Worldwide, approximately 2.5 billion people do not have a formal account at a financial institution, according to the World Bank’s Global Financial Inclusion Database. The global revolution in mobile communications, along with rapid advances in digital payment systems, is creating opportunities to connect poor households to affordable and reliable financial tools through mobile phones and other digital interfaces. In fact, research has shown that the most effective way to significantly expand poor people’s access to formal financial services is through digital means.
The Bill & Melinda Gates Foundation gave a grant of $5.9 million to the UNCDF Mobile Money for the Poor (MM4P) programme, a five-year initiative which aims to promote and improve the use of electronic banking platforms, particularly mobile phones, to provide financial services to low-income households.
The new grant agreement has the purpose to develop a more inclusive, efficient and interconnected digital financial services ecosystem. These services will include domestic money transfers, savings, insurance or other services that assist households in increasing their financial security.
“Mobile money extends financial services to people living in poverty. This means access to small business loans, a savings account or insurance, for example. In developing countries where financial services are scarce, mobile money has a potential to be a powerful tool for poverty alleviation. This is part of UNCDF’s ambition to fight inequalities by promoting inclusive growth and in line with our new Strategic Framework 2014-2017 that introduces ICT as a key vector to amplify the impact of our core expertise, accelerate development in the LDCs and share lessons learnt globally,” said Marc Bichler, UNCDF Executive Secretary. “This grant presents another boost for reducing poverty and accelerating progress towards the Millennium Development Goals.”
The new grant will support a three-year (2014-2016) digital financial services ecosystem support strategy, implemented by MM4P. The strategy will focus on regulatory and policy changes, building greater awareness and collaboration amongst stakeholders, agent network development, digital product design and implementation, as well as shifting bulk payments to digital platforms.
About MM4P MM4P is a global programme funded by UNCDF, the Swedish International Development Cooperation Agency, the Australian Department of Foreign Affairs and Trade and The Bill & Melinda Gates Foundation. The programme provides support to branchless and mobile financial services in a select group of Least Developed Countries to demonstrate how the correct mix of financial, technical and policy support can build a robust branchless and mobile financial services ecosystem that reaches low income people in these countries.