mobiles for development: the case of m - banking. poverty and access in latin america
DESCRIPTION
Presentación de Judith Mariscal (División de Administración Pública)Fuente: http://www.telecomcide.org/TRANSCRIPT
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Poverty and Access in Latin America
Judith Mariscal
Mobiles for Development: the case of M - Banking
LASA 2009, Rethinking Inequalities. Rio de Janeiro Brazil, June 2009.
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1. Underserved Population in Latin
America.
2. M - Banking
3. Conclusions
CONTENTS
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Unserved Population in Latin America: different dimensions1
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DOI, NRI and PIB per capita for some countries, 2006
Source: ITU and Harvard University.
The expansion of the economies based on information and knowledge have two sides of the coin.
They offer a window of opportunities for the poor in new productive processes…
ICT Opportunities
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Latin American countries still lag behind with respect to countries that have implemented successful ICT strategies.
Digital Opportunities Index (DOI) and Network Readiness Index (NRI) for some countries, 2006
Source: ITU and Harvard University.
Or they can increase the economic and social divides if few points of access are provided for the poor.
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1
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9
nri
doi
Divides in LA
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Accessibility is a key variable to explain low penetration levels in LA.Mobile tariffs represent 9% of income per capita in LA, while in other countries is less than 1%
Source: CEPAL, 2007
Fixed, Mobile
teledensity and tariffs
as % Income per
capita (2005)
Internet tariffs represent 12% of income per capita, while in developed countries is 1%.
Bb. Internet Subscribers
per 100 hab.,
Internet users per 100 hab.
and tariffs as %
Income per captia (2005)
Peru; 17.0%
Korea; 0.4%
Mexico; 2% Canada 0.3%
Argentina; 3%Honduras; 16.0%
Singapore; 0.6%Germany; 0.8%
-20
0
20
40
60
80
100
120
140
-5 5 15 25 35 45 55 65 75 85
Fixed Telephone Lines per 100 hab
Mo
bile
Tel
eph
on
e lin
es p
er 1
00
hab
Cost of access to ICT as a % of income per capita
Guatemala; 25.0%
Bolivia; 22.0%
Germany; 0.7%
Chile; 4.0%
Argentina; 5.0%
-4
-2
0
2
4
6
8
10
12
14
16
-10 0 10 20 30 40 50 60
Internet Users per 100 hab.
Inte
rnet
su
scri
bers
Bb
per
100 h
ab
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Government vs. Market solutions
Public initiatives have had a limited impact given its potential demand
Public and Private Telecenters in LA (2006)
Source: CEPAL 2006
CountryGovernment TC
Private TC
Total TC
Proportion of Gov. TC over the total
Potential users for each TC
Argentina 9,555 20,647 30,202 32% 889
Bolivia 10,034 50,164 60,198 17% 2,423
Brazil 9,976 1,178 11,154 89% 8,143
Chile 10,034 50,164 60,198 17% 3,454
Costa Rica 484 715 1,199 40% 2,238
Mexico 1,171 18,765 19,936 6% 1,300
Peru 54 20 74 73% 1,017
Market initiatives appear to have a larger scale
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Despite the low ICT penetration in poor areas, ICT users spend a significant amount of money on ICT .
Mexico: % of income spent on ICT by location size (2005)
3.12
4.05
4.93
less than 2500 inhab. 2500 - 9 999 inhab. More than 100 000
Source: INEGI (2007)
Percentage of income spent on ICTs is growing, old rule of thumb was 2.5 percent. Today we find up to 10 percent.
Potential Demand
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Mobile phones have rapidly spread among the lowest socioeconomic levels (D and E)
Mexico: Mobile penetration by SEL (2005)
Source:Bonina, Piedras and Verut (2006)
85%
43%
9%
ABC+ CD+ DE
89%
75%
67%
42%
27%
AB C+ C D+ DE
Business’ opportunities at the BoP.
2005
2003
Low Income groups have a growing access to mobile
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M - Banking2
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There is a lack of access to basic financial services in the developing world
Source. World Bank and Vodafone
The rapid spread of mobile phones means users already exceed the number of banked people in many developing countries.
B a n k b r a n c h e s , A T M s p e r 1 0 0 ,0 0 0 p e o p le ; m o b i le s s u s c r ip t io n s p e r 1 0 0 p e o p le ( 2 0 0 5 )
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
Ch
ina
Eg
ypt
Ken
ya
Mex
ico
So
uth
Afr
ica
Tu
rkey U
K
US
A
B r a n c h e s A T M s M o b i l e s P e n e t r a t i o n
Financial Penetration vs. Mobile Penetration
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Source. Expanding Horizons, Nokia.
M – Transactions may contribute to increase financial services in developing world.
M - Transactions
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What role can mobile telecommunications play in providing banking services?
• Mobile based banking offers the potential to fill a financial vacuum in developing countries through the movement of small amounts of money.
• Uses existing communications infrastructure that already reaches un-banked people; adding a bank account to an existing mobile phone. (stored value accounts)
• Channels the power of new distribution networks for cash transactions such as airtime merchants.
• Has the potential to be transformative.
(www.gamos.org.uk)
Telecommunications in Banking Services
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According to the IDB, LAC received remittances for USD$ 65,000 million.
Mexico is the leading receiver (23, 979 million). For Guatemala, El Salvador, Honduras and Nicaragua, remittances account for more than 10% of its GDP.
23, 979
3,085
700
125
850
2,900 7,075
920
4,520
330
4,128
2,5613,120
320
990
560
3,695
Jamaica1,975
Haití 1,830
Trinidad & Tobago 1,830
1,050
The importance of remittances
Source. IDB
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•M-PESA (Kenya) : 1 million subscribers.
•Globe Telecom and Smart (Philippines)•Smart (2000 ): 2.5m subscribers, with debit card, linked to bank•Globe (2004 ) 1.2m subscribers, with ‘virtual wallet’Accessible via 3500 merchants
$120 billion worldwide annually was sent from rich to poor
318 billion worldwide was sent from poor to poor. (WB 2007)
Size of Remittances
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Barriers for m - banking
• Uncertainties over the speed and nature of customer adoption.
• Lack of interoperability with existing payment systems.
• Regulatory barriers, i.e. lack of openness to new models and lack of policy certainty.
• Difficulties in providing security with protocols available.
• Lack of supply; in many low income countries mobile penetration is low and operators are focusing their strategies on basic services.
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Challenges for regulators:
• Enabling environment.
• Promote competition.
• Setting interoperability.
Challenges for Operators:
• Interoperability.
• Applications to allow transactions.
• M- network coverage .
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CONCLUSIONS3
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ICTs are a useful tool for a pro-poor growth, one that enables low income groups to actively participate in economic activity.
Investment in mobile services offer a high yield return in terms of pro-poor growth.
There is an untapped market where the bottom of the pyramid sector holds a significant potential as a viable business.