growth. In 2021, more than 1.5 million person-to-person (P2P) transactions were made every hour on average, compared to fewer than 68,000 in 2012, and the average account makes 3.5 P2P transactions per month."

3. Agent networks continue to thrive. "Between 2012 and 2021, the number of active agents grew more than 10 times, from 534,000 to 5.6 million, unlocking access to financial services for the most underserved customers. Despite closures and restrictions on movement during the COVID-19 pandemic, the value cashed in and digitized via mobile money agent networks grew by 18 percent in 2021, reaching a total of $261 billion or more than $715 million a day. Even the most established agent networks registered strong growth, with the 25 largest networks growing by more than 25 percent on average from 2020 to 2021."

4. Regulatory challenges persist. "Despite the huge success of mobile money services in many countries, in others, the sustainability of mobile money services is threatened by certain policy and regulatory interventions, from taxes on transactions to poorly implemented instant payment solutions and costly data localization mandates. The high cost of compliance is shared by mobile money providers and customers alike with potentially negative consequences on future investments in, and customer usage of, mobile money services. Dialogue between policy makers, regulators and industry leaders is of paramount importance in order to prevent adverse policy and regulatory interventions."

5. Merchant payments nearly doubled. "After a momentous year for merchant payments in 2020, in 2021 they nearly doubled, reaching an average of $5.5 billion in transactions per month and accounting for 21 percent of the value circulating in the mobile money system (P2P + merchant payments), up from around 10 percent in the past two years. Uptake has been in part driven by the number of businesses actively accepting and receiving mobile money payments."

6. International remittances are still flowing fast. "Two years on since the onset of the COVID-19 pandemic, diasporas around the world increasingly send money home using mobile money. The number of international remittances sent and received via mobile money grew by 48 percent in 2021, reaching $16 billion. Still, mobile money represents less than three percent of all remittances globally, meaning there is significant potential to digitize remittances and offer faster and more affordable ways to send money worldwide."

7. Bill payments leapt again in 2021. "Like other ecosystem transactions, the number of bill payments processed via mobile money leapt in 2021, growing by 37 percent to exceed $5 billion in transactions per month. For customers, mobile money-enabled bill payments can unlock access to a range of new services, such as off-grid energy, and help low-income users build economic identities. For government agencies and utility companies, mobile money-enabled bill payments can make revenue collection more efficient and cost-effective, strengthen financial transparency and circumvent fraud."

8. Bulk disbursements are seeing remarkable growth. "After registering 28 percent growth in 2020, mobile money-enabled bulk disbursements grew by another third in 2021, topping $65.8 billion. This growth is likely due to an uptick in salary payments as more and more employers turned to mobile money to pay their employees, with the number of unique accounts receiving salaries via mobile money increasing. The number of unique accounts receiving Government-to-person (G2P) payments were also up, as governments forged new partnerships with mobile money providers to deliver pandemic relief and other forms of social support."

9. Savings, credit and insurance are building financial resilience. "According to our Global Adoption Survey, approximately two in five (44 percent) mobile money providers offer credit, savings or insurance products. Uptake of these products in 2021 was encouraging across mature mobile money markets while they also gained traction in less mature markets, where customers are seeking out products to help protect their families and businesses against uncertainty and crisis, invest in their livelihoods and improve their standard of living.

10. Partnerships are pushing interoperability. "After recording exceptional growth in 2020, the value of transactions flowing between banks and mobile money platforms also grew quickly in 2021, up 46 percent, more than doubling since 2019. The continued acceleration of these types of transactions confirms the complementary relationship between banks and the mobile money industry that has been observed in the past few years, confirming mobile money’s key position in the financial ecosystem."

11. The mobile money gender gap is holding women and economies back. "Across LMICs, women are still less likely than men to own a mobile money account. This is due to a variety of reasons including not owning a mobile phone, lack of awareness of mobile money and lack of perceived relevance, knowledge and skills. Encouragingly though, once women have a mobile money account, their likelihood of using it is almost on par with men. As part of the GSMA Connected Women Commitment Initiative, 26 mobile operators across Africa, Asia and Latin America have made formal commitments to reduce the gender gap in their mobile money customer base since 2016."

12. Mobile money is enabling access to humanitarian assistance, utilities and agricultural solutions. "Mobile money is an enabler of many other services that can help solve critical socio-economic and environmental challenges, such as providing access to essential utilities, sustaining the livelihoods of smallholder farmers and delivering rapid financial relief to vulnerable populations. For mobile money providers, these use cases represent valuable opportunities to diversify, which many have already embraced."

Video entitled "Mobile money: tracking a decade of innovation, growth and sustainable impact":

The report concludes by explaining that "2021 has shown how the scale and power of mobile money can build a more inclusive world. Behind the numbers and milestones in this report are hundreds of millions of people participating in a more inclusive digital economy." What is more, "Individuals, communities and the public, private and non-profit sectors are all reaping the socio-economic benefits of mobile money."

The GSMA further says "even more profound benefits are possible if the industry and all stakeholders can catalyze efforts, reducing the mobile gender gap and meeting diverse customer needs to activate the billion registered customer accounts that are currently so infrequently used. In practical terms, this can also mean delivering more fast and secure cash transfers among the over 235 million people in need of humanitarian assistance; providing credit, insurance and other risk management tools to more of the nearly 500 million smallholder farmers growing a third of the world's food; and opening further access to affordable, reliable and safe water, energy and sanitation among the more than 1.2 billion people without access to core urban services."

