PSD Blog - World Bank Group

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.

It's all about sharing

Nokia found that over 50 percent of users in India and Pakistan and 30 percent in Vietnam share their phones. Accordingly, the world's largest cell phone maker released two new models optimized for sharing. Among the new features are a cost-tracking application, multiple phone books, and software in 80 languages.

Paying attention to customers in emerging markets has paid off. The Finnish firm has posted record quarterly results: over 77 million units sold in Asia, the Middle East and Africa - almost doubling its sales in Europe and North America (42.3 million).

Critical thinking at the bottom of the pyramid

Can information and communication technologies (ICT) foster critical and entrepreneurial thinking at the bottom of the pyramid? This was one of the key themes that emerged from the GK3 conference last month.

Take for example the One Laptop for Child initiative. Interestingly, the debate did not center around the long-term sustainability of the project, but whether it can help move education systems in emerging markets away from the hierarchical, rule-memorizing approach.

Once you start seeing users of ICT in developing countries as creative contributors, a whole new world of opportunities emerges. Backed by InfoDev, the Equinox project allows teachers, trainers and companies in emerging markets to build and share e-learning curricula.

A sign of things to come?

Earlier this week IBM and Nokia let go of 31 "eco-patents" and released them to the public. By doing so, the technology giants hope to tap into the wisdom of the crowds. This very web 2.0 move is a sign of their recognition that when it comes to complex issues, such as spurring innovation or identify new business opportunities in the area of clean technologies, the best knowledge may well reside outside their organizational boundaries.

Also recently McKinsey added its voice to the choir of the wikinomics prophets and included "distributing cocreation" and "using consumers as innovators" among the eight emerging trends to watch in business technology. The global consulting firm predicted that "in the US economy alone roughly 12 percent of all labor activity could be transformed by more distributed and networked forms of innovation."

Intuitively, the development sector should be at the avant-garde of the adoption of openness, peering and sharing - the cornerstones of the web 2.0 era. And yet, ironically, the private sector seems to be ahead of the game.

I say development, you say développement

Maybe it's because I am under the influence of Spoken Here, but one of the key messages coming out of the GK3 conference last week was the increasing importance of promoting local content and language to address the digital divide.

It is well known that out of the 6,000 languages spoken on the planet, only a tiny percentage is represented on the web. Perhaps less intuitive are the factors that preclude multilingual digitization of content.  They range from the problems of recognition of minority languages, the lack of local language computing capacity, through the plethora of internet governing bodies involved in encryption projects, to the lack of interface between linguistic and IT expertise.

History didn't help either. 

What can governments do to foster branchless banking?

More and more research shows the positive impact that mobile technology has on economic development. The Economist has a short piece of advice for governments on how to maximize this mobile momentum:

[…] do away with state monopolies, issue new licenses to allow rival operators to enter the market and slash taxes on handsets

The recommendation is timely. Western Union, which handled nearly 17 percent of world's remittances in 2006, announced last month it would make it possible to wire money via cell phones.

Development 2.0: a recipe for the UN

What opportunities are opening up for the UN (and, one might add, the World Bank) in the web 2.0 era? What is the long tail of human rights? What is the potential of crowdsoucing for development?

An inspiring post from the Internet Artizans blog has some suggestions. While the UN is thinking about it, the latest web 2.0 platform for development has been launched. For budding social enterpreneurs, more Development 2.0 ideas can be found here.

After m-banking comes m-government

Last year, the total number of mobile technology users was estimated at 2.7 billion, compared with only 1.1 billion of those with Internet access. Some countries have been experimenting with "mobile government" (M-Government) to deliver public services to citizens who are unable to go online but have a cell phone – estimated at least 22 percent of people in developing countries.

Nearly 60 percent of India's government services can be delivered through a cell phone, says R. Chandrashekar, India's Additional Secretary and a keynote speaker at an upcoming event "Mobile Government: The New Frontier in Transforming Public Services."

The event is open to the public and will take place on Thursday, November 29, 2007 at 8:30am at the World Bank. Can't make it? Follow it here through a live webcast.

