Mobile Financial Could Improve Lives In Developing Countries
According to a new study, mobile financial services are expected to improve the lives of around 2 billion people in developing countries within a decade and boost economies.
“Overall, mobile financial services can reduce financial exclusion by 5 percent to 20 percent through 2020 and increase gross domestic product (GDP) by up to 5 percent, with Pakistan, for instance, potentially seeing a 3 percent uplift,” the Boston Consulting Group, who performed the study, said in a statement to Reuters.
It said that improved access to finance helps bring on entrepreneurship, new business creation and new jobs.
It said in the report released by Norwegian telecom group Telenor on Tuesday that it focused on five countries that represented a broad development range during the study.
According to the study, about 72 percent of the population in developing countries are without access to banks or credit cards.
Instead, they borrow money from friends and family, obtain short-term credit from employers, from savings clubs or seek out moneylenders.
Telecom firms like Telenor, Vodafone, Orange and MTN have begun investing in mobile payment systems in Asia and Africa that allow consumers to make basic payments for utilities for example, but also participate in savings, credit and insurance programs through mobile phones.
The study said mobile financial services can also help overcome economic shocks like natural disasters or unexpected medical emergencies.
In Kenya, Safaricom’s M-Pesa’s UAP insurance insures poor farmers through mobile phones against weather-induced failures.
Norway’s Telenor said it was still in the early days, but the potential for growth was expected to be huge.
Telenor’s EasyPaisa program in Pakistan started with 2,200 retail outlets in October 2009 and now has 12,600 retailers spread over 650 cities across the country.
It has about 10 million users and the total value of money transfers has reached $167.2 million.
“We believe that mobile financial services will be one of the key drivers for financial inclusion going forward and thus has the potential to be the most powerful tool for economic and social development in emerging economies,” Telenor Chief executive Jon Fredrik Baksaas said in a statement to Reuters on Tuesday.
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