It is encouraging to read how mobile money continues to grow rapidly, bringing a suite of financial products to hundreds of millions of users worldwide and disrupting traditional financial services. Moreover, mobile money is providing significant growth in merchant payments and enabling access to humanitarian aid, utilities and agricultural solutions. Nevertheless, while I recognize recent improvements to increase financial inclusion for women, more must be done to eliminate the mobile gender gap.

Are there aspects of GSMA's report on the mobile money industry that you found of particular interest?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Smart Investment in Emerging Technologies Can Help Address the Challenges Faced by the Global Giving Sector

Emerging technologies such as artificial intelligence (AI), blockchain, and internet of things (IoT) is having a profound effect on how businesses worldwide operate. However, less is known how these technologies are impacting the giving sector. A report produced by The Economist Intelligence Unit (The EIU) and supported financially by the Bill & Melinda Gates Foundation presents the key findings of a research program on the potential impact of ten emerging technologies in the giving sector. Venture into the future of giving: The potential of emerging technologies in the giving sector highlights ways that smart investment in emerging technologies can help address the challenges faced by the global giving sector.

The report argues that "Fourth Industrial Revolution technologies are transforming the development assistance and giving sectors, from using AI and machine learning to diagnose diseases to implementing drone-based humanitarian logistics. However, their potential impact on the giving process remains underappreciated to date."

Having served in leadership positions of various nonprofit organizations, I understand that "[w]ithin the giving sector, donors, intermediaries and implementing organizations operate in a complex global giving supply chain, which encompasses a wide variety of stakeholders including corporations, academic institutions, watchdogs and governments, among others. Each participant in the supply chain faces both unique challenges and challenges that are common across the sector. For the purposes of this report, we focus on three of the sector's most noteworthy shared challenges: 1) building and sustaining trust, 2) increasing efficiency, and 3) measuring and maximizing impact."

"There are ten key emerging technology applications," the report explains, "that have the potential to enhance the workings of the giving supply chain: big data, AI analytics, virtual reality (VR), augmented reality (AR), cryptocurrencies, blockchain payment infrastructure, the IoT, drones, smart contracts and impact tokens. All of these applications are powered by four core technologies: AI, virtual intelligence (VI), blockchain and the IoT."

Moreover, "These technologies can be applied to five key links in the giving supply chain: matching donors and recipients, motivating and informing giving, facilitating transactions, tracking outcomes and validating performance."

Below are the report's key concluding points:

To support donor and recipient matching, big data and AI are helping charitable organisations to understand more about the views, behaviors and opinions of current and future donors, and about trends in the giving sector. A key challenge is determining how to take advantage of the benefits of analytics in a way that does not impinge on privacy and is compliant with relevant regulations like the GDPR.

To motivate and inform giving, VR and AR are allowing donors to see the impact of their investments, overcoming the marketing and communications challenges faced by the sector in the past. A key challenge is the potential for misuse and manipulation when using a powerful tool to unlock empathy.

To facilitate transactions, blockchain and cryptocurrency can add a new rail to financial infrastructure, with tech companies using these facilities to reduce transactions costs.

To improve outcome tracking, sensors, drones and the IoT can be used to gather data that humans cannot, including on environmental and pollution challenges.

To validate performance, impact evaluation can be facilitated by smart contracts, which promote transparency and enable automated pay-outs when a social program reaches a performance threshold. This gives donors greater control over performance-related disbursements. Tokens can also help to monetize measures of impact and create new economic incentives for donors beyond tax exemptions. 

As I am continually learning how emerging technologies work, I appreciate the report's assertion that [w]hile no single technology can overcome the challenges inherent to the giving process, smart investment in appropriate solutions can ensure that all participants in the ecosystem make optimal use of their resources. The structured analysis of technologies undertaken in this study seeks to provide a guide for groups that are willing to experiment and invest to ensure that the sector's sizable contribution to economic and social development can be deepened and sustained in the years to come."

Although I agree with the report that smart investment in emerging technologies help address the challenges faced by the global giving sector, I am disappointed the report does not address the topic of cyber security. It is important for those stakeholders to understand the cyber threats that exist and have a system in place to keep their technologies secure from hackers. Not doing so will negate the value of any "smart investment."

Do you agree with the report's findings? Will smart investment in emerging technologies help address the challenges faced by the global giving sector?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Symposium on Global Health in China

"Contribute to strengthening global health through supporting the collaboration of China in the global health arena" is one of four strategic priorities of the World Health Organization's (WHO) collaboration with China as outlined in the China—WHO Country Cooperation Strategy. I have witnessed a number of initiatives over the past few years focused on China's increasing role as a major contributor in the global health arena. Given my personal and professional interests on global health, I appreciated having the opportunity to attend the "Symposium on Global Health in China: Harnessing the Power of Universities" at the University of Washington in Seattle. This post addresses a few points made during the symposium that took place from April 5-6, 2016.