Update: the summary of the conference is here and the video clip here. 

New lessons from India

Offshore tutors and personal assistants are the latest development in outsourcing. Not surprisingly, India is a leader in this person-to-person offshoring, estimated to reach $2 billion by 2015.

Online career network for India's poor

Anirudh Krishna found that the lack of connections, rather than a shortage of better jobs, is what keeps poor Indians from escaping poverty.

Inspired by this research, Sean Blagsvedt co-founded babajob.com, an online marketplace for low-skilled workers. The company managed to overcome the main barrier to online networking – the lack of computer access by the poor – with a simple incentive. Babajob pays people to help others find jobs.

Connecting the unconnected

The total bottom of the pyramid household market for information and communication technologies (ICT) is estimated at $51.4 billion and includes 3.96 billion people with annual incomes below $3000. The Economist writes about poverty penalty in Africa, where only four out of every 100 people have internet access:

Of its 48 countries, the 28 in central and eastern Africa are connected to the web by only the flimsiest of satellite technology. Apart from the occasional internet hook-up at a diamond mine or UN camp, whole regions of Congo and Sudan, sub-Saharan Africa's two largest countries, have no connection at all. Even countries like Uganda, which are go-ahead about the internet, start from a very low base. Research by Microsoft found only one in 200 Ugandans regularly uses e-mail.

The organizers of the "Connect Africa" summit held today in Rwanda hope to encourage a new "Marshall Plan" for ICT on the continent.

Low-cost cell phones pay off

Amidst research on the transformative effects of mobile phones on developing communities, companies in emerging markets are adding hundreds of millions of customers a year. From Nokia's third quarter earnings report:

Sales of [cell phones] rose 45.1 percent, to 19.3 million devices, in Africa and the Middle East, while rising 37 percent in China, to 18.9 million, and 41.1 percent in the rest of the Asia-Pacific region, to 29.5 million.

Waste included for better cell phone service

As more and more people in developing world depend on cell phones for their business, can microbial fuel-cell chargers, which derive electricity from plant waste, bridge the infrastructure gap? Yes, according to students at MIT.

Goodbye TV ads, hello cell phone messages

The 2.5 billion mobile phones around the world can potentially reach a much bigger audience than the planet's billion or so personal computers. The number of mobile phones in use is also growing much faster than the number of computers, especially in poorer countries.

Advertisers estimate that nearly half of their messages miss the target market. But unlike the case of TVs, most people carry their cell phones along at all times.

Sounds like a perfect channel for delivering highly individualized ads? Vodafone and Virgin think so too. And though the idea of receiving advertisement on your phone may seem irritating, unsolicited text messages meet with limited opposition from consumers in the Middle East. The Economist has more.

The most transformative development technology

Currently there are around 3 billion mobile phone subscribers. By 2015 this number which is expected to reach 5 billion when, according to Nokia, two out of three people in the world will have a cell phone.

Through a combination of a growing coverage with a cheaper technology, mobile telephony is slowly bypassing many obstacles that poor infrastructure has put in the way of economic development:

To the astonishment of the industry, people living on a few dollars a day have proven avid phone users, and in many parts of the world cellular airtime has become a de facto currency. The reason is simple: a mobile phone can dramatically improve living standards by saving wasted trips, providing information about crop prices, summoning medical help, and even serving as the conduit to banking services.

This trend will continue as cell-phone makers and service providers are one-by-one discovering the top dollar at the bottom of the pyramid. More in the BusinessWeek article.

Don't even think about it - Facebook at work

Are social websites a major damper to productivity? A new report finds that 233 millions hours are lost to Internet networking every month.

World Bank meets You Tube

Next time you browse the fastest-growing video sharing website on the Internet – which uploads 65,000 every 24 hours and averages 20 million visitors a month - be sure to check out the new World Bank channel.

And because a picture is worth a thousand words, the bank has also joined flickr.

Reducing costs and increasing reach - get the skinny on CGAP

Co-funded by the Bill and Melinda Gates Foundation the CGAP Technology Program is applying innovation to advance their ambitious agenda - this time with a new blog.

