Article The changing value of money

Mobile banking promises women relief from poverty

Why banks can ride the coattails of mobile money to alleviate poverty and how mobile operators are sitting on a $13B market of women without mobiles.

Dressed in patterned Nigerian fabric, the Lagos market woman stood with a dried catfish in one hand, and two days worth of profit in the other. Corrugated steel contained bursting shelves of fragrant fleshy fish in the narrow stall. With her hands full, the woman’s attention was split between a haggling customer, and her bank agent. The customer wanted a discounted price on a fish crate. The agent was there to collect her twice-weekly savings deposit. While negotiating with the client, the fish vendor handed over the cash to the agent. Moments later, a text message on the woman’s cell phone confirmed her deposit was safe in the bank. The transaction was completed in seconds. The haggling took longer.

Jennifer McDonald of Women’s World Banking witnessed the above exchange on a research trip to Nigeria in March 2012. The Diamond Bank savings pilot project was so successful that it was offered branch-wide six months later. This year, McDonald went to Tanzania to implement a similar program.

“Women in many of these countries are time poor,” said McDonald. “They commute for three or four hours. They are in the market all day long, and they bear responsibility for their families, including their children’s education. It doesn’t get more convenient than being able to save at the bank while still being able to carry on your activities.”

The ease of cheap cell phones using simple SMS technology has catapulted mobile money in middle and low-income countries. According to the World Bank, mobile signals now cover 90 percent of the world’s poor. In sub-Saharan Africa, there were 98 million registered mobile accounts in June 2013; more than twice as many as the total number of Facebook users in the region (

But mobile mechanisms were designed to send and receive, not save. As a result, the majority of the world’s poorest are missing out on financial tools that could help them out of poverty. Economists say financial services like savings accounts, insurance or loans are just as important to escaping poverty as is improved agriculture and education. That’s why McDonald and other inclusive banking advocates are pushing to implement mobile savings programs for “unbanked” women — those without any link to formal banking institutions. The effort is based on the premise that when a woman has a formal relationship with a bank’s financial services, there’s a beneficial impact on her personally, her family and the larger economy.

Getting Savings Services to Women

The task is a big one for banks. It first requires increasing mobile phone usage among women. Then, banks need to develop relationships with a customer base long ignored.

“Half the planet’s adult population lacks something as simple as an account to store and save their money,” said Shamina Singh, executive director of the MasterCard Center for Inclusive Growth, which also supports savings programs. “This leaves them without the things we take for granted – an identity, a way to save money for a rainy day, get loans, or insure themselves or their crops. They are disproportionately women and young people, many with jobs and living in urban centers.”

With 76 percent of Nigerian women unbanked, Diamond Bank saw a business opportunity. The pilot program pursued self-employed market women by adapting the banking model to meet their needs. With the help of Women’s World Banking and Visa, Diamond Bank trained agents, called “BETA friends”, who visited the women in the market to promote the program, set up accounts and collect deposits. BETA is the name of the savings product, which means “good” in pidgin English. The majority of these women saved up to 60 percent of their daily income with informal savings tools, so the bank didn’t need to promote the importance of saving. Rather, Diamond Bank’s BETA savings program sent text messages reminding clients to save on schedule and promoted incentives like no minimum deposit, no monthly fees and weekly cash prizes persuade women to join. Agents of similar programs also had to have enough money for client withdrawals when there wasn’t an ATM available (many banks and ATMs are often placed in dense and wealthier areas).

“If an agent isn’t liquid enough to enable a cash out, you lose a customer,” said Tahira Dosani, director of portfolio engagement at Accion Venture Lab ( Dosani previously worked in Kabul at Roshan, Afghanistan’s leading telecommunications operator. “You need the cash in and cash out points to be able to transact with the system. There’s a huge trust factor in terms of mobile banking. So if people don’t feel like they have access to their money whenever they need it, they won’t use the product.”

Challenges remain with models like BETA, like dealing with network down times, delayed text message receipts and unreliable agents.