It their welcoming letter, Judy Wasserheit and Stephen Gloyd, co-chairs of the symposium, wrote: "The symposium goals is to create a forum to help define future directions for academic global health in China, and to discuss how best to facilitate university collaborations with institutions from both high and low income countries." Drs. Wasserheit and Gloyd continue to explain that "the symposium will provide our Chinese university colleagues with an opportunity to meet a wide, interdisciplinary array of faculty, students, and other stakeholders to strategically plan for future collaborations."

I was surprised to learn about China's long history of sending medical aid teams to over 60 countries and regions, with most teams being sent to Africa. In his keynote speech, "Emergence of Global Health in China: Prospects and Implications," Lincoln Chen, President of the China Medical Board, noted the first China Medical Team (CMT) was sent to Algeria in 1963.

Regarding its domestic market, Dr. Chen said, "China has increasingly equitable care that can provide a model for the developing world." However, while China is making progress in modernizing its domestic healthcare system, the speed of such progress is slow. "China is still evolving from a Soviet-style medical system to a Western-style system."

He also remarked that China "is intellectually engaged in global health issues" and as a global economic power, the world's most populous country "wants to contribute more, which shows it is taking up its responsibilities as a global power."

During the plenary panel titled "Global Health in the Chinese Context," panelists discussed how global health is defined, what global health means in the context of activities supported by China, and how Chinese universities contribute to this global effort. In remarks made by Yinou Li, Director of the Bill & Melinda Gates Foundation's China office, Dr. Li noted that China has made progress in certain areas such as reducing tobacco use through restrictions on tobacco advertising and banning indoor smoking. Moreover, she provided some insights on collaborative efforts by the Chinese government, health organizations, and universities to create advocacy campaigns in support of tobacco control measures and social marketing campaigns that aim to educate people and change attitudes about tobacco use (namely, making smoking socially unacceptable and unappealing). Success in this area could serve as a model for other emerging or developing countries.

On the topic of eradicating infectious diseases such as tuberculosis, the Gates Foundation says, "According to the World Health Organization (WHO), nearly 1 million people develop tuberculosis (TB) in China each year—more than in any other country except India. In addition to a high burden of the disease, China has about one-fifth of the world's cases of multidrug-resistant TB (MDR-TB), which is especially difficult and costly to treat." Dr. Li noted that a majority of funding by the Gates Foundation in China is allocated to supporting the efforts of the Chinese government. For example, the Gates Foundation's website explains its support of a grant to the National Health and Family Planning Commission, which focused on "developing and demonstrating innovative TB-control models that can help China further reduce the number of patients who develop TB, and particularly MDR-TB."

The Gates Foundation is also helping China control its HIV epidemic by "reaching high-risk groups with prevention programs and accurate information, testing, and efficient and effective treatment programs." This has been done, according to the Seattle, Wash.-based organization's web page on combating HIV in China, through financially supporting "the Chinese government and community organizations on a program to expand HIV prevention (through testing and interventions) among those most at risk of infection and to provide care and treatment to those infected. In some program cities, more than half of all newly detected cases were identified through our collaboration with community organizations." Again, if done efficiently and effectively, China's efforts of reducing tobacco use, eliminating TB, and controlling HIV could serve as a model in other emerging or developing countries.

In the plenary panel, "Chinese University Partnerships with Low and Middle Income Countries," panelists talked about China's efforts in improving its bilateral health cooperation and greater participation in global health work and governance. Feng Cheng, Professor and Chief Physician, Research Center for Public Health and School of Medicine at Tsinghua University said expanding partnership opportunities will facilitate the development of health technologies and quality products to contribute to global health. Such partnerships will help transfer appropriate health technologies between Chinese universities and low and middle income countries with the aim to improve global health outcomes.

I want to express my appreciation to the symposium's co-chairs, planning committee members, and organizers. While I am not a member of the academic community, I found great value in attending this symposium to learn more the benefits through the collaboration among Chinese and American universities. I plan to learn from these lessons and apply them to the efforts my colleagues and I at ROI3, Inc. are developing to promote health and wellness in emerging and developing countries through localized mobile software solutions designed for smartphones and tablets.

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

PATH does not Consider China a Recipient, but a Partner

The focus of the previous post on this blog is on the role China plays in the strategy of ROI3, Inc. In doing some research for the post, I found some notes that I took while attending an event at The Bureau of Asian Research (NBR) on March 15, 2013 entitled "China's Evolving Health Industry Investments" featuring Jiankang (Jack) Zhang, PATH’s China Country Program Leader. While the event occurred eight months ago, there are a few points that remain relevant and worth sharing in this post. [Photo of Jack Zhang: PATH/Mike Wang]

Program for Appropriate Technology in Health (PATH)

"PATH's mission is to improve the health of people around the world by advancing technologies, strengthening systems, and encouraging healthy behaviors," according to its website. The Seattle, Wash.-based international nonprofit organization, which was founded in 1977, says that it "transforms global health through innovation. We take an entrepreneurial approach to developing and delivering high-impact, low-cost solutions, from lifesaving vaccines and devices to collaborative programs with communities. Through our work in more than 70 countries, PATH and our partners empower people to achieve their full potential."

In 2011, according to its Consolidated Financial Statements, PATH's total revenue was $283,838,000. Their funding derives from foundations; the United States government; other governments, other nonprofit organizations, and multilateral agencies such as the World Health Organization (WHO); individuals; and interest from investments 75.5 million people worldwide benefited from PATH's work in 2011 including 4.8 million mothers, newborns, and infants; 8.3 million children and adolescents; and 5.4 million people living with HIV/AIDS or tuberculosis.

