PSD Blog - The World Bank Group

ICT stat of the day

The World Bank's handy annual Little Data Books were released earlier this month. I came across some interesting stats from the Little Data Book on ICT. Between 2000 and 2007, internet subscribers per 100 people in low-income countries grew from only .1 to .8, but mobile cellular subscriptions per 100 people grew from .3 to an amazing 21.5. If you want to reach the poorest countries in the world, it looks like mobile phones are your best bet. No wonder that mobile money and insurance via SMS have taken off.

Straight talk on combatting fraud in mobile payments

Some months ago I saw Nick Hughes of Vodaphone speak about the success of M-Pesa in Kenya. One of the lingering questions from the meeting was how secure a client's money is when it's en route. An interview (below the jump) with Simon Cavall of Mi-Pay Ltd. provides some insight into the steps mobile operators are taking to prevent fraud from tainting an innovative industry.

Conference envy...

I've got a case of conference envy - my colleagues over at CGAP are organizing the second annual Mobile Money Summit to take place in Barcelona June 22-25. I'd gladly fly economy class to attend! 

Mongolia’s landscape equals mobile money opportunity

Mongolia is about the size of Alaska and has a population of fewer then 3 million people.  This translates into one of the lowest population densities in the world.  With almost half the population living in Ulaanbaatar, the capital city, and the rest spread out across the country, it may seem that Mongolia is not the ideal landscape for mobile financial services.  Think again!  Because that's what the key players in the market are doing. 

Last month, I had the opportunity to visit Mongolia to assess the mobile banking landscape there, and I came away surprised by what I found—and excited by the possibilities.

What would Samuel Huntington say about Dev 2.0?

There is little question that the advent of technologies like the mobile phone have been a great boon to economic development around the world. But every new technology brings along with it the potential - or perhaps even the necessity - of disruption. Generally, this kind of disruption is usually a good thing, as it helps break up incumbent (and less efficient) firms, or at the very least forces incumbents to innovate. (I'm thinking, for example, of M-Pesa in Kenya.)

But there is no controlling this kind of process, and the disruptions are not limited to economic life. Social activism gets a boost from these kinds of technologies, and we see everything from an African bloggers conference to highly effective environmental activism. In other words, these technologies hold out a special democratic promise. But therein also lies the risk.

Creative destruction in ICT

If ever there were a moment to witness creative destruction in action, now is it. If I had to bet on a sector that would benefit most from this process in the current financial crisis, it's ICT. My colleage Oleg Petrov in e-Development points me to a recent note from the World Bank on the experience of ICT during the Asian financial crisis. The note argues that creative destruction is exactly what happened during that episode:

...the point here is that the Asian financial crisis was actually beneficial in creating a Schumpeterian "gale of creative destruction" that swept through the failed telecom investment schemes of the mid-1990s (in this case based on narrowband networks) and prepared the ground for a fresh round of investment. The Republic of Korea was arguably hardest-hit by the Asian financial crisis, but it was also in the vanguard of the broadband charge, with the Government taking a leading role, alongside private enterprises...

...financial crises also create openings for disruptive technologies, and here, small companies hold an advantage. Google was born in 1998, in the middle of the Asian financial crisis, while Skype was born in 2003 at the very bottom of the dot.com slump.

Big news in mobile banking

Zain has announced the roll-out of Zap, an initiative to bring mobile banking to millions in Africa. It looks like Safaricom will now have some serious competition. AllAfrica.com has the details:

Providing the most comprehensive and accessible package of mobile banking features currently available on the African continent, Zap will be initially available in Kenya and Tanzania prior to the launch in Uganda.

Zap represents the most comprehensive mobile banking service ever launched and will provide millions of people with access to banking for the very first time.

Another OLPC complaint

OLPC is looking for college students to take on summer internships setting up XO laptops in Africa. Chris Blattman is not impressed:

One thing is for sure, this kind of internship strains my patience. $10,000 for 10 weeks of work delivering laptops? (1) That's 100 laptops right there; (2) $10,000 goes a LONG way in Rwanda; and (3) this strikes me as a job an African would benefit from doing.

