Gates, USAID dangle $16 million for mobile banking services

MANILA, Philippines - Some $16 million will be rewarded to institutions that can set up mobile banking services in Haiti.

The Bill and Melinda Gates Foundation pledged $10 million and the United States Agency for International Development (USAID) will add another $5 million to coax telecommunications and finance companies to set up mobile phone banking services for Haiti’s poor.

“After the earthquake on Jan. 12, we saw huge demand from Haitians who needed to receive money from family and aid organizations, but we also saw a severe reduction in the capacity of the banking system to get the cash into their hands,” Amolo Ng’weno of the foundation’s Financial Services for the Poor unit, said.

The powerful quake in Haiti killed up to 300,000 people and knocked out a third of banks, automated teller machines (ATMs) and money transfer outlets.

The multimillion-dollar pledge will offer cash incentives to companies that set up mobile financial services in Haiti, the poorest country in the Americas.

The first company to launch a mobile money service that reaches certain benchmarks within six months will receive $2.5 million, and the second operator to launch and reach the same targets within 12 months will receive $1.5 million.

The remaining $6 million will be awarded as the first five million transactions take place.

The $5-million USAID pledge will actually be in the form of technical and management assistance.

Phone service providers, banks and technology companies can bid to provide mobile banking services in Haiti-and compete for the Gates Foundation incentives-provided they have “a track record of commitment to the country that goes beyond the emergency period and a strong likelihood of success,” foundation officials said.

For the program to work, it must get off the ground rapidly and be deployed on a very large scale.

The Gates Foundation hopes at least one company will provide mobile banking services-also known as M-banking-in Haiti within a year and that five million mobile phone transactions will take place on the island nation within two years.

Around 40 percent of Haiti’s nine-million population have mobile phones, and those who don’t usually have access to one through a friend or relative.

Foundation officials hope that mobile phone financial services will enjoy the same success in Haiti as Kenya’s M-PESA mobile money service, used by nine million Kenyans just three years after its launch.

Anyone who can receive a mobile phone text message can receive money by M-PESA, and then merely have to go to the retail outlets of the mobile phone service provider that runs the M-banking program, or to a gas station, supermarket or local shop, to withdraw their cash.

M-PESA has caught on so dramatically in Kenya that everything from taxi fares to school fees is paid by mobile phone, according to the Gates Foundation.

In Haiti, the foundation hopes M-banking won’t only help people get much-needed cash but also stimulate local economies because “people who receive money on their phones, in their communities, are more likely to spend it there,” Ng’weno said.