Specific to China, PATH, since 1979, "has worked with Chinese government agencies, nongovernmental organizations, research institutes, and manufacturers to improve health. Our team in China has focused particularly on addressing reproductive health and infectious diseases." Coordinated from the organization's office in Beijing since 2003, PATH's strategy for success includes:

• Developing and expanding public-private partnership models for health product development that take into account health needs, the best interests of donors, PATH's core competencies, the interests of Chinese public agencies, and synergies with Chinese public and private companies;
• Identifying opportunities vertically and horizontally to build on this model to meet the multiple health needs of vulnerable populations in and outside of China; and
• Promoting global access and supply of affordable, accessible, and sustainable health products in China, and through China to other low-resource settings.

PATH in China explains how "PATH views collaboration as the key to providing innovative, sustainable, affordable, and culturally appropriate health solutions for low-resource settings. We conduct rigorous monitoring and evaluation to ensure the efficiency and effectiveness of our work. PATH's strategy in China includes:

• Developing and expanding public-private product development partnerships that align with donor interests, PATH’s core competencies, the interests of China’s public health agencies, and the needs and perspectives of Chinese companies;
• Identifying opportunities to build on these partnerships to meet multiple health needs of vulnerable populations inside and outside of China; and
• Promoting sustainable access to supplies of affordable health products in China and through China to other low-resource settings.

PATH's specific initiatives in China include work in vaccine research, development, and introduction; Woman's Condom product development and promotion; and new diagnostic tools for tuberculosis (TB). A sampling of PATH's projects includes the advancing rotavirus vaccine development; assessing Chinese vaccine manufacturers, the Japanese Encephalitis project; polio vaccine development and scale-up project (PVD); Protection Options for Women (POW); the tuberculosis new diagnostic demonstration project; the Woman's Condom project; and the Safe Water Project.

"China's Evolving Health Industry Investments"

As PATH's country program leader in China, Jiankang (Jack) Zhang is responsible for program development, project management, office management, and liaising with local and international collaborators, including local health authorities, public and private institutions, and other nongovernmental organizations in China.

During his presentation, Mr. Zhang said that the Chinese government is encouraging more private investments in the pharmaceutical and biotechnology sectors. He noted, however, intellectual property protection remains a significant concern by private enterprises, particularly companies based outside of China.

In Mr. Zhang's interview with NBR's Claire Topal and Karuna Luthra on May 25, 2011 entitled "A Pivotal Moment for China and Vaccine Manufacturing," it is noted, "The World Health Organization (WHO) announced on March 1, 2011, that the national regulatory authority of China—the State Food and Drug Administration (SFDA), along with affiliated institutions—now meets WHO indicators for a functional vaccine regulatory system. This means that Chinese-made vaccines are now eligible to apply for WHO pre-qualification."

WHO prequalification ensures that vaccines used in national immunization services in different countries are safe and effective for target populations at the recommended schedules, and that they meet particular operational specifications.

During the 2011 interview, Mr. Zhang said, "WHO's clearance opens the door for [Chinese vaccine manufacturers] to apply for WHO vaccine pre-qualification—a regulatory status that opens the door for United Nations agencies and governments to begin ordering the vaccine— with the aim of becoming eligible for vaccine procurement by the United Nations Children’s Fund (UNICEF)."

Responding to a question, during the 2011 interview, on the implications of the announcement for China's role as an international partner in global health, Mr. Zhang explained, "The Chinese health authority considers the WHO clearance a significant step in China's efforts to contribute to global health, notably to African countries where China has already donated to infrastructure, health systems, and anti-malaria treatment and control programs. The addition of vaccines to this portfolio is truly exciting for the Chinese government."

However, according to Mr. Zhang, "Obtaining a WHO pre-qualification certificate is complex and can be difficult to maintain. Ultimately, in my opinion, the biggest challenge for China won't be in building infrastructure, but instead in sustaining the commitment of public agencies and encouraging manufacturing executives to strictly comply with WHO requirements and the new Good Manufacturing Practice code."

The new Good Manufacturing Practice (GMP) code, adopted by the SFDA and effective March 1, 2011, aligns with WHO GMP standards, containing stricter requirements for the production of pharmaceuticals (including vaccines). The SFDA has asked that all newly-built pharmaceutical manufacturing enterprises should comply with the new GMP code. Existing factories, which produce sterile drugs, including blood products, vaccines, and injections, are mandated to reach the new code before the end of 2013. The deadline for other plants is Dec 31, 2015. Companies that cannot meet the new requirements before these deadlines will be forbidden from continuing to produce drugs. See SDA website, www.sda.gov.cn/WS01/CL0844/59017.html.