Mobile banking takes WING in Cambodia

One of the enterprises that IFC has been working with in Cambodia is WING, a subsidiary of the Australia and New Zealand Banking Group (ANZ). In late January, WING launched a mobile payments business that targets unbanked customers. Last week, I had the opportunity to visit WING’s offices, meet their team, participate in their rollout, and travel to remote areas to visit agent locations. I was impressed by the high energy and creativity of WING’s staff, their incredible progress in a relatively short period of time, their willingness to adapt to new lessons quickly, and the unique aspects of their solution. 

WING’s USSD-based service will allow customers to save, make purchases, transfer money to both WING and non-WING users, and perform a range of other financial services – all through mobile phones. Since WING account numbers do not have to be tied to a customer’s mobile phone number, the service is also available to people who do not own phones. In a country like Cambodia, this feature is extremely important because a large percentage of the population still does not own mobile phones but have easy access via family and friends.

Prior to designing their product, WING performed extensive market research to ensure that they understood the target market and its financial needs. The resultant service was developed in response to those findings. Product development occurred over a 9-month period during which the company performed iterative testing and redesign, mapping their solution closer and closer to the needs of the market.

From mobile banking to mobile money making

What can't a mobile phone do? First, it was mobile payments, then mobile banking, and now mobile phones have become a source of income, at least in rural Kenya. An article in The New Scientist describes a company called txteagle that pays people to complete short tasks via text message:

DAVID, a Masai herdsman from Kisumu in Kenya, answers a call on his cellphone. After listening to the message, he repeats a short phrase in his Masai dialect. He then listens to another short message, and repeats the new phrase. After 30 minutes, he ends the call, having earned enough for a week's worth of personal cellphone airtime.

David is working for txteagle, a service that allows rural Kenyans to earn airtime and money by performing small tasks such as translation and transcription using their cellphones.

OLPC smackdown

Jon Evans, a writer for The Walrus magazine, brings the smackdown on the One Laptop per Child project: 

Meanwhile, the rest of the world has already lapped them. My Acer Aspire One netbook is faster, has more memory, a better screen and keyboard, connects to encrypted Wi-Fi networks, renders Wikipedia correctly, and has a user-friendly interface with many useful applications. There’s no comparison: it’s miles better, for a comparable price. As far as I can tell, the OLPC team so wanted to be revolutionaries that they insisted on reinventing everything at once, and as a result, failed everywhere. (Although to be fair they did inadvertently spur the growth of the netbook market that has since entirely overtaken them.)

Google as development agency ctd.

Is Google the newest development agency? They keep impressing me with their new initiatives. This time it's an SMS service that allows mobile phone users to request and receive information off the web free of charge. This could prove to be of huge benefit to the now vast number of mobile phone users in the developing world who don't have access to an internet connection. From Joe Mucheru writing on the Google Africa Blog:

In Africa, we've learned that mobile phones are easier to get to than internet connections and PCs, and that working towards our mission means working through mobile phones. At the beginning of 2008, there were over a quarter of a billion mobile subscribers on the continent. Mobile penetration has risen from just one in 50 people at the beginning of this century to almost one third of the population today. To that end, we are excited to launch a test of Google SMS Search in Ghana and Nigeria.

Google SMS Search provides access to information through a mobile phone without internet. You simply create an SMS message about what you are looking for and send it to the Google number (4664 or "GOOG") and wait for a response by SMS.

So far it looks like Google is only offering the service in Ghana and Nigeria. Maybe an enteprising PhD student could talk to Google about implementing a randomized evaluation when it's extended further?   

E-Money – Mobile Money – Mobile Banking – What’s the Difference?

When I speak at conferences or with people interested in the use of mobile phones for financial service delivery, I am often asked what is the difference between e-money, mobile money, mobile banking, and a range of other terms that are often used wily-nily in reference to this emerging business opportunity.  It is a good question.  People are confused.  And rightfully so.  There are no universally accepted definitions.  While this lack of uniformity may not be important much of the time, it does become critical at the regulatory level as well as when potential players are trying to have a meaningful conversation with each other. 

In an attempt to create some clarity around terminology, I researched documents from thought leaders in the e-money and branchless banking space to see if I could find any consistency among the terms used.  The definitions provided below are the result of that effort.  Writings from CGAP, the GSM Association, and the European Union were all leveraged heavily.   (You can find links to all terms that have been taken directly from source material.) 

