Despite being disconnected from the mainstream banking
system, many of the world’s poorest actively use informal tools such as
moneylenders to meet their financial needs, experts say.
“The right financial tools can help a poor household capture
a chance to move out of poverty, or weather a shock without being pushed deeper
into poverty,” she says.
Currently, banking services are prohibitively expensive
for the poor to afford, mainly due to the cost of distributing them through
traditional channels such as bank branches and ATMs, high run-rates for opening
and maintaining an account as well as providing mortgages.
Ms Oxman states that innovative and sustainable methods are
needed to provide affordable financial services to those who earn under $2 per
day. Optimistic promotion seems to be in the growing mobile industry.
Thus far, there has been a large drop in costs and increased
access when mobile channels are used.
In spite of the success of services like mobile money
transaction in Tanzania is utilised by 63 per cent of the population and in
Kenya payments system like M-Pesa is now utilised by more than 70 per cent of
poor households
This situation indicates that there are many more
opportunities to break down the barriers associated with delivering financial services
to the poor that are left unexplored for lack of initial funding.
Inspiring has
been the upsurge in the number of users of mobile phone financial services,
evidently showing the importance of making them accessible.
FSP boss points out that there is huge potential in
transferring the innovations to help the poor in the developing world, but
change requires action from all types of innovators — from entrepreneurs to
inventors to financiers.
FSP is excited about its partnership with Electronic Transactions
Association (ETA) and the opportunity to deliver financial services to the
world’s poorest with life-changing innovations.
Source: The Citizen, www.thecitizen.co.tz, reported by Victor Karega in Dar es Salaam
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