While Chinese companies may apply for WHO pre-qualification to manufacture vaccines for the African market, Mr. Zhang remarked during his presentation on March 15th that most vaccines used in Africa are manufactured in India. Despite the lack of Chinese-manufactured vaccines in Africa, he emphasized that the 4th International Roundable on China-Africa Healthcare Cooperation, which is scheduled for May 2013 in Gaborone, Botswana, will attract senior government officials and company executives from China and throughout Africa alike. (The World Bank published an article on December 10, 2009 about the initial China-Africa Healthcare Roundtable that was held in Beijing from December 4-5, 2009. This article by UNAIDS dated May 7, 2013 provides a summary of the aforementioned conference held in Botswana.) (Photo: UNAIDS)

Upon the conclusion of Mr. Zhang's presentation, I asked for an update on how China's vaccine manufacturers were complying with WHO requirements including the GMP. He replied that while Chinese-made vaccines are now eligible to apply for WHO pre-qualification, not a single manufacturer has yet be approved for pre-qualification.

While polio was eradicated in China, Mr. Zhang noted tuberculosis remains a problem. PATH produced a document, Collaborating to Control Tuberculosis, about its work to combat TB in China that says, "China has the most MDR-TB (management of multi-drug resistant TB) cases in the world and the second largest number of overall TB cases. The World Health Organization classifies China as a high-burden country. There are an estimated 120,000 new cases of MDR-TB each year in China, accounting for 24 percent of the global total."

Furthermore, according to the TB document, "With funding from the Bill & Melinda Gates Foundation, PATH is responding to the challenge. In collaboration with the Foundation for Innovative New Diagnostics and the Hong Kong Supranational Reference Laboratory, PATH assists the Chinese National TB Reference Laboratory with determining the operational feasibility, cost-effectiveness, and impact of new TB diagnostics in order to help the Chinese Ministry of Health decide whether to introduce and scale up these technologies."

Regarding his organization's operations in China, Mr. Zhang remarked that "PATH does not consider China a recipient, but a partner."

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Global Savings Forum Outlines Sustainable Solutions to Financial Inclusion

My previous entry presented various statistics explaining that while very few poor people have access to savings accounts, there is a strong desire to utilize such financial schemes. It is estimated that 3 out of 4 adults in developing and middle income countries do not have bank accounts and worldwide, it is the poor, women, and rural residents who are the least banked. Only about 10 percent of the 2.5 billion people living on less than $2 per day have access to a bank account. Rather than illustrating a dire picture, these statistics demonstrate the opportunity that exist in broadening savings services to a large segment of the most underserved people worldwide; otherwise known as financial inclusion. (Photo: Bill & Melinda Gates Foundation)

At the Global Savings Forum in Seattle, the first global gathering focused on the role of savings in the developing world, the Bill & Melinda Gates Foundation pledged $500 million over the next five years to expand savings. Foundation co-chair Melinda French Gates noted that a package of six new grants totaling $40 million are part of the $500 million pledge. The grants support projects and partnerships to improve access to savings and other financial services, including:

• Expansion of bank and microfinance services to include savings accounts;
• Implementation of new approaches to reach the poor with savings, such as branchless banking and mobile money; and
• Research to identify how people use formal and informal financial tools, including savings, credit, insurance, and payment services, and to analyze the impact of financial services on the lives of the poor.

“Savings doesn’t just help people mitigate the risks posed by a medical emergency or a bad crop,” said Mrs. Gates. “It also gives them the ability to marshal their resources to build something better for themselves and their children. It allows them to fund their own businesses, to look ahead with confidence. Savings helps families to take the giant leap from reacting to events to planning for a healthier, happier future.”

Explained by a Gates Foundation press release, “Technologies such as mobile phones are already providing safe, reliable, and easy options for people to access financial services. Sixty-nine percent of the developing world already has a mobile connection, and this number is expected to climb to 98 percent within five years.”

Emerging technologies such as mobile phones and innovations that enable banking services to be provided in post offices, neighborhood shops, and other convenient locations are creating a historic opportunity to deliver affordable, quality financial services to the doorsteps of the world’s poor. In Kenya, a service called M-PESA allows nearly 12 million people to transfer money and link to bank accounts using mobile phones. In Mexico, a network of government-operated convenience stores is serving as a platform to offer banking services to the rural poor. In Malawi, a bank is reaching thousands of first-time banking customers by mounting mobile banks on the back of pickup trucks. Here is a video detailing the Foundation’s program of promoting financial inclusion in Mexico:

Savings Accounts are in High Demand by People in Poverty

From November 16-17, 2010, the Seattle, Washington-based Bill and Melinda Gates Foundation hosted the Global Savings Forum, the first global gathering focused on the role of savings in the developing world urging urged leaders in government, banking, mobile communications, and international development to work together to build a new kind of financial infrastructure to bring savings to the poor. The conference produced several interesting statistics about the unbanked—people who do not have access to a savings account.

It is estimated that 3 out of 4 adults in developing and middle income countries do not have bank accounts and worldwide, it is the poor, women, and rural residents who are the least banked. Only about 10 percent of the 2.5 billion people living on less than $2 per day have access to a bank account. Sub-Saharan Africa is the least banked region in the world with 80 percent of its population lacking access to a bank account. This is followed by the Middle East/North Africa and Latin America/Caribbean at 68 and 65 percent, respectively.

