Article: http://www.gsma.com/mobilefordevelopment/in-kenya-microfinance-is-going-global-part-1
The economies of developing nations
are structured such that there are a lot of poor families who can barely afford
the basic amenities required in life. To make their living, they need to start
a business. Any business requires initial investment of money which these
people do not have. Also, they do not have access to loans from banks and as
such are caught in a vicious cycle of poverty. The economic principles of
microfinance and microcredit have turned out to be a boon for these people. The
principle of microfinance entails providing small cash loans to people in rural
areas of developing nations to start a business with no or very little interest
rate. Although this has turned out to be a great success, the principle did not
penetrate the market as much as it was expected to. The social entrepreneurs
turned to technology to address this issue, specifically mobile technology as
explained below with Africa's example.
Africa has experienced
an unbelievable explosion in mobile phone use over the past decade. In 1998,
there were fewer than four million mobiles on the continent. Today, there are
more than 500 million. In Uganda alone, 10 million people, or about 30% of the
population, own a mobile phone, and that number is growing rapidly every year.
The mobile devices are a way of life for the African people. The most dramatic
example of this is mobile banking. Four years ago, in neighbouring Kenya, the
mobile network Safaricom introduced a service called M-Pesa which allows users
to store money on their mobiles. If one wants to pay a utilities bill or send
money to a friend, one simply dispatches the amount by text and the recipient
converts it into cash at their local M-Pesa office. It is cheap, easy to use
and, for millions of Africans unable to access a bank account or afford the
hefty charges of using one, nothing short of revolutionary. And the people
deploying microfinance have utilized this simple technology to help millions of
people earn their way out of poverty.
The use of mobile
technology in Africa for solving century old problems is a refreshing
advertisement for technology and its hand in human welfare.
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