Among the six authors you will recognize Jim Rosenberg who also writes for us. The group uses their blog to communicate how the latest technology is making the broader access to finance for the poor possible. Read the latest post here.

Why we like mobile telephony so much

Quoting Robert Jensen's most recent research, Manoj Kohli, the President and CEO of Bharti Airtel – a telecom company – in a WSJ editorial [subscription required] aptly puts in words the development potential of cell phones:

Mobile phones are making conventional economic transactions more cost- and time efficient, as they often make up for poor infrastructure by substituting for travel. They allow price data to be distributed and enable traders to engage with wider markets.

Calling off outsourcing

Netflix, a U.S. web-based DVD-rental business, decided to rethink its client service after losing 55 thousand customers last quarter. The company eliminated all foreign call centers and email-based communication, in favor of a domestic, phone-only program staffed with chatty locals.

The campaign may be paying off. At least this one client will stay:

'There's nothing on your list that's of interest to me,' said [a female caller], referring to the 80,000 movies Netflix carries.

Undeterred, Ms. Daste [a call center representative] suggested they find a movie together. The woman mentioned one she had been wanting to see for a while, an Indian film titled 'Fire.' Within seconds, Ms. Daste had it on her screen. She added it to the customer's queue and told her she would be receiving it shortly. Customer pleased. Disaster averted.

For more, listen to NPR's story on trends in out- and homesourcing.

Calling out poverty with mobile phones

[..] not only can such technologies increase earnings, but those increased earnings […], in turn, can be expected to lead to improvements in health and education. In addition, because mobile phones in Kerala are a private sector initiative rather than a development project, other than through perhaps raising interest rates for capital, they do not crowd out investments in other projects. Also unlike most development projects, the service is self-sustaining; mobile phone companies provide service because it is profitable to do so, and fishermen are willing to pay for mobile phones because of the increased profits they receive.

In the Quarterly Journal of Economics Robert Jensen provides evidence for why the provision of information technology - mobile service in this case - ought to be a priority, especially for low-income countries.

Lenovo targets Chinese farmers

The world's third largest computer producer will release a $199 PC to rural China. In the countryside, where nearly 800 million people live, incomes average at $560 a year and have been growing at an annual rate of 10 percent.

Additionally, later this year, Lenovo will start furbishing its computers with Linux instead of Windows operating system – a move that may potentially further lower the price, and undercut Dell.

So far the tactic has paid off. Last quarter Lenovo shipments to China increased by 30 percent accounting for $1.53 billion.

$100 laptop production launched

The production of the low-cost computer, first announced in 2005, finally began. The product should reach the first group of children by October 2007.

Green computer returns

Zonbu is a new $99 Linux-based computer with a monthly subscription fee. Interesting about it is the absence of a disk drive and a fan inside. The result is a 15-watt PC, rather than standard 200-watt, and up to $10 in energy savings per month.

Although Zonbu is a for profit solution, the new technology may be relevant to Nicholas Negroponte's project, especially as things with Intel didn't always seem to look good.

More Development 2.0 daydreaming

As "folksonomy" is voted the most hated web 2.0 buzzword, Andrew Keen blasts the wisdom of the crowds, and a Nigerian politician launches a web 2.0 campaign site, let's add, just for fun, some new entries to our imaginary wish list of start-ups in a Development 2.0 world. After all, as we say in Italian, dreams cost nothing…

• D-projects.org: a web site that aggregates information on all development projects run by international and local NGOs, international agencies and financial institutions, and volunteer organizations. Potential donor interested in Ghana, for example, could compare projects and select the ones to give their money to. Development agencies could use the site to check out who else is working on a specific country or issue before embarking on a new project. Recommendations (Amazon style) by users could help donors make more informed choices and, thanks to word-of-mouth, smaller, but worthy, projects may get increased visibility.

