Most of us use cell phones to make phone calls, send text messages, take pictures, surf the Web or listen to music. Humanitarian organization CARE hopes to add another function to that list: banking. The group believes it’s a cost-effective way to help alleviate poverty in Africa.
CARE, whose mission is to fight global poverty through the empowerment of women and girls, is seeking funding partners to support cellular technology so that poor populations in rural Africa can access loans and other financial products from banking institutions. CARE has already implemented a village savings and loan associations (VSLA) program which helps address access for women to loans and other financial services, but it hopes to expand its efforts in the coming months.
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The VSLA pilot programs are active in 21 countries throughout Africa and consist of groups of 10-20 mostly female members who save small sums of money each week to create a fund from which they can access loans. The groups use the loans to start or expand small businesses.
In time, however, members may find they want to expand their businesses beyond the credit capacity of their VSLA. Due to a scarcity of bank branches in rural Africa, access to financial institutions that can grant larger loans is difficult. Compounding this problem is that the lifestyle of most women in rural Africa – who are typically responsible for farming, household chores and childcare – prevents them from making expensive, day-long journeys to the nearest bank.
Enter mobile phone banking
Through cell phones, millions of people gain access to basic banking services, such as securing loans or making loan payments and deposits. CARE plans to roll out a mobile phone banking pilot program in the coming months which is slated for implementation in Tanzania and Malawi, with a goal of reaching 200 VSLAs, or approximately 4,000 people.
“We’re still in the stages of seeking additional funding partnerships to assist in developing secure transaction applications, and in securing needed software and hardware for the programs,” says Vida Durant, CARE’s Chief Information Officer and vice-president of technology. “We want to leverage existing resources for both piloting and scaling up successful solutions, and once we have the final pieces in place, we’ll roll out the program.”
As a member of NetHope, a new-generation IT consortium of more than 25 leading international NGOs, CARE is one of many organizations working to break new ground in the developing world. The collaboration and support of its fellow NetHope members are key to applying innovative technologies for use in the developing world, and CARE plans to make a significant impact through mobile phone banking.
“We want mobile banking to be a seamless extension of traditional banking services, with transactions interfacing with a bank’s existing software as much as possible,” says Durant. “We are looking for the right partners to share best-practices knowledge, achieve economies of scale and develop solutions that benefit millions of people striving to overcome poverty.”