The majority of Tanzania’s 41 million inhabitants live on less than US$2 a day, and only 12% have a formal bank account. But half own a mobile phone, through which they can save money and handle financial transactions without a bank account.
These phones are relatively inexpensive to purchase. One astounding fact is that they are the first technology in history to have more low-income users than wealthy ones, according to Abbie Laugtug, a policy advocate for the nonprofit organization CARE.
Dennis Ripley, SVP of programs at “Opportunity Malawi” says that mobile payments make it possible for individuals to save as little as $1 or $2 at a time, amounts too small for deposits to formal banks, given the 30 cent cost of a deposit. It can also be the first step into the formal financial system for low-income Africans. “We’re working with mobile phone operators to connect their payment customers to Opportunity Bank, operated out of trucks and storage containers across 21 countries in Africa, at a cost of 3 or 4 cents per transaction.”
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| Malawian clients access banking services at a mobile banking vehicle. |
“We equip vans and trucks as banks on wheels to go into the last little communities throughout Malawi and park there and do banking once or twice a week,” Ripley says. “Most of our clients have never been able to go into a bank because the minimum deposits are so high.”
At Opportunity Malawi, we expect to expand from our current 305,000 savings accounts to 1 million within three years, thereby banking with about 7% of the country’s population. Opportunity can reach far more people than a traditional bank and help them avoid the long $1 bus ride into the town, Ripley says.
Ripley calls systems for paying and storing money on mobile phones “revolutionary.” He reports, “The ability to take your cell phone and transfer money or make a payment, you have changed [Africans’] lives fairly dramatically in terms of their time and their cost.”