Do you think having some consensus around terminology would be an important step for the industry?  How would you change the definitions that I have complied to make them more universally acceptable?  Your comments and thoughts are welcomed.

M-Pesa update

My colleague Jim Rosenberg at CGAP points me to a very useful post on the debate taking place around M-Pesa, the highly successful mobile payments service in Kenya. (See my earlier post on Disruptive technologies: M-Pesa vs. the banks for a bit of background.) It seems the banks in Kenya are threatened by the success of M-Pesa and are clamoring for a regulatory crackdown from the Central Bank.

All of this brings up the difficult question of how to regulate companies that provide financial services to the previously under- or unserved. Is this a case where regulation will serve a legitimate public interest in protecting consumers or where it will protect incumbent firms but masquerade as consumer protection? Let's hope it turns out to be the former. For more on the controversy, check out the East African Standard and the Business Daily.

(Hat tip: Mark Pickens)

Bank Indonesia promotes e-money efficiency

Back in November of last year, Bank Indonesia and IFC co-hosted a half-day forum focused on bringing efficiency to electronic money solutions in the country. The seminar – titled Peningkatan Efisiensi Penyelenggaraan Uang Elektronik (E-money) – was opened by Bank Indonesia Director Murniastuti and IFC Vice President Rachel Kyte. Global experts were brought in from Europe and India to discuss emerging regulatory best practices as well as the role for interoperability between mobile money and mobile banking solutions. 

Bank Indonesia is interested in efficient systems not just for mobile money, but for other forms of electronic money such as credit cards, debit cards, pre-paid cards, ATMs, and point-of-sale (POS) terminals. Since many banks in Indonesia still maintain proprietary payment networks, it is not uncommon to find multiple POS terminals present at a single retailer – each POS accepting payment or debit cards from a limited number of banks. The same is true of ATM networks.

Disruptive technologies: M-Pesa vs. the banks

Mobile payment systems are turning out to be a truly disruptive technology in Kenya. The great success of M-Pesa, the now prototypical example of mobile payments, has the banks frightened, at least according to an article in the Nairobi Star. But Kenyan blogger Bankele calls for a truce: "Banks need to change and embrace M-Pesa as it is able to do some things they can't or won't do." According to Bankele, the alternative is not pretty:

...take away m-pesa and people will go back to stuffing cash in tins, rolling them in blankets and mailing them in cartons on buses. They will not go back to open new bank accounts or queue at western union.

(Hat tip: Elia Varela Serra at Global Voices Online)

Next in line for m-banking services: Papua New Guinea

This past October I participated in a 2-day Mobile Money Summit in Port Moresby, Papua New Guinea. Why Papua New Guinea? There is growing interest among telecom companies and banks there in mobile financial services. Although the meeting was attended by more than 50 people from around the Pacific, the majority of the participants were from companies doing business in Papua New Guinea.

IFC cosponsored the event, along with the Asian Development Bank, Bank of Papua New Guinea, the Business Council of Papua New Guinea and the Port Moresby Chamber of Commerce and Industry. The topics discussed reflected the variety of participants – an overview of mobile banking, regulatory discussions, and success stories from the region. Bank South Pacific also provided us with a demonstration of a mobile banking service. And I spoke during a session on New Solutions: Engaging with Customers and Creating Compelling Products, where I presented a range of business models and discussed technology options for mobile financial services.

New Blogger: Janine Firpo

Mobile banking – everyone is talking about it, but how can we separate hype from reality? I've invited Janine Firpo, President of Sevak Solutions, to help us make sense of this potentially transformative technology. Janine was recently hired by IFC, a member of the World Bank Group, to work with IFC’s regional advisory teams to accelerate the development and large-scale roll-out of mobile money solutions in East Asia and the Pacific.

Janine brings over 24 years experience in technology, international development, and consortium building to her efforts. For the past six years, she has focused exclusively on the role of information and communications technologies in the extension of financial services. She is a pioneer in the implementation of branchless banking solutions and has worked on a range of related issues in Africa, Asia, and Latin America. Welcome!

