In the mid-1990s, when I was winding up my decade of off-and-on living in Bangladesh, Professor Muhammad Yunus had his second big idea. I immediately knew it would have a big impact on the Grameen Foundation that I was then preparing to launch back in the United States. That idea was that information technology, if harnessed the right way by people with a strong sense of social purpose, could be a significant accelerator of poverty reduction globally. (His first big idea, of course, was that the world’s poor women were bankable.)
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At Grameen Foundation, our goal is to spur innovation in the global movement to eliminate extreme poverty. Part of that work is to develop better solutions and share them with people like you.
On GF Insights, we share lessons learned from our leaders in the field, news about efforts to expand access to financial and information services for the poor, and how poverty-focused organizations are using data to improve the way they work.
Camilla Nestor, Grameen Foundation’s Senior Vice President for Global Solutions, teaches a financial inclusion course at Columbia University’s School of International and Public Affairs. As part of her course, students submitted blog posts that were evaluated by professors and Grameen Foundation’s communications staff. The winning post is featured here.
Especially since the Global Findex report made headlines around the world with its finding that the number of financially excluded dropped from 2.5 billion to 2 billion during the period 2011-2014, I have been increasingly uneasy with equating account access as financial inclusion, and especially as equivalent to the essential concept of full financial inclusion as defined by CFI. The Center’s new publication “By the Numbers” does an excellent job helping people to digest all the publicly available data about financial inclusion, and make sense of them. It also reinforces my unease.
Despite the progress in account openings, the report makes it clear that the number of people actually using accounts is unfortunately not growing. Even more worrying, it argues that most accounts “are not really functioning as the hoped-for ‘on-ramp’ to financial inclusion.” The risk, as I see it, is that by adopting a stunted definition of financial inclusion that emphasizes account openings, we may be measuring and incentivizing the wrong things. The report wisely urges “caution regarding the value of mass drives for account opening, such as mandated no frills accounts…”
A mobile money agent shows Sonata clients how to do transactions on a phone
By Sharada Ramanathan
Imagine that your loan payment is due. You have two options: either physically carry cash to your bank or make this payment instantaneously via your mobile wallet. It is safe to say that most of us would choose the latter option, even if it costs us more. To us, the benefits of mobile money – safety, efficiency and speed – skew the decision firmly in its favor. Now imagine that it is a microfinance client in rural Uttar Pradesh, India, who needs to repay her loan. Presented with the same two options, would she make the same decision? Not necessarily, in our experience.
The mobile channel holds tremendous potential for delivering financial services economically to the poor in rural, remote areas. However, it is unlikely to be able to deliver on this promise if adoption rates remain low, as we see currently.
Airtel Uganda has received an ICT for Development Award for ‘Airtel Weza,’ a mobile application for savings groups developed with Grameen Foundation and Plan Uganda. The award was given by the Uganda Communications Commission at its Annual Communications Innovations Awards (ACIA) ceremony, which recgonizes ICT innovators that create practical solutions.