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Mobile Payment to increase GDP

Week 22, 2010

Mobile money changes the lives of million of people. Bringing users an efficient means to transfer money, and a safe manner to carry dematerialized money, form one place to another improves dramatically people’s lives. In many places, owning a means to pay in a dematerialized manner (electronic purse, credit card, mobile phone,…) enhances people social status and social recognition. For this reason microfinance institutions are especially getting involved into mobile money project, as bringing people self-confidence an essential part of their global goal.

Mobile Money has also demonstrated it is a source of income for operators. For instance, Safaricom, the Kenyan mobile network operator behind the M-PESA mobile money system just announced its full-year profit jumped 44% between 2008 and 2009, mainly thanks to M-PESA, which is at the same time a source of revenue per se and a subscriber retainer. There are now 9.5 million M-PESA users in Kenya (out of a 40 million population).

More globally, mobile phones are the best technology for fighting poverty. According to the World Bank, an extra ten mobiles per 100 people in a typical poor country will add 0.8% to GDP growth. This impact on poverty fight includes projects such as Tata Consultancy Services’ platform for farmers in India to receive personalized information from a database compiled by local agricultural experts, or the Chinese mobile service Nong Xin Tong (farmers’ communication network), which gives farmers advice on planting techniques, pest management and government policies on agriculture, and has already 50 million users.

Mobile phones also bring better government processes, and a better democracy. For instance, in India, voters could use their mobiles to get information on the competing candidates, with downloadable profiles, which gave details on candidates’ education, religious beliefs, even criminal convictions.

Professor Cheol Oh from Korea’s Department of Public Administration, said “Mobile phones allow to narrow the geographical and emotional distance between government and the Citizen”

Thierry Spanjaard

Chief Editor

Smart Insights