Four million mobile phones can't be wrong

If you've got some free time this afternoon, I highly recommend checking out an event being put on by CGAP on Mobile Banking for Poor People: Pioneer Perspectives. The discussion will take place between 2pm-5pm eastern standard time and will feature a star-studded panel, including Nick Hughes of Vodaphone and Brian Richardson of Wizzit. There will be a live webcast - the link will be made available here shortly before the start of the program. (In the meantime, check out coverage of a past event at CGAP with Nick Hughes of Vodafone.)

(Hat tip: Jim Rosenberg)

Real Simple Reporting, continued: Can web 2.0 help companies report on their performance?

I recently ventured that "real simple reporting" could be the killer app for development 2.0. At that time, I had project reporting to donors in mind. But what about corporate social responsibility and sustainability reporting: Is there a role for web 2.0 there?

Simplicity, if we are to listen to the HBS folks, is what will drive the success of social media applications. They call for companies to develop "a dashboard of simplicity that is open to the whole Internet." As if heeding that call, Sun Microsystems recently launched a revamped version of OpenEco.org, a collaborative platform that allows companies to track their greenhouse gas emissions and, interestingly, develop a "top-level organization dashboard where users can track a broad spectrum of emission sources to provide a comprehensive view of an organization's carbon footprint." What is the incentive for companies to use this tool as opposed to (or as a complement to) their own internal reporting processes?

Vodafone: Keep It Simple, Stupid

Nick Hughes, the head of Vodafone's international mobile payment solutions, recently gave a talk at CGAP about the company's work in Kenya, Afghanistan, and Tanzania. If I might sum up the talk in just a few words: KISS (Keep It Simple, Stupid). Less than two years ago, Vodafone rolled out M-PESA, a mobile payments service in Kenya. M-Pesa now has some 4 million subscribers and 3,500 frontline agents. Nick made it pretty clear that this rapid uptake far exceeded any expectations that Vodafone had when they started offering this service. 

The key to Vodafone's success? They focused entirely on offering a single service, and doing it well. M-PESA does not offer any banking services - no credit, no microloans, no savings. Rather, they simply offer a way to transfer money between two people. M-PESA didn't even originally plan to create payments for things like utilities or school fees - they discussed the possibility and decided to leave that to a later date. M-PESA makes its money by charging commissions on money transfers rather than on investing money.

Odd bedfellows: good for development

Some time ago I blogged about different connotations of the phrase "development 2.0."

A recent report by the US Chamber of Commerce, Development 2.0: Changing the Way Globalization Works adds yet another dimension to the debate (fellow PSD blogger Michael Jarvis contributed one chapter to the publication). The report focuses on the role of multinationals in emerging markets and argues that "development 2.0 is about blended value - finding ways to promote both social and economic development." Hybridization, partnerships and crossover planning are the strategies to be adopted in this emerging paradigm. The recently launched "e-co Hub" NGO Connect Africa seems like a good example of this approach at work.

Earlier this year, a Brooking Institution report on Global Development 2.0 also touched on the disruptive role of partnernships among what, until recently, were odd beddfellows:

The cozy, all-of-a-kind club of rich country officials who for decades dominated the development agenda has given way to a profusion of mega-philanthropists, "celanthropists," and super-charged advocacy networks vying to solve the world’s toughest problems.

Banking on Mobiles: The Good, the Bad, and the Ugly

While mobile banking has recently been getting some high end exposure (see the recent posts on the Clinton Global Initiative), a recent conference sponsored by CGAP provided a welcome counterpoint by getting into the nitty gritty of actually implementing the m-banking model on the ground. Titled Banking on Mobiles: Why, How, for Whom?, the conference really should have been called The Good, the Bad, and the Ugly (per the subtitle of the Powerpoint presentation). Why? Because a number of obstacles still remain to widespread adoption of this technology, even though presenters Kabir Kumar and Ignacio Mas are enthusiastic about our ability to overcome those obstacles.

Kumar and Mas placed m-banking in its appropriate context - it is part of the wider world of branchless banking, which requires networks of retail agents to handle transactions. And despite the hype, the numbers of people with access to branchless banking are still not that impressive. The only country that has really achieved the vision of 'banking in every village' is Brazil.

