mobile money


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Using Mobile Money. Mobile Banking to Enhance Agriculture in Africa Last updated December 2010 1 BRIEFING PAPER USING MOBILE MONEY, MOBILE BANKING TO ENHANCE AGRICULTURE IN AFRICA INTRODUCTION This is one of a series of briefing papers to help USAID missions and their im- plementing partners in sub-Saharan Afri- ca use information and communications technology (ICT) more successfully —via sustainable and scalable approaches—to improve the impact of their agriculture related development projects including Feed the Future projects. 1 1 ICT includes cell phone and Internet servic- es, radio, and a wide range of digital devices and related tools including cameras, geo- graphic information systems, and a wide range of hand-held computing devices. In this context, this paper provides a brief overview of mobile money and mo- bile banking services. As the resource list at the end of this paper illustrates, there are many other sources of infor- mation available to inform the reader regarding the many aspects of m-money and m-banking related to security, risks, legal and regulatory issues, and key chal- lenges for implementers. In contrast, the paper explains the basics of such servic- es; their current and potential use for agriculture related projects; a few les- sons learned to date related to such usage; and a few issues to consider when looking ahead. This topic is changing quickly as more and more countries adapt the service to local circumstances. Given how dramatically mobile money services are growing in sub-Saharan Afri- ca, they offer an unprecedented oppor- tunity to significantly increase access to financial services and ease the flows of financial transactions within agriculture value chains. The challenge is to harness these services to increase the success of USAID funded agriculture development projects. MOBILE MONEY / MOBILE BANKING BASICS Mobile money (m-money) is the term used for using a cell phone to make pay- ments to others using a cell phone where value can be stored on an “m-wallet” be- fore and after the transaction. A sender loads money into his m-wallet by going to a registered “agent” (sometimes a finan- cial institution, more often not); then the sender can use a secure electronic ap- proach to transfer funds to the recipient’s m-wallet. The recipient can either store the funds in his m-wallet for further mo- bile money transactions or go to an agent to convert the mobile money to cash. Mobile money reduces transaction costs, reduces risks of loss inherent in handling cash, and has proven to increase savings opportunities—based on evidence in Kenya, we know that the poor often use their m-wallets to save funds at least for short periods of time and are more likely to be able to have the cash needed to weather emergencies. 2
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This note was uploaded on 11/24/2011 for the course BUS 301 taught by Professor Karake during the Fall '11 term at Maryland.

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