There is a misconception that poor people do not save. The truth is that poor people actively save in cash and through informal mechanisms, but these tools inadequately meet their specific needs. According to a series of studies, over the course of a year, a typical poor household in Bangladesh, India or South Africa uses no less than four and typically closer to ten types of financial instruments. Rotating Savings and Credit Association (ROSCA) membership rates among adults have been estimated at between 50 and 95 percent of adults in Cameroon, Côte d'Ivoire, Democratic Republic of Congo, Gambia, Liberia, Nigeria, and Togo and similar group savings schemes are widespread outside of Africa as well. (ROSCA is a group of individuals who agree to meet for a defined period of time in order to save and borrow together.) Furthermore, a study of 1,500 people in Uganda showed that 99 percent of respondents failed to reach their savings goals when using informal methods, either because the money was stolen or lost, or because they were too tempted to spend the money when it was stored as cash in their home.

The conference presented overwhelming evidence that savings accounts are in high demand by poor people. Interestingly, savings accounts are being engaged at rates up to 12:1 compared to loans, even when both services are available from the same institution. In Uganda, for example, 43 percent of people said a savings account is their greatest financial need compared to 31 percent who cited credit. A Consultative Group to Assist the Poor (CGAP) study of six microsavings-focused institutions also found rapid growth in savers. During a six-year time period, 20 million new accounts and $4.3 billion in savings volume were added, representing an increase of 87 percent and 71 percent respectively.

Several participants noted that safe savings options help people to manage risks, like illness, increase investment in livelihoods, and empower women. A study in the Philippines showed that access to certain savings products increased women’s economic empowerment, including decision-making power over purchases, family planning, and children’s education. Farmers who were given the option to put aside money toward the next planting season increased productivity, enhancing investments in farming inputs by 32-39 percent. A randomized control trial in Western Kenya found that women who had access to a formal savings account were able to save and invest 45 percent more in their businesses after six months, leading to increased purchasing power for food and personal expenditures. The same study revealed that women with formal savings accounts were better able to afford emergency health services without depleting the money invested in their businesses. For most poor households, using savings to pay for large expenditures is cheaper and more efficient than taking a loan. For instance, even microfinance institutions (MFIs) often charge over 50 percent annual interest on loans. Fees for small deposit accounts, however, often equate to zero or positive interest payments to savers.

Poor households with access to savings accounts are more likely to invest in education, increase productivity and income, and reduce vulnerability to illness and other unexpected events. The challenge remains that very few MFIs offer savings accounts, and more than 90 percent of the world’s poor still lack access to financial services and resort to risky, expensive, and inefficient ways to save. In my next blog entry, I will present a number of solutions discussed during the two-day forum that will increase savings mechanisms to a large underserved market.

What can Governments and NGOs Learn from Coca-Cola?

The purpose of the TEDxChange forum was to promote public awareness of and support for the Millennium Development Goals (MDGs), which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015. The MDGs are to be achieved by a collaboration of all the world’s governments and nongovernmental organizations (NGOs). The September 20, 2010 forum included a few speakers and a performance by Bajah + The Dry Eye Crew, a hip-hop group originally from Sierra Leone that is known for speaking out against political and social injustices. Melinda Gates, co-chair of the Seattle, Washington-based Bill and Melinda Gates Foundation, was one of the speakers and there are certain aspects of her speech worth discussing on this blog.

Mrs. Gates spoke about the worldwide presence of Atlanta, Georgia-based Coca-Cola Company, even in most underdeveloped regions of the world. This is in stark comparison to the items underserved populations are lacking such as condoms, vaccinations for curable diseases, and educational materials for malaria prevention and prenatal care. "Coke is everywhere," said Mrs. Gates. “In fact, when I travel in the developing work, Coke feels ubiquitous." Moreover, "Coke's success makes you wonder how they are able to get to these far-flung places." If Coke is so successful in delivering their product worldwide, "then why can't governments and NGOs do the same thing?”

Mrs. Gates explained that if the international development community wishes to achieve the Millennium Development Goals prescribed by the United States by 2015, “we need to learn from the innovators and those innovators come from every single sector. I feel that if we can understand what makes Coke ubiquitous, we can apply those lessons to the public good. Coke’s success is relevant because if we can analyze and learn from it, then we can save lives.” Mrs. Gates continued to explain that there are three things the international development community can learn from Coca-Cola: “Real-time data and immediate feed it back into the product, tap into local entrepreneurial talent, and they do incredible marketing.”

Coca-Cola takes immediate data to measure progress. This is different to development organizations where evaluation comes at the very end of the project and by then, it is too late to use the data. Mrs. Gates uses bowling in the dark as an example of the flawed system governments and NGOs use, “You roll the ball, you hear some pins go down, it’s dark and you cannot see which pins go down until the lights come on, then you see your impact. Real-time data turns on the lights.”

In order to reach distant markets in developing nations, Coca-Cola recognized that it had to change its distribution model that worked so effectively in industrialized nations. Observing that some people in Africa were buying Coca-Cola products in bulk and reselling it in rural villages, the beverage company created 3,000 created micro-distribution centers in Africa since 1990, which now employs 15,000 entrepreneurs. In Tanzania and Uganda, micro-distribution centers represent 90 percent of Coka-Cola sales.

How can governments and NGOs learn from Coca-Cola? "Governments and NGOs need to tap into that local entrepreneurial spirit as well because locals know how to reach the very hard to serve places and they also know their neighbors and what motivates them to make changes," remarked Mrs. Gates. She cites Ethiopia’s new health extension program as an example where the Ethiopian government noticed that so many people resided long distances from medical centers that prevented them from seeking immediate medical care. In 2003, using a similar model used in the Indian state of Kerala, the Ethiopian government trained 35,000 health extension workers to deliver medical care directly to the people in rural areas. In five years, this program increased the number of workers from one per 30,000 to one worker for every 2,500 Ethiopians.