 

More m-banking at the Clinton Global Initiative

Brian Richardson wasn't the only one talking about mobile banking at the Clinton Global Initiative. Elizabeth Littlefield, CEO of CGAP, also made an appearance (Hat tip: Jim Rosenberg). Video of her talk can be seen here - first appearance is around 27:30. And here's a little excerpt:

In fact, the real Achilles heel all along has not been risk, it's been transaction costs, the costs of making tiny little transactions in remote areas to poor people, the tiny transactions that they need. So we figured if you can use cell phones or technology to reduce the cost, which it does, by 5, 10, 50-fold by using cell phones, then we could actually reach the most remote and poor people that we couldn't reach with the normal bricks-and-mortar branches.

What a difference six years make...

Speaking of mobile banking (see the previous post), it might be useful to see just what mobile coverage looks like in South Africa. Fortunately, the UNDP provides heat maps with exactly this data. Here is one from 2000 (which also appears in an earlier post called UNDP discovers the private sector):

 

Compare that to a similar map with data for 2006 (below the fold):

Mobile banking at the Clinton Global Initiative

Mobile banking keeps getting more and more publicity, as it should. Brian Richardson, the CEO of WIZZIT, made an appearance at the Clinton Global Initiative last week. You can see video of Richardson's appearance here. The video below provides a bit of background on WIZZIT, an organization that has received support from the IFC. For earlier PSD blog coverage of mobile banking, see here and here. CGAP also just held a conference on Banking on Mobiles: Why, How, for Whom?, more on which in a later post.

Microinsurance - the next sexy development initiative?

In the last couple of years, microcredit has managed to get a sexy reputation, for better and for worse. The attention helps to bring large dollops of funding, but at the same time raises expectations higher than can ever be met. Development initiatives of this type probably go through something similar to Gartner's hype cycle for technological breakthroughs, with a peak, a trough, and a leveling off:

 

Microcredit is probably past its peak of inflated expectations. Microinsurance, though, may be one its way up - now that the Bill and Melinda Gates Foundation has thrown its weight behind microinsurance, attention is sure to grow. The Gates Foundation recently awarded a grant to the International Labor Organization to establish a Microinsurance Innovation Facility - in cooperation with CGAP - that will award some 40 to 50 innovation grants at a total value of $18 million. (For more on the initiative, check out Improving risk management for the poor.) Microcredit has proven effective enough that it will undoutedly make it to the 'plateau of productivity'. Can the same be said of microinsurance?

Aid effectiveness and e-government

Last week saw an interesting videoconference at the World Bank on aid effectiveness and e-government (here are the schedule of events and a blog post from the new e-Development blog.) The event was a joint effort of GTZ and the World Bank e-Development Thematic Group. I'll spare you a summary of the introductory remarks other than to note that many of the speakers stressed the importance of e-government in reaching the goals set out by the Paris Declaration and recently evaluated and reiterated at the 3rd High Level Forum on Aid Affectiveness. Anyone who left after just these remarks would have learned little - the meat of the videoconference came when speakers from government agencies talked about their own on-the-ground attempts to utilize e-government.

Cell phone vs. HIV

While telemedicine is nothing new, improvements in telecommunications are creating the possibility of previously unthinkable innovations. The text message, as I've commented before, is becoming widely available in the developing world, and many organizations have taken note. A non-profit called One World launched a help service for questions on HIV in Kenya a few years ago. But researchers at the University of California - Los Angeles are proposing a truly heroic advance in the use of cell phones. The UCLA researchers propose using cell phones to diagnose diseases like HIV through a novel imaging technique (Hat tip: Giulio Quaggiotto). According to the article:

Ozcan envisions people one day being able to draw a blood sample into a chip the size of a quarter, which could then be inserted into a LUCAS-equipped cell phone that would quickly identify and count the cells within the sample. The read-out could be sent wirelessly to a hospital for further analysis.

No word, unfortunately, on the possible price tag for the proposed cell phone.

Trust through technology

The most recent Economist has a piece on mobile phones in the developing world - The meek shall inherit the earth - that hits on a lot of topics discussed on the PSD blog (Hat tip: Giulio Quaggiotto). It talks up the potential value of mobile phones in the developing world while warning about some of the technological barriers that still face mobile technologies: "walled gardens", overlapping efforts, sustainability, etc. The thing that amazes me, though, and that seems to get missed in much of the media coverage, is the extent to which trust plays a role in the use of these technologies, particularly m-banking. Here's the Economist's description of m-banking:

Google as development agency

Google just released its own browser, Chrome, to compete with Internet Explorer. Daniel Altman on the International Herald Tribune blog argues that it may just turn out to be the developing world's browser. Now, Google has just announced it is supporting the development of a system of satellites to provide internet access to regions without fast fiber networks. Apparently, the bottom of the pyramid can be targeted from outerspace...

