This time last year, I had the pleasure of helping launch the Better Than Cash Alliance (BTCA) on behalf of USAID. The room was filled with a sense of optimism and possibility, as co-founders gathered from USAID, the Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, Visa, and the UN Capital Development Fund. Together, we knew that this group of impressive organizations and companies—with their broad reach, expertise, and enthusiasm—could improve the lives of the 2.5 billion people who currently lack access to formal financial services.
Connected technologies like mobile phones are reinventing financial services—once the exclusive domain of the rich—and offering billions of people the opportunity to take control of their finances. With access to products like savings accounts, insurance, and credit, families have the tools they need to lift themselves out of poverty and connect to the formal economy.
We know mobile and electronic payments can provide people with the power to protect themselves against economic shocks. A study published by the Massachusetts Institute of Technology in 2011 found that families who do not use M-Pesa in Kenya—the largest mobile money system in the world—suffer a 7 percent drop in consumption when hit with a negative income shock, while the consumption of families who use M-Pesa remains unaffected. We are starting to see real evidence that access to mobile money services can make a real difference for vulnerable communities.
Not only do mobile and electronic payments benefit billions of poor people globally, they have measureable benefits for governments, development organizations, and private sector players, including cost savings, economic growth, and strengthened transparency and security. For example, when the Afghan government started paying police officers with mobile money, the officers thought they had received a 30 percent pay raise. In reality, they were just enjoying their entire paycheck for the first time, since small amounts were getting skimmed from the top when they were being paid in cash.
As we look back on the past year, there is a lot to celebrate. Fifteen new members joined BTCA, including the governments of Malawi and Afghanistan as well as Mastercard. In addition, four of USAID’s missions—Philippines, Zambia, Afghanistan, and Haiti—have revised their procurement practices to encourage or mandate the use of electronic payment methods among USAID partners, which is not a simple feat. Across our operations, we are making bold moves to eliminate cash, because we know it facilitates corruption, inefficiencies, and security risks.
While it is important to celebrate these accomplishments, it is equally important to ask: are we, at USAID, doing enough?
Today, we are proud to step forward with a new and stronger pledge to the Alliance. I am pleased to announce that we will be incorporating language into ALL grants and contracts to accelerate the use of mobile and electronic payments globally.
I encourage fellow members of BTCA, and others who are working towards financial inclusion, to also ask the question: Are we doing enough? Are we achieving our original commitment and striving to do more? How are we going to measure our results? Are we leading by example?