Mrs. Gates continued to explain that "health extension workers can help with so many things whether it is family planning, prenatal care, immunizations for the children, or advising the woman to get to the facility on-time for an on-time delivery. That is having real impact in a country like Ethiopia and it's why you see their child mortality numbers coming down 25 percent from 2000 to 2008. In Ethiopia, there are hundreds of thousands of children living because of the health extension program."

With respect to marketing, Coca-Cola's successful strategy lies in localizing their brand and advertising on a country or region basis. I have witnessed this during my travels. Whether it is in Uganda, Brazil or China, Coca-Cola creates advertisements using local people and in the local language, which gives the impression that the beverage company is locally-based. Everyone knows that Coca-Cola is a large American conglomerate, but their marketing strategy reflects a localized feel to the product. Governments and NGOs need to incorporate similar marketing strategies whether it is condom distribution to eradicate AIDS/HIV or promoting sanitary behavior like washing hands after defecating or linking toilets to courtship like a northern India state did to save lives caused by dysentery. Mrs. Gates said that if governments and NGOs “begin to understand what people want in health and development, then we can change communities and whole nations.”

You can watch the Mrs. Gates' speech in its entirety in the video below or through this web link:

Decade of Vaccines: Gates Foundation Pledges $10 Billion to Fight Childhood Diseases

At the 40th annual World Economic Forum held in Davos, Switzerland, the Bill and Melinda Gates announced “that their foundation will commit $10 billion over the next 10 years to help research, develop and deliver vaccines for the world’s poorest countries,” according to a Gates Foundation press release. “The Gateses said that increased investment in vaccines by governments and the private sector could help developing countries dramatically reduce child mortality by the end of the decade, and they called for others to help fill critical financing gaps in both research funding and childhood immunization programs.”

The Seattle, Washington-based philanthropic organization said that it “used a model developed by a consortium led by the Institute of International Programs at the Johns Hopkins Bloomberg School of Public Health to project the potential impact of vaccines on childhood deaths over the next 10 years. By significantly scaling up the delivery of life-saving vaccines in developing countries to 90 percent coverage—including new vaccines to prevent severe diarrhea and pneumonia—the model suggests that we could prevent the deaths of some 7.6 million children under 5 from 2010-2019. The foundation also estimates that an additional 1.1 million children could be saved with the rapid introduction of a malaria vaccine beginning in 2014, bringing the total number of potential lives saved to 8.7 million.”

An article by Seattle Times writers Sandi Doughton and Kristi Heim says that the Gateses’ pledge “ranks as the biggest philanthropic pledge ever to a single cause….The $10 billion pledge represents a doubling of Gates Foundation spending on vaccines. The Chronicle of Philanthropy said the amount is more than the entire assets of the Ford Foundation, America's second wealthiest foundation — after Gates.”

The foundation’s announcement notes that the new funding “is in addition to the $4.5 billion that the Gates Foundation has already committed to vaccine research, development and delivery to date across its entire disease portfolio since its inception.” The foundation's initial vaccine investments created an organization called the Global Alliance for Vaccines and Immunisation, or GAVI, which was launched at the World Economic Forum ten years ago.

The GAVI Alliance, the Gates Foundation explained, “has reached 257 million additional children with new and underused vaccines, and prevented 5 million future deaths. In the coming years, GAVI will focus on rapidly introducing vaccines to tackle diarrhea and pneumonia.” Billions more are needed, however, “from other donors to achieve the goal of 90 percent coverage of childhood immunization. Critical funding gaps exist at GAVI and in the global polio and measles programs, and more support is needed for the research and development necessary to produce new vaccines.”

The Gates Foundation occasionally receives criticism for not doing enough to help impoverished adults in the developing world. Responding to this issue during the January 29, 2010 press conference, Melinda Gates said that the foundation, with the help of Warren Buffet’s financial support, contributed to the “Green Revolution” in Africa that increases the productivity of small farms, moving tens of millions of people out of extreme poverty and significantly reducing hunger. In addition, said Mrs. Gates, the foundation is supporting innovative microsavings programs to help those who do not have access to traditional financial services to deposit funds in safe and secure bank accounts. For additional information about the foundation’s support of microsavings, please read “Gates Foundation to Help Poor People Save Money.” The press conference may be viewed in its entirety in the video below:

worldeconomicforum03 on livestream.com. Broadcast Live Free

Gates Foundation, Partners Pledge $90 Million to Boost Incomes of Small Farmers in Africa

In addition to establishing the Mobile Money for the Unbanked program, the Bill & Melinda Gates Foundation announced on February 19, 2009, "two significant partnerships and $48 million in grants to help hundreds of thousands of small cocoa and cashew farmers in sub-Saharan Africa significantly increase their incomes so they can lift themselves out of hunger and poverty. The two grants—$23 million to the World Cocoa Foundation and $25 million to the German development organization Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH—were awarded in conjunction with $42 million in cash and in-kind contributions from private industry." (Photo courtesy of Issouf Sanogo/AFP/Getty Images)

Broadening market access for cocoa farmers is a significant outcome resulting from these partnerships. One of the challenges many farmers in developing nations encounter, in addition to having the necessary tools and equipment to maximize their yield, is having access to distribution or consumer markets. Maximizing sustainable growth success for cocoa farmers will require the collaborative efforts of governments, civil society, and the private sector. I was very pleased to read, "The grants complement financial support and in-kind contributions from the private sector, nongovernmental organizations, and local governments. Farmer associations will also play a significant role in leading training and knowledge sharing."

