Gates Foundation, USAID create $10 million fund for mobile money services in Haiti
The devastating earthquake in Haiti drew an unprecedented surge of donations via text messages from outside the island nation. But on the ground, where many buildings lie in ruins and food is still in short supply, locals face a simple but crushing obstacle: getting their hands on cash.
One-third of the country’s ATM machines and bank branches were rendered inoperable by the quake. Every day, people wait hours in long lines at banks to get money for everyday needs. Much of the relief aid raised overseas and remittances aren’t getting to the population of 9.7 million.
The Bill & Melinda Gates Foundation and the U.S. Agency for International Development (USAID) on Wednesday plan to announce a $10 million fund aimed at bringing cutting-edge mobile money services to Haiti and putting more money into people's hands.
The Gates Foundation and USAID said their “incentive fund” that will go to companies – such as Haiti’s three wireless service providers – to create applications and services that allow users to deposit and withdraw money through their cell phones.
“Out of the ruins of Haiti’s tragic earthquake, there is an unprecedented opportunity to improve the lives of millions of Haitians and unlock the country’s economic potential through mobile money,” said Mark Suzman, acting president of the Global Development Program at the Gates Foundation.
The first eligible company will receive $2.5 million in funding. The second to meet the criteria set by the foundation and USAID will get $1.5 million. Another $6 million will be awarded as the first 5 million transactions take place and divided between operators of those transactions.
Corporations and aid groups see mobile technology as a key piece of Haiti's infrastructure because much of the nation's old copper-wire phone network was destroyed during the quake. About 40 percent of the population has cell phones and operators like Voila, run by Seattle venture firm Trilogy, hope to turn Haiti into a all-wireless nation and have committed to spending $100 million to beef up its network.
The foundation has implemented similar programs in the Congo, southern Sudan, and Mexico. Mobile money services allow women in parts of Mexico to deposit money at dozens of local markets and withdraw cash when needed. It’s a simple need that is often prohibitively expensive for poor families, who can’t afford high banking fees or the costs associated with traveling to bank branches and time lost by missing work.
Indeed, the Gates Foundation said 90 percent of the world’s poor don’t have access to safe, affordable savings accounts. For example, only 10 percent of Haitians used a traditional commercial bank before the earthquake. But the poor have indicated in surveys they want to be able to deposit money and save. A study by the National Bureau of Economic Research suggested that poor households with access to savings accounts are more likely to invest in education and increase their income.
“The reason why we are so excited about mobile money, or deposit services, is that it is a historic opportunity that is starting to gel in many places to get banking outside banking halls,” said Bob Christen, director of financial services for the poor at the Gates Foundation. “Haiti is a particular opportunity because there is more of a sense of urgency for this.”
June 9, 2010; 12:01 AM ET
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