DBJ pilots mobile solution to microfinancing

Monday, July 30, 2012

The development bank indicates on its website that it is now ready to launch the Mobile Money for Microfinance (M3) Pilot Project in collaboration with technology partner Transcel Limited and other industry stakeholders.

The project was central bank-approved in June.

DBJ, which calls itself a lead agency in microfinance solutions, said mobile money is central to its strategic plans to distribute credit.

The current initiative is expected to reduce lender overheads, and therefore loan costs.

“One of the major challenges the industry faces is the cost of disbursing loans and collecting loan payments. This is consistent with the experience of microfinance institutions (MFI) in other countries. More significantly, it is the single greatest obstacle to MFIs lowering the comparatively high interest rates they charge on micro loans,” said DBJ.

M3 is also expected to improve access for rural borrowers.

“Another hurdle to the widespread adoption of microfinance is the difficulty in accessing rural populations. There is a potential solution to both problems: Mobile Money (transactions carried out using mobile phones and the mobile phone network),” the release on the DBJ’s website stated.

Source: The Jamaica Gleaner (link opens in a new window)