At the end of the first six months of the BETA savings program, an aggregate of $1.5 million (USD) was saved and 40 percent of the 38,600 new accounts were opened by women - exceeding expectations, and challenging the status quo.

Women and Financial Services

Women and girls are often excluded from many elements of society in the developing world, and financial services is certainly included. Without tools like insurance or personal savings, most families working to climb out of poverty are just one emergency away from falling back into destitution. Most of the time, it’s women who suffer most.

“If there’s a crisis, women are the first to miss the school fee for themselves or their daughters, or they are the first to go without protein,” said Rodger Voorhies, director of the Financial Services for the Poor Program at the Bill & Melinda Gates Foundation. He recently published a piece in Foreign Affairs (, which explained how mobile technology, like savings programs, offers the developing world relief from poverty. In one study led by Voorhies’ program, farmers in Malawi saved with a bank increased household expenses by 10.8 percent, which is linked to household well-being (page 20,

But globally, formal savings programs are rare among the poor. A survey of all low-income countries found that 77 percent of poor people do not have a bank savings account. In sub-Saharan Africa, the figure is 85 percent ( The easiest way for women to save is through informal community programs. These vary across communities but the model is similar: an individual collects the money and pools it. Access to savings is limited to a few days per month and peer pressure encourages regular saving. But any benefit is outweighed by the risk that the individual in charge gets sick, has an accident, or the money is lost or stolen. People can try to save with non-bank mobile money programs, but it’s not encouraged. Companies like M-Pesa make money on transactions not on accumulation. A formal savings account at a bank, with the money held at no fee and out of other people’s reach, is less porous and more safe.

Women in poor countries appear to be more frugal, even when they aren’t the ones earning the majority of the household income.

“There’s a difference in terms of savings behavior between men and women. Men were more likely to treat their savings like a transactional account. They would deposit and withdraw,” said McDonald. “Whereas women would deposit and accumulate and withdraw less frequently.”

Research shows that poor women around the world are usually in charge of the financial decisions. In addition to buying food, paying school fees, or sending remittances, women are also the key savers for routine or emergency payments ( Figure 1).

At a June conference in Seattle, Voorhies said emerging evidence shows that when decision making is given to women, they make decisions that have positive impacts on themselves, their children and their household. It follows, Voorhies said, that giving women the financial tools would be beneficial for all in the household.

“So if you can go directly through a mobile handset to a woman, then she has way more control over those services,” said Voorhies.

The problem is, many of these women aren’t dialed in.

Closing the Mobile Phone Gender Gap

In 2012, a woman is 24 percent less likely to own a mobile phone than a man if she lives in the Middle East and 37 percent if she lives in South Asia (Figure 2, There are a whole slew of cultural and economic reasons why this is, and mobile operators like Mobilink ( and Roshan ( are working to improve women’s mobile literacy with culturally sensitive marketing in Pakistan and Afghanistan ( page 22). According to researchers with the GSMA (, the global mobile industry association, and the Cherie Blair Foundation, it is in mobile operators’ best interests to shrink the gender gap. They say the untapped market for mobile growth among women is valued at $13 billion (USD) (Figure 3:

It doesn’t just make business sense. Those 300 million women in developing countries are missing out on a host of socioeconomic benefits. Research has shown that increased cell phone penetration has been linked to job creation and rising GDP in poor countries ( page 12). A study in Kenya showed that women with access to a bank savings account increased business reinvestment by about 40 percent; increased food expenditure suggested higher incomes (14 to 29 percent); and were less vulnerable to health shocks (Dupas and Robinson, 2009).

Mobile Money Paves Path in for Banks in Tanzania

The gender gap is the smallest in Africa, where women are 23 percent less likely to own a mobile phone than their male counterparts. Countries in eastern Africa were the earliest adopters of mobile technology. Kenyans have been using M-Pesa, the benchmark for successful mobile money implementation, for seven years ( But Kenya’s southern neighbour has recently eclipsed it in the mobile financial landscape, giving the industry reason to be optimistic.

