At an OECD Meeting on May 27^th, 2011, Administrator Shah outlined three areas of reform for USAID, one of which was “leveraging the role of science and technology,” particularly through mobile phone banking systems.  The announcement should not come as a surprise, given the growing movement among the leaders of the agency to support mobile phone programs.

Shah’s announcement is coupled with his recent talk with MIT economist Esther Duflo at the USAID Development Forum on May 23^rd.  During the question and answer session, Shah referred to the power of mobile banking, citing the financial security it provides to rural farmers.

In addition to voicing support for mobile banking, USAID has supported specific initiatives, coming to an agreement last year with the Gates Foundation to provide a $10 million incentive fund to companies in Haiti who provide mobile financial services.  Speaking about the fund, Shah said, “Before the earthquake, fewer than 10 percent of Haitians had ever used a commercial bank.  A mobile money system can restore and remake banking in Haiti and serve as an engine of inclusive growth.”

Eric Postel, assistant administrator at EGAT, has led USAID’s mobile money programs in Haiti, including one project that allows Haitians to purchase emergency relief food supplies via mobile money payments.  Postel praises Haitian shop owners who accept mobile payments, which, he claims, are “broaden their client base” and lower their risk by not carrying cash payments to the bank.

 

Other leaders in USAID have shown support for mobile banking as well.  Maura O’Neill, Chief Innovation Officer at the USAID Development Innovation Ventures in the Office of the Administrator, recently co-hosted the Mobile Money Summit in Afghanistan.  At the summit, the USAID Mobile Money Innovation Grant Fund was announced, which aims to create unique public-private partnerships to encourage mobile banking.  Currently, “only 4% of Afghans have bank accounts,” and given the success of M-PESA in Kenya and similar services worldwide, mobile banking is a legitimate solution to this problem.  O’Neill attended the summit with Senior Advisor to the Administrator Priya Jaisinghani, another notable expert in mobile banking.

USAID’s interest in mobile projects is not new.  In 2008, USAID commissioned a report on the use of phones in citizen media.  As well, numerous projects targeting women in development, have utilized mobile phones.  Mobile banking, however, appears to be a high priority for USAID currently.