Leapfrogging e-government

Looking back at this post on E-government - another chance to leapfrog?, I now realize I may have gotten it wrong. The real opportunity for some governments is not to develop more participatory and easy-to-use websites. Whatever solutions a government comes up with - even one as cool as Estonia's TOM that allows citizens to comment on laws and propose new legislation - will quickly become outdated by the development of new and better internet tools. Why not get the public sector out of the business of creating end-user internet solutions and instead get the private sector to do it?

At least, that's the proposal offered in a new paper in the Yale Journal of Law and Technology called Government Data and the Invisible Hand (Hat tip: Giulio Quaggiotto). While David Robinson et al. focus on e-government in the US, a lot of what they say could apply with some caveats to a lot of developing countries. Here's the heart of their argument: 

Text messaging - the real revolution in telecommunications?

While we may not be ready to announce victory in the digital war on poverty, there are definitely battles that are being won. And the most recent battle is that over text messaging. Cell phones have spread like wildfire across Africa and many other parts of the world. But these are basic handsets - no internet access, no videos, no maps. These phones do, however, have short message service (SMS), aka text messaging. And while the capacity to send 160 characters by phone may not be a revolution, it is definitely having a positive impact.

Jim Witkin, writing at Triple Pundit, discusses one of the most interesting efforts to apply this technology to the developing world (Hat tip: Giulio Quaggiotto). Kiwanja.net, a non-profit, has developed a program called FrontlineSMS that allows NGOs to communicate with their field workers through text messaging. As Witkin explains:

...the [NGO] administrator can compose a message once in FrontlineSMS and send it simultaneously to hundreds of volunteers. The program has been used by NGOs in over forty countries for a wide range of activities including blood donor recruitment, assisting human rights and conservation workers, election monitoring, and coordinating healthcare workers. 

Creating creative capitalism

The debate continues over at Creative Capitalism, the blog/book-to-be spurred by Bill Gates's speech at Davos. Meanwhile, Gates gives a hint at just how to create Creative Capitalism - get universities involved. At a forum in Hong Kong, Gates argued that universities need to team up with industry to drive innovation. More resources on university-industry collaboration are available here. 

Alphabet soup - AED, AAP, PDA

Perhaps in contrast to my post on the digital war on poverty, I just noticed an interesting article on the website of AED - the Academy for Educational Development. They are using a technology called the African Access Point (AAP) in combination with personal digital assistants (PDAs). From the article:

...to increase connectivity, AED is employing a new technology, called the African Access Point, or AAP. This technology links inexpensive PDAs to a computer hundreds or even thousands of miles away using an existing wireless telecommunications network.

The digital war on poverty

Jeffrey Sachs, ever the optimist, has announced victory - or something very near it - in the digital war on poverty. Writing yesterday in the Guardian, Sachs had this to say:

Extreme poverty is almost synonymous with extreme isolation, especially rural isolation. But mobile phones and wireless internet end isolation, and will therefore prove to be the most transformative technology of economic development of our time...There are now more than 3.3 billion subscribers in the world, roughly one for every two people on the planet.

Perhaps I am a Luddite, but Sach's article brings to mind Rousseau's Discourse on the Moral Effects of the Arts and Sciences (available in English translation here). Rousseau expresses a certain skepticism about the benefits of technology that has been echoed repeatedly since. Here is one interesting passage:

E-government - another chance to leapfrog?

Much has been made of the example of some developing countries leapfrogging the adoption of outdated technologies, for example with the adoption of mobile banking. One has to wonder whether that could be the case with e-government, at least for a handful of countries. A new report out from Brookings reports on Improving Technology Utilization in Electronic Government around the World, 2008 (Hat tip: Giulio Quaggiotto). The author ranks governments around the world on the quality of their outreach through websites, tabulating things like online information, electronic services, and disability access. While OECD countries are well-represented among the highest ranked, a number of other contenders made it into the top 20, e.g. Brazil, Dominica, Malaysia, and Ghana. In fact, these countries were all ranked higher than France, Portugal, New Zealand, and the UK!

