Gregory Howell is the Deputy Director of the Office of Economic Growth and Infrastructure at USAID’s Afghanistan Mission in Kabul, Afghanistan.
Traditionally, USAID Missions have managed development programs by segmenting activities into technical offices such as democracy and governance, economic growth, health, education, and infrastructure. Crossfertilization takes place occasionally, when mutual interests are identified; but meaningful collaboration is rare. The focus on mobile money in Afghanistan breaks out of the usual stovepipes, demonstrating how dynamic teams bringing expertise from different disciplines in partnership with host-country counterparts can contribute to a collective goal—even in a difficult operating environment.
An Afghan youth uses his mobile phone to take pictures of U.S. Marines from 1st Battalion, 8th Marines as they patrol the town of Musa Qala on January 18, 2011. | AFP Photo: Dmitry Kostyukov
Ten years after the introduction of mobile-phone technology to the country, more than half of all Afghans have mobile phones, and more than 80% have access to a mobile-phone network. But only 7% of Afghans have a bank account.
By leveraging the mobile-phone network to provide financial services to the unbanked, key public- and private-sector services can be improved to serve hundreds of thousands of women and men across the country. With mobile money, a teacher can receive her salary in full and on time in a remote district; a police officer can transfer funds to his family back in his home village; and a business woman can repay her microloan without having to spend valuable time away from her business. Once customers have registered for the service, they can visit a local mobile-money agent to withdraw actual cash that had been deposited in their mobile wallet. The agent serves as the ATM, exchanging mobile money for cash once the customer inputs a PIN number into the phone. Mobilemoney service provider bank accounts pool funds from all clients in at least four banks to diversify risk.
Mobile money can fundamentally transform the lives of Afghans, just as it has in Kenya, the Philippines, and a growing list of countries around the world. USAID’s strategic approach focuses on three main areas of intervention:
- Engaging with key stakeholders, including government ministries, private-sector companies,
and international donors - Ensuring an appropriate legal and regulatory environment and support from relevant host country government agencies
- Encouraging innovation through public-private partnerships that could lead to greater inancial
inclusion and development results
Read the full article in USAID’s Frontiers in Development Publication.
Although I laud the convenience of mobile money, I question the statement that it will change lives. Afghanistan has and has had for decades, a money transfer system called Hawalla that is very efficient and cheap. Like it is with micro-finance, this merely puts a large institutional face to the process and is taking business away from those presently engaged in it.
On the other hand, it will serve the needs of people engaged in distributing cash payments to workers without the need to be carrying large amounts of cash into the field.
I must say this is a well put article. I also totally agree with you Steve Hutcheson, It will serve the needs of people engaged in distributing cash payments to workers without carrying large amounts. Now the fact that mobile money will change lives??? hmmm not so sure!
I agree with Steve Hutcheson and Dayvon Polar Heart. There is, indeed, value in mobile money, which can be seen in its unquestionable success in places like Kenya and the Philippines. However, I am a little dubious that mobile money will have as profound an impact in Afghanistan because of the already implemented hawalla system (which the Wall Street journal described as “often-secretive outfits” and has been involved in the transfer of more than $3 billion of diverted US aid and logistics dollars to abroad financial havens). I am, therefore, even less optimistic as an Accenture Development Partnerships report from 2011 stated that mobile money was successful in other developing nations due to trusted mobile network operators, which may not be readily available in Afghanistan.
I also doubt that it will have an impact because of the geography and culture of the region, as the Accenture report also found that they key success of the Kenyan mobile money system was, in part, a result of the significant numbers of adults who migrated to cities like Nairobi in search of work. In a country like Afghanistan, where agriculture is the main source of income, I do not see a migration of the Afghan population to their country’s cities as a possibility, which may slow the infiltration or progress or an Afghan mobile money system.