Cell phone banking could lift Africa's farmers

You might have a few dollars in your wallet, but chances are most of the money you spend is through your credit or debit card. The cashless system we’ve grown accustomed to across North America, offers consumers instant access to products and services – giving us the freedom to buy whatever we want whenever we want it. Much of the developing world still relies solely on cash and barter transactions.

But now entrepreneurs in Africa are pioneering a remote electronic money network for the continent’s “unbanked” rural people, allowing customers to use their cell phones like a debit card. Investing in this social entrepreneurship could bring prosperity to markets that need it most.

Over the past decade, cell phone use has increased fivefold in Africa. Worldwatch Institute’s Nourishing the Planet project traveled across sub-Saharan Africa over the last year, and has found that nearly everyone, from remote villagers in Ethiopia and Uganda to poor farmers in Niger, has a cell phone.

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Farmers are using their phones to gain access to information and other things they didn’t have before. They can check crop prices before investing time in long trips to city markets, for example, giving them the option to wait until prices increase. Agricultural extension agents and development agencies use cell phones to inform farmers about changes in weather that could affect crops.

The cashless system has several benefits. First, money stored electronically is less likely to be stolen or misused. Second, electronic transactions can be instant – lowering transaction costs – whereas in-person cash transactions often mean investing time and money in transportation. Electronic money can benefit more marginalized people who often have to rely on middlemen to help them access markets.

The investment needed to firmly establish mobile banking in Zambia is large, and even more is needed for it to go international. But the models are there. The technology is there. The expertise is there and growing daily.

And according to Mr. Quinn, “There is no better place or time to be an entrepreneur in an emerging mobile payments industry.”

Credits -csmonitor