Outsourcing credit card defaults

The Financial Times reports today that US credit card defaults prove a boon to India. According to the article:

Firstsource, an Indian business process outsourcing company that handles credit recovery for most of the top five US banks and half of the top 10 credit card issuers, said it was increasing staff numbers to win business from growing credit card defaults in both national markets. "There is more demand for that service. If I could add 100 people today, overnight, I would do it," said Ananda Mukerji, Firstsource chief executive, in an interview with the Financial Times...Mr Mukerji said: "There are more credit card outstandings being defaulted on today than there were a year back, so that's a growth opportunity for us."

If I were asked to devise a way to increase protectionist sentiment among U.S. voters, I doubt I could come up with a more effective method than this.

From the Nokia 1100 to the iPhone 3G

Giulio Quaggiotto pointed me to this article by Ken Banks on Mobile Phones and the Digitial Divide, which takes a somewhat sobering look at the limits of mobile technology in the developing world. Here's the money quote:

In the West, when we talk of mobiles helping close the digital divide, many people make a huge assumption about the technologies available to users in developing countries. We look at the mobile through rose-tinted glasses from the top of our ivory towers, through a Western prism or the lens of a 3G iPhone.

The reality is that one of the most common phones found in the developing world is the Nokia 1100. It's sturdy and serviceable, but provides little beyond voice and SMS services. According to Banks, handset manufacturers see further opportunity at the bottom of the pyramid, but it doesn't involve anything like internet browsers or cameras. For that, a little help is needed. Citing an IFC project with Celtel in Africa, Banks proposes "diverting international development funding toward providing a subsidized, fully Internet-ready handset for developing markets." If that happens, I'm going to get totally left in the dust - all I've got is a Samsung A437!

All things Africa and ICT

I've just run across a spate of items on the development of ICT in Africa; although it could just be coincidence, I suspect there's been a growing interest in this topic in the development community.

First off, Africa Telecom News has just come out with an Africa Mobile Factbook (Hat tip: White African). The report is free - well, if you discount the time needed to take a required survey - but the factbook offers up some interesting statistics. Figure 1 (below) shows that mobile penetration has grown markedly, and they're predicting continuing growth in this sector. White African also points out much of this development is local: "Most of the mobile operators are home-grown. In 2005, the continent’s seven largest investors controlled 53% of the African mobile market."

    

Development 2.0 in healthcare

If you haven't seen it yet, you should really check out HealthMap, a website created to aggregate health-related news and produce heat maps of potential disease outbreaks. HealthMap's creators - researchers associated with Children's Hospital Boston and Harvard Medical School - just released an open access article describing the motivation behind HealthMap and the promise it holds:

The goal of HealthMap is to deliver real-time intelligence on a broad range of emerging infectious diseases for a diverse audience, from public health officials to international travelers...Ultimately, the use of news media and other nontraditional sources of surveillance data can facilitate early outbreak detection, increase public awareness of disesase outbreaks prior to their formal recognition, and provide an integrated and contextualized view of global health information.

One of the supporters of the project, head of Google.org Larry Brilliant, has high hopes for HealthMap. According to an article in Wired, he had this to say in 2006:

Podcasting for development

There seems to be a mania to take any new technology and apply it to the developing world, be it computers, solar panels, or, the next big thing, iPods. (Sorry, OLPC, you're no longer the cool new kid on the development block.) And the really next big thing is podcasting for the developing world. An article on scidev.net discusses one such initiative in Peru:

Practical Action has been working on podcasts for the Cajamarca region of northern Peru since 2006. A poor, rural area, most of the people there rely on agriculture for their livelihoods...Practical Action's local office in Peru surveyed local people about the type of information they needed to support their livelihoods - advice on grape cultivation or raising cattle for example. This information was then gathered from experts and recorded as digital audio files...

