NB Financial Health
Weekly Roundup – The Indispensable Platform: The growing importance of mobile access to businesses that serve the poor
At Bill Clinton’s second inaugural address – the last of the 20th century – he famously called the U.S. “the world’s indispensable nation.” Though some might object to the idea of any one country declaring itself uniquely important (as we Americans tend to do), Clinton was reflecting on the singular impact of America’s technology, culture, military, and political and economic ideas on the 20th century world. Even today, no matter where you go, American influence can be felt – for good or ill.
A similar phenomenon has emerged in global development, where mobile phones have become what Clinton, in his current role as a globe-trotting humanitarian, might call “the developing world’s indispensable platform.” Not only has mobile access become a valuable tool for low-income people in their daily lives, it has grown into an essential platform for businesses and services that hope to reach them. Recent numbers from the GSMA illustrate the kind of access that’s now available:
- Well over 50 percent of people in the developing world have access to a mobile phone
- Markets in South Asia and Africa have experienced user growth of nearly 20 percent a year since 2008
- Network coverage for basic mobile services (voice and text) now reaches over 90 percent of the world’s population
- Access to mobile services has outpaced the rate at which many people are gaining access to basic services like electricity, sanitation and banking – and more people now have access to mobile networks than to energy or water
That final bullet point ?might seem like more of a cause for concern than for celebration. But the growth of mobile access has sparked a new dynamism in many of the sectors that have traditionally struggled to serve the BoP, and perhaps no sector has been more affected than finance. GSMA’s 2013 State of the Industry report shared some impressive stats:
- With 219 services in 84 countries, mobile money is now available in most developing and emerging markets
- In June 2013, there were over 60 million active mobile money accounts globally, with 13 mobile money platforms reaching over 1 million active users
- At the end of last year, nine markets in the developing world had more mobile money accounts than bank accounts
The revolution in mobile finance could prove to be a decisive factor in poverty alleviation in the coming years, as businesses and utilities use it to serve populations that were once unreachable. That’s why we were excited to work with CGAP to publish a series on their Digital Finance Plus project, which ran this week on NextBillion Financial Innovation. As CGAP describes it, “Digital Finance ’plus’ is the use of mobile money and branchless banking to make basic, essential services and utilities – in energy, health, education, and water, for example – more accessible to people at the base of the economic pyramid.”
CGAP has identified 55 services that are leveraging the infrastructure of mobile payments to reach and serve their customers. We explored some innovative examples on NextBillion, including the potential synergies between digital finance and agriculture, Fenix International’s lease-to-own solar energy solutions, m.Paani’s socially focused loyalty program, and Bridge International Academies’ cashless approach to education. (You can learn more about Digital Finance Plus by watching this week’s World Bank Live webcast, below, in which several innovative companies discuss how they are tackling big development challenges with digital finance.) We plan to expand on this coverage with more posts on the uses of digital finance at the BoP in the coming weeks and months, and would welcome suggestions on interesting business models and innovations.