This article was first published on Insights – Ripple
As the world’s poorest people struggle with the economic impact of COVID-19, a potential source of hope has been found in Kenya. Around half of the East African nation’s 52 million people use the mobile payments service, M-Pesa. Recent evidence suggests that these users have shown a higher degree of resilience to financial shocks than those who don’t use M-Pesa.
For the World Bank’s Mahesh Uttamchandani, this is a clear demonstration of the benefits of financial digitization. Speaking at Ripple Swell Global 2020–a virtual gathering of the world’s trusted leaders in financial services and blockchain technology–today, Mahesh explained:
“People living in extreme poverty, who earn less than $1.90 a day…that income tends to be seasonal. Having the ability to save that money, to transact with it, to use it for investment, helps build resilience amongst the poor. They can invest in other developmental goals like health and education if they have access to a basic financial service.”
Mahesh leads a global team focused on financial infrastructure and how it can help with the World Bank’s twin goals of reducing extreme poverty and boosting shared prosperity. Simply providing access to basic financial services has a major impact. But even when digital services exist, challenges remain, especially for women.
Evidence shows that when women have greater access to family finances, it boosts life and health outcomes. However, in many developing world countries, women’s access to the mobile devices and internet services that digital finance depends on is lower than that of men. In addition, stringent KYC rules – while critical for ‘full use’ accounts – put up barriers for women, who are less likely to have the required documentation. These requirements can be calibrated so that they become less stringent for simplified or ‘limited-use’ accounts.
Mahesh noted that Indonesia’s ...
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