Gates backs cell phone banking for Haiti
In the wake of the earthquake, Bill Gates' charitable foundation backs a $10 million initiative to use mobile banking to speed the aid and recovery effort.
The massive earthquake in Haiti in January destroyed a third or more of the country's banks and ATMs, but even before the quake fewer than 1 in 10 Haitians had ever used a traditional bank.
Aiming to broaden access to financial institutions and aid in the recovery, the Gates Foundation and the U.S. Agency for International Development announced Tuesday a plan to back up to $10 million in funding to spur the use of, an approach that has worked elsewhere to bring financing to the poor.
"Out of the ruins of Haiti's tragic earthquake, there is an unprecedented opportunity to improve the lives of millions of Haitians and unlock the country's economic potential through mobile money," said Mark Suzman, acting president of the Global Development Program at the Bill & Melinda Gates Foundation, in a statement. "Making financial services widely available to the poorest families in the developing world can help break the cycle of poverty by giving them a safe place to save, guard against risks, build assets, and provide opportunities for the next generation."
The fund will offer cash awards to companies that build mobile financial services in Haiti, giving $2.5 million to the first country that launches a mobile banking service in the next six months and hits certain goals. The second company that does so within 12 months will get $1.5 million, while the remaining $6 million will be awarded proportionately to those services that process the first 5 million transactions.
The program's backers hope that, in the short term, mobile banking will make it easier to distribute humanitarian aid, including various cash-for-work programs. Over time, the hope is that a mobile banking system will leave Haitians with broad access to savings and other financial services that were not widely available before the quake.
A program in Kenya, known as M-Pesa, reaches 9 million people--40 percent of adult Kenyans--just three years after its launch. The service allows a range of goods and services, from taxi fares to school fees--to be paid by phone. The Gates Foundation touts a recent University of Edinburgh study that suggests rural households using M-Pesa saw their income increase by 5 percent to 30 percent.
Bill Gates has beenin bringing access to banking, particularly savings, to the poor. He during a stop in Berkeley, Calif., on his .
"Poor people don't have saving accounts," Gates said. "The financial system doesn't work for the poor."