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Can Haiti's informal economy eschew cash and embrace phone-to-phone money transfers?
SAINT-MARC, Haiti — Adeline Alexandre does a steady business selling Haitian staples at Fifi Boutique, a little hillside shop off a dirt street with potholes the size of bathtubs.
Sardine cans, buckets of rice, jars of cooking oil and stacks of empty Coca-Cola bottles fill her shelves — along with a glaring reminder that she, like Haiti, remains in the financial dark ages.
Her cash register is a splintering wooden drawer filled with crumpled bills and tarnished coins. It sits behind the counter on a gray bucket seat that had been torn from a car and dropped on the store’s concrete floor.
“I’ve always done it that way,” she said. Perhaps not for much longer.
Haitian telecoms and banks are racing to sign up residents like Alexandre for mobile banking plans through which payments are made electronically from mobile phone to mobile phone. The money is stored in an “electronic wallet” — the phone’s SIM card — instead of that wooden drawer.
At least two major mobile phone providers have launched mobile banking programs, partnering with major Haitian banks and international aid agencies. The competition is spurred by a $10 million reward from the William and Melinda Gates Foundation and the U.S. Agency for International Development (USAID). The money, dispersed in two awards in December and next spring, will go to the company that records the most transactions.
Cash to mobile phone may seem an incongruous transition for a woman like Alexandre who owns a shop with not a Visa sticker to be seen and for a country where only 10 percent of residents have bank accounts.
But mobile banking has been successful in developing countries across the globe. Kenya’s M-Pesa service, which mobile banking promoters hold up as the poster child of success, has 9.5 million users, nearly half of the roughly 20 million mobile phone users there.
The service has long been forthcoming in the developed world. In the United States, banks have seen an uptick in the number of users in recent years as smartphones have become more prevalent. A 2009 study by financial services company Mercatus LLC found that 11 percent of 1,100 people surveyed were using their mobile phones to access their bank accounts or make payments.
Backers are expecting it to spread more rapidly in Haiti. “This technology has the potential to leapfrog traditional financial services,” said USAID Haiti Mission Director Carleene Dei in a statement to GlobalPost.
The benefits for the poorest can be numerous: Many never before had access to a bank branch or held an account. Their banking history can be used to help secure loans or apply for other financial services. It’s more secure than handling cash. And it’s cheaper than a traditional bank account.
“I’ve met people who’ve never walked into a bank before,” said Kokoevi Sossouvi, who runs financial services for the aid group Mercy Corps, which is incorporating mobile money in a food aid program for 20,000 people in Saint-Marc and surrounding areas. “This is a safe way for them to have access to a full suite of financial services. Our goal is financial inclusion.”
It’s not a purely altruistic endeavor. “There is a business reason behind it, obviously,” said Jean-Robert Desrouleaux, consultant with Unibank, one of two major Haitian banks partnering with mobile phone providers.
For a country in which there are only two bank branches for every 1,000 people — compared to 50 or more in some developed countries — the mobile model is a growth opportunity for banks and mobile phone providers.
“We’ve reached a slow growth period for cell phones, a plateau,” said Alex Bouchereau, who is overseeing mobile banking for Voila, one of Haiti’s largest mobile phone providers. “Within a year, we’ll see significant growth as this takes hold.” The country’s largest mobile phone company, Digicel, which launched its own mobile-banking service with Scotiabank, estimates 35 percent of the 10 million residents had mobile phones in 2010.