"Cocoa is West Africa’s largest agricultural export, accounting for 70 percent of the world’s supply. Approximately 2 million West African smallholder farming households rely on cocoa production for a significant portion of their income....The cocoa project aims to increase farming household incomes through improved farmer knowledge and productivity, better cocoa quality, crop diversification, and improved supply chain efficiencies. The five-year project will reach approximately 200,000 smallholder cocoa farming households in Cameroon, Côte d'Ivoire, Ghana, Liberia, and Nigeria and aims to help farmers double their incomes. The project will complement the broader work of the World Cocoa Foundation, which works in partnership with its industry members to ensure cocoa cultivation is sustainable and delivers greater benefits to the farmers who grow it."

With respect to Africa's cashew industry, a significant problem is the lack of processing facilities. "Africa is responsible for about one-third of the world’s cashew crop. However, a lack of cashew processing facilities in Africa has created major market inefficiencies and denies Africans the economic benefits that accompany jobs in the cashew processing sector."

Linking farmers to processing facilities will provide added-value benefits for all stakeholders. Farmers will have a scalable value chain for their products and processing facilities will provide local employment opportunities, which will help sustain economic development in some of the world's poorest economies. (Photo courtesy of Chiba Y. and UNDP Ghana)

It is important to mention Kristi Heim's blog entry "Gates Foundation responds to questions on cocoa farming and child labor." (Ms. Heim is a writer for The Seattle Times and she maintains a blog, The Business of Giving.) Her blog explains, "The non-profit World Cocoa Foundation represents 70 chocolate companies, and most have not lived up to an agreement they signed to stop the worst forms of child labor in their cocoa supply chains, according to the International Labor Rights Forum." Is the Gates Foundation supporting human right violators?

I do not have enough information to discuss the claims made by the International Labor Rights Forum and I am sure that some of those claims are valid, but Ms. Heim interviewed Richard Rogers, Gates Foundation program officer in agricultural development, and he said it is necessary to have commercial involvement for the project to succeed.

"By having the private sector directly involved, 'farmers can have a clear understanding of what the market demands,' he said. Companies will contribute technical and managerial skills and resources to help farmers develop better seed varieties and plants and post-harvest handling methods. Rogers said he chose the World Cocoa Foundation for the grant because 'they have the best network of connections with governments, NGOs and corporate partners we feel are critical to this project.'"

I agree with Mr. Rogers and with these newly established partnerships created by the Gates Foundation, we should expect and I predict we will see a high level of operational transparency, which should result in eliminating any human rights abuses perpetrated by the private sector.

Mobile Money for the Unbanked

According to a press release dated February 17, 2009, "The GSMA, which represents the interests of the worldwide mobile communications industry, and the Bill & Melinda Gates Foundation today announced an innovative program that will expand the availability of financial services to millions of people in the developing world through mobile phones. The Mobile Money for the Unbanked (MMU) program, supported by a $12.5 million grant from the foundation, will work with mobile operators, banks, microfinance institutions, government and development organizations to encourage the expansion of reliable, affordable mobile financial services to the unbanked."

The MMU program is part of the Gates Foundation's Financial Services for the Poor initiative, "which is working with a wide range of public and private partners to harness technology and innovation to bring quality, affordable savings accounts and other financial services to the doorsteps of the poor in the developing world."

I applaud the creation of the MMU program since gaining access to financial services is a significant problem for individuals and small and medium-sized enterprises (SMEs) in developing nations. Mobile devices will improve the access of mobile financial services for individuals through money transfer services, which will give consumers a sense of empowerment. SMEs will benefit by improving inventory control, paying vendors electronically rather than mailing or hand-delivering payments, which is not a productive use of time, and gaining improved access to financial services necessary to meet the needs of business growth.

The Gates Foundation's statement further says, "The MMU program will fund regulatory and market research to help overcome some of the barriers of providing these services and demonstrate the business case for serving this market. The program includes a $5 million fund to catalyse a new wave of mobile money innovation, encouraging mobile network operators to create new services for previously unbanked people in emerging markets. The MMU program will support approximately 20 projects in developing countries, focusing on Africa, Asia and Latin America, with the goal of reaching 20 million previously unbanked people with mobile financial services by 2012."

Market research will show that there are great business opportunities providing mobile financial services. Such services will eliminate many of the barriers that exist in conducting financial transactions in developing markets. In Bangladesh, for example, 80 percent of transactions involve hard currency.

In my post, "Developing Nations Seek Entrepreneurs," I quote Kazi Islam, Chief Executive Officer of Dhaka, Bangladesh-based Grameen Solutions Ltd., "Migrants moving to the capital city of Dhaka still send funds back to their home villages, often relying on the local post office or a trusted friend to carry the cash to their families. As a result, it becomes a barrier to trade since funds cannot be used while they are in slow, physical transit." The MMU program will help eliminate these barriers.