Yes, the iPhone is cool. But not as cool as mobile phone banking for the poor

Okay, we're three days into the era of the iPhone. While my first-hand experience playing with one over the weekend was exciting (I'm intrigued but will keep my beat-up Treo 650 for awhile, thanks very much), there's another nascent development in cell phones that could potentially be a much bigger deal over time: mobile (cell) phone banking and its potential to increase access to financial services for poor people.

At CGAP, we're partnering with companies like Globe Telecom to explore how poor rural communities might be better served with appropriate, responsible services through mobile phones.  As this effort gets underway, we're also taking a look at how regulators in several countries, including the Philippines, are dealing with mobile phone banking.  Here are some highlights from our preliminary assessment of Pakistan's banking regulations when it comes to so-called branchless banking:

• Several mobile network operators (MNOs) have started developing concrete proposals to offer mobile phone payments and banking directly;

iPhone is out, now is time for iWait

Conan O'Brien's new video shows what makes iPhone the ultimate smart phone. And the Solutions Research Group analyzed the buyer profile of Apple's $500 ipod-cell phone-internet device: 72 percent male, average age 31 and average income $75,600 – 26 percent higher than U.S. average.

The rumored 3 million iPhones, which will be released at the end of the day today, are likely to be sold out. But affluent Apple enthusiasts don't have to take chances with limited supply. The market has found a solution and it runs at about $700.

Too good for the berry

While some countries are well-known for their high standards others are simply trying too hard.

The wireless solution used by nearly seven million people worldwide has an endorsement for transfer of sensitive information by the UK government and NATO but it can't make the cut in this country.

Race to the bottom: cell phones in India

India is one of the fastest-growing mobile phone markets in the world, adding 6 million new subscribers a month. In a market where 135 million cell phones are already in place and 450 million users are expected by 2010, handset makers are turning their attention to rural markets:

Since many people in India's countryside often need to share one phone, Nokia's new models include features enabling multiple users for each handset. For the first time, the phones have a call-tracking application and a multi-phonebook to make phone sharing simpler for customers at the bottom of the pyramid.

The low-cost cell phones will have FM radio and even a flashlight at prices as low as $19.

Intel inside (emerging markets)

Competition breeds access. The Intel Corporation will invest $1 billion and work to develop cheaper processors in a hope to reach one billion customers in developing countries.

The goal: to harvest the potential revenues of up to $10 billion a year before Advanced Micro Devices – the rival – does.

Will connectivity transform development?

"If I were you, I wouldn't be so quick to get rid of my landline phone" said Joel Mokyr at a World Bank Forum 2007. Ethan Zuckerman – the second panelist – wrote his own summary of the event.

Slaying laws - the Belgian way

What is Belgium famous for besides beer, chocolate and the creation of Body Mass Index? Reforming - says Vincent Van Quickenborne, the Secretary of State for Regulatory Simplification. When in 2003 he took the office, 18 out of 100 Belgians worked for the government, the administrative costs for private companies reached €9 billion a year, and the number of startups was 40 percent down compared with previous years.

Earlier this month, however, Belgium was named a top business climate reformer. Mr. Van Quickenborne explained this transformation:

• Bottom-up approach: his office gathered more than 20 thousands suggestions before abolishing over 200 regulations
• Substantial reduction in time and cost - savings of €3 billion - through the introduction of 'paperless office' featuring e-accounting, e-archiving, electronic tax filling and notary services
• The time required to start a business – the long 56 days – was slashed to 3
• The reduction in administrative burden for companies coincided with a rise of startup companies by over 40 percent

The Belgian example shows that business reforms are not the realm of developing countries only. Mr. Van Quickenborne concluded by quoting American president Calvin Coolidge: "it's much more important to kill bad laws than to pass good ones."

Connectivity at the bottom of the pyramid?

"Currently the semiconductor population is limited to the 800 million people at the top of the pyramid. The industry is in search of a PC for the next billion," Cynthia Chyn from the Taiwanese Institute for Information Industry told the FT.

As Nicholas Negroponte makes strides toward an ultra-low-cost laptop, another Cambridge enterprise shows how to drive rural web access for profit.

Computers for development

The idea for an ultra-low-cost computer isn't new. This time the going price is $200.