Econ_May_05

The Economist

May 5th 2018

FINANCIAL INCLUSION

SPECIAL REPORT

CONTENTS

5 Mobile money

Paying respects

6 India

Stack’em high

7 Blockchain and

remittances

Not to the swift

8 Mobile financial services

Pocket banking

10 Rich countries

The bottom rung

11 Winners and losers

The best of times

AS THE EBOLA virus was devastating parts ofwest Africa in 2014, Sierra

Leone’s difficulties were compounded by its emergency-response work-

ers going on strike. They were risking their lives, but were often paid er-

raticallyandnot in full. Sometimes they travelled longdistances to collect

the money, in cash, to find that it had been disbursed to an impostor, or

that the official paying it out would take a cut. So the government

switched tomaking the payments digitally, to theworkers’mobile-phone

accounts. That way they were paid in a week in full, rather than after a

month with deductions. Thanks

to lower costs and reduced fraud,

the new system was millions of

dollars cheaper. The strikes end-

ed; liveswere saved.

According to a report by the

Better than Cash Alliance, a part-

nership based at the

of gov-

ernments, companies andorgani-

sations promoting digital

payment, Sierra Leone was well

placed tomake this change in two

respects: about 95% of the coun-

try was covered by a mobile-

phone signal; and 90% of the

emergency workers had mobile

phones. Even so, the obstacles

were formidable. Only 15% of the

workers had mobile-money ac-

counts. Opening one could be

hampered by a lack of documen-

tation, made worse by the coun-

try’s severe shortage of surnames

(most people share just ten of

them). Biometric identification,

such as fingerprints, raised fears

of infection from the Ebola virus

(a problem that was solved by fa-

cial-recognition technology). But they got there in the end.

The episode offers a graphic example of how technology can deal

with “financial exclusion” by greatly reducing the number of thosewith-

out access to financial services. Almost inadvertently, the spread of mo-

bile telephony and mobile-internet services has brought hundreds of

millions of people into the formal financial system. Take bKash, of Ban-

gladesh, one of the world’s biggest mobile-money services. Started in

2011, it now reaches 30m registered customers. Kamal Quadir, a founder,

says people used to keep their money under the mattress; now they can

store it on their phones. The service “has become the collective mattress

for all the common people of Bangladesh. Now the money is in digital

formand they are in the banking system regulated by the central bank.”

Since its inception in the Philippines in 2000 and its take-off in Sub-

SaharanAfricamore than a decade ago, “mobilemoney”—the transfer of

cash by phone—has become a global phenomenon, welcomed and en-

couraged by governments and international organisations. In 2010 the

20 group of countries came up with a set of “Principles for Innovative

Financial Inclusion”. In 2012 the World Bank, with funding from the Bill

andMelinda Gates Foundation, produced the first “Findex”, or financial-

Exclusive access

Nearly a quarter of the world’s population remains unbanked. But

thanks tomobile phones, financial inclusion is making great

strides, writes Simon Long

ACKNOWLEDGMENTS

Besides the people and companies

named in the report, the author

would like to thank the following for

their time and help: Tughral Ali,

Christine Allison, Mudassar Aqil,

Simon Banks, Adrian Black, Simon

Black, Paresh Davdra, Allison Davies,

Jonathan Dharma, Margaret Doyle,

Hisham Ezz Al-Arab, Xavier Faz, June

Felix, Jacob Haar, Ahsan Iqbal,

Ismail Khan, Leora Klapper, Brian

Ledbetter, Werner Liepach, David

Medine, Ghalib Nishtar, Tunde

Olanrewaju, Matthew Saal, Alan

Safahi, Ali Sarfraz, Rupert Scofield,

Andree Simon, Chris Skinner, Joe

Valenti and Anna Wong.

РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News"

VK.COM/WSNWS