A 2013 survey found that half the adult population in Tanzania - the highest proportion anywhere in Africa - has learned to use mobile financial services through bank and non-bank mechanisms ( More than 94 percent of the adult population now has an e-money account with over 49 percent actively using these services ( In December 2013 alone, e-money providers processed more than 99 million transactions valued at over 3.1 trillion TZS (US$1.9 billion) (

Tanzania has 14 banks offering mobile banking services and four non-bank mobile payment providers. Voorhies said the competitive market has reduced the cost of a transaction there to one tenth the cost in Kenya.

In terms of savings programs, there’s still a long way to go. Around 70 percent of Tanzanians keep savings at home, but savings via mobile money is on the rise ( Savings at banks rose from nine percent in 2009 to 13 percent in 2013; while non-bank mobile savings rose from seven percent in 2009 to 26 percent in 2013.

The gender gap is another area needing improvement in Tanzania. The Access to Finance survey shows that women’s use of formal financial products is lagging behind that of men. The gap between men and women who use formal financial services increased from 3% to over 12% between 2009 to 2013. Many of them are turning to non-bank options.

Non-bank mobile companies currently dominate the market in Tanzania because they are convenient, accessible and secure. Banks remain out of reach for most Tanzanias (74 percent of the population lives in rural areas). Like the Nigerian market vendors who were initially reluctant with the Diamond Bank program, many Tanzanians assume they aren’t welcome at banks. The consequence is that Tanzanians are using mobile money with non-banks, which aren’t created to encourage saving.

“This was our big aha moment,” exclaimed a recent blog from Women’s World Banking ( “While mobile money is re-shaping the way low-income Tanzanians view formal financial services, it cannot yet offer all of the benefits of a bank account.”

But, this opportunity comes with a big caveat. Any institution that seeks to serve this market must be able to offer products that match or exceed the levels of accessibility and convenience that this population is used to. The market is also changing.

There’s been a recent surge of partnerships between mobile operators and banks. M-Pesa partnered with Commercial Bank of Africa to introduce fully mobile banking products. M-Shwari in Kenya reached over 6.5 million accounts within one year. A similar partnership in Tanzania, M-Pawa, just launched. Telecommunication companies see the demand for more complete financial services beyond mobile money.

Mobile money has made significant inroads in connecting with clients, who view their phone as their bank. So banks are stepping up their game in competition for these new clients.

Opportunity Awaits Banks and Mobile Operators

At least nine countries in Africa already have more registered mobile money accounts than bank accounts, more than double the number in 2012 ( Non-bank mobile companies have paved the way in Cameroon, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe. Whether banks can meet and exceed their competitors’ standard is the question.

That’s what McDonald and Women’s World Banking is trying to do in Tanzania, where they are working to develop a mobile savings product for low-income women in this market. Now, more than ever before, banks are seeing it as a growth strategy.

“In the past the cost structure didn’t make it possible to have a viable relationship with people at the bottom of the pyramid,” said McDonald. “But with mobile technology — being able to contact local infrastructure in the communities to service the communities — the cost is reduced significantly. People previously considered unbankable are now considered temporarily unbanked, and a market opportunity.”

It is through savings programs and other financial services that women from the world’s poorest countries can help their families escape poverty, according to Voorhies. He said somewhere between ten and 30 percent of the world’s poorest households manage to escape poverty, typically by finding steady employment or entrepreneurial ventures.

Self-employed women like the market vendor in Lagos are leading the way. Fish by fish, she earns a steady income. And with each naira saved through her bank agent and mobile phone, she’s climbing her way out of the poverty bucket with her family coming with her.###

Photo: Market vendor and Diamond Bank savings account client Shadiat Kareem (right) sells her produce to a client in the Balogun Market in Lagos, Nigeria, in March 2012. (credit: Women’s World Banking)

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