The massive earthquake that hit Haiti in January devastated the country in many ways, with one being the destruction of a third or more of the country’s banks and ATMs. Even before the earthquake, however, fewer than 1 in 10 Haitians had ever used a traditional bank.
The Gates Foundation and the U.S. Agency for International Development announced Tuesday a plan to change all that with $10 million in funding to spur the use of cell phone banking and mobile payments to bring financing to the poor and help rebuild the financial ecosystem in Haiti.
The fund will offer cash awards to companies that build mobile financial services in Haiti, giving $2.5 million to the first country that launches a mobile banking service in the next six months and hits certain goals. The second company that does so within 12 months will get $1.5 million, while the remaining $6 million will be awarded proportionately to those services that process the first 5 million transactions.
“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 Bill & Melinda Gates Foundation, in a statement. “Making financial services widely available to the poorest families in the developing world can help break the cycle of poverty by giving them a safe place to save, guard against risks, build assets, and provide opportunities for the next generation.”
Those involved are hopeful of the initiative, citing a similar case in Kenya, where a service known as M-Pesa already reaches 9 million people, or 40 percent of adult Kenyans, just three years after its launch. M-Pesa allows a range of goods and services, from taxi fares to school fees to be paid by phone. The Gates Foundation touts a recent University of Edinburgh study that suggests rural households using M-Pesa saw their income increase by 5 percent to 30 percent.