Mobile money – an update

Past PSD bloggers have pointed to the growing use of mobile phones to facilitate financial services (see past posts on a workshop on IT and financial services and on regulatory issues related to mobile financial services). These posts suggest that masses of previously underbanked individuals are taking advantage of these services. Until now, this phenomenon has been largely confined to relatively peaceful countries like the Philippines and South Africa. According to a blurb in today’s Financial Times, however, mobile phone financial services (subscription required) may be moving into new terrain. According to Karim Khoja, the chief executive of an Afghan mobile phone company, a partnership he has formed could

…leapfrog the banking system in the same way as we leapfrogged wires in the ground.

Afghanistan seems to be an appropriate proving ground to test this possibility. According to the article, any movement of cash in Afghanistan requires heavily armed convoys. Bank branches have been set up in only five cities throughout the entire country. Perhaps mobile phones will be of even greater value in a conflict-ridden country like Afghanistan than in South Africa or the Philippines.

More mobile banking, this time in the US. So what?

Word today that Western Union, the global money transfer service, is increasing its profile in the United States when it comes to selling new ways to send and receive money. This is just the latest in a series of steps Western Union has taken to get more involved in mobile services, which have grown exponentially in places like the Philippines and Kenya but have been less quick to catch on in markets where banking services are well-developed, such as the United States. The service will initially seek to reach Latino immigrants who are among the 40 million people in the US who lack access to basic banking services. How will it work? The Wall Street Journal explains:

To use the service, people go to one of RadioShack's more than 4,000 stores and sign up for a Trumpet prepaid phone, which is required under the program. Customers can then load up to $200 onto their phones for cash transfer via Western Union's network either within the U.S. or internationally.

Telecoms talk at the WTO

Daniel Annerose, CEO of Manobi, an African mobile data services company, and José Alfredo Rizek, executive director of Indotel, the Dominican Republic's telecoms regulator, joined in a telecommunications services debate hosted by the WTO (video available).

They discussed the 10th anniversary of the Basic Telecommunications services deal and its implications for governments, consumers, businesses, and for development.

One cell phone for every two humans

"Eventually there will be more cell phone users than people who read and write," says Eric Schmidt, chairman of the board and chief executive officer of Google in a recent article by the Washington Post. The article has some interesting facts about how cell phone technology grew so fast since its creation that no one could predict the magnitude of this expansion.

There's a particularly interesting anecdote that illustrates how unpredictable cell phone expansion has been. Mckinsey & Co., the consulting firm, in 1980 underestimated what the size of the cell phone market would be in the year 2000. Its number was not even 1 percent of the actual market size in 2000.

Can you hear me now?

The importance of cell phones for isolated communities and different applications of mobile technology have been the subjects of much debate.

A new paper suggests that an increase in competition policy in sub-Saharan Africa, to at least the same level as that of the best-performing countries in the region, could almost double overall cell phone coverage. However, the authors highlight that more targeted work would need to be done to eliminate the digital divided between rural and relatively dense areas.

More cell phones, better grain prices

We already know that cell phone technology has enabled lots of people in remote areas to access bank accounts and government services. But here is a new one: a recent paper creates a model that predicts that cell phones in Niger will lead to a reduction in price dispersion. This would be true since cell phones enable grain traders to perform searches for better prices in areas where it would otherwise be too costly to search.

Interested? Register online for a discussion with the author held by the Center for Global Development in Washington, D.C.

Development 2.0, the book

This book from Brookings, which I just ordered, promises to be a very interesting read.

CGAP: Policy needs a balanced approach to mobile banking and other technologies

A new CGAP/DFID paper addresses the policy implications of branchless banking. Regulating Transformational Branchless Banking: Mobile Phones and Other Technology to Increase Access to Finance is based on assessments of policy and regulation in seven key countries, including interviews with more than 500 people from governments, the private sector, and international organizations in Brazil, India, Kenya, Pakistan, the Philippines, Russia and South Africa.

While much of the current buzz is around mobile phones, other branchless banking applications are gaining traction as well. Brazil's increase in access to finance has been accomplished largely through the more than 95,000 banking "correspondents"—local merchants and post offices that act as agents for banks, equipped with card-swipe and barcode-reading point-of-sale (POS) terminals. In Russia, a broad network of bank ATMs, POS terminals, and online e-money providers offer transaction services outside of traditional branch offices.

Want to know more? Read the full report and access country-by-country information.