Financial Services

One of the storeowners in Saint-Marc, Haiti, supported by Mercy Corps' Mobile Money program.

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One of the storeowners in Saint-Marc, Haiti, supported by Mercy Corps' Mobile Money program. Photo: Lisa Hoashi/Mercy Corps

The 7.2 earthquake that devastated Haiti on January 12, 2010 resulted in catastrophic loss of life, destruction and displacement. It also put an enormous strain on the country's already-fragile financial sector, which was instantly rendered unavailable to meet the cash needs of a population in distress.

All of a sudden, Haiti suffered from a severe shortage of available banking: throughout the country, there was an average of just two bank branches for every 100,000 Haitian citizens. Even when food and other household necessities became available in local markets shortly after the earthquake, families weren't able to buy anything, because they didn't have cash.

Families needed food. Small vendors and local economies needed cash. And it turns out the solution to this Catch-22 was right in the hands — or the pockets — of most Haitians.

Adapting an emerging technology for Haiti

As many as 85 percent of Haiti's citizens have a mobile phone. Throughout the world, especially in East African countries like Kenya, the practice of mobile banking — customers using their cell phones for all sorts of cash transactions — was gaining wider notoriety and usage. With Haiti's banking system in a shambles and less than half the country's population with traditional bank accounts, there was both a need and an opportunity to try something revolutionary.

Just weeks after the earthquake, Mercy Corps began working with two strategic partners — telecommunications operator Voilà and financial services provider Unibank — to conceive, develop and implement a mobile money solution for Haiti.

Over the months that followed, Voilà and Unibank developed and introduced the mobile money architecture, incorporated Mercy Corps' suggestions for improvement and designed an easy-to-use service for Haiti's vast "unbanked" population. Mercy Corps piloted the service; identified, mobilized and trained program participants; and managed the logistics of the humanitarian distributions. Our team conducted field tests, assessed the reactions of participants and provided continuous feedback to Voilà and Unibank.

Cashing electronic paychecks

Much of the program pilot took place in the form of Mercy Corps cash-for-work projects, during which participants were paid over their cell phones for work they'd done to rehabilitate roads, farmland and irrigation systems. These cell phone credits could be cashed in for food and other household necessities at stores that were also participating in the pilot program — creating a system through which local economies could begin healing.

“I wait for my payment eagerly and without worry," said Pierre Louis Jacques, a 43-year-old earthquake survivor who participated in the cash-for-work pilot program for mobile banking. "With my money, I’m going to buy food and pay for school for my children. I like this way of paying – the process is easy to learn and there's less risk involved.”

Sylmanie Prophete, a 27 year old woman said, “It’s a very good way of paying people because it’s very discrete," 27-year-old Sylmanie Prophete agreed. "People don't know your business — it’s between us, Mercy Corps and the bank.”

Keying in a mobile banking transaction. Photo: Erin Wildermuth/Mercy Corps

Mobile banking reaches thousands in Haiti

With such enthusiastic feedback and success in the pilot program, the partners launched Haiti's first mobile wallet solution in September. The launch coincided with a Commitment to Action — which highlighted mobile banking's role in Haiti's ongoing recovery — at the 2010 Clinton Global Initiative meeting in New York City.

Since then, Mercy Corps has rolled out mobile money to more than 6,000 people in rural Haiti. We've disbursed more than US$1 million in mobile money payments for various activities. And we've helped create a network of several dozen stores that engage in mobile money transactions.

There remains much work to be done, and thousands of Haitians yet to access mobile banking. But this approach is a clear example of Mercy Corps' eye toward innovation: taking something as small and widespread as a cell phone and, with help from savvy partners, using it to help renew and transform a country's economy.

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Rasunan is a board member of the Arinagata coffee cooperative, a third-generation coffee farmer and the father of two girls. Photo: Sarah Castagnola/Mercy Corps

Rasunan offered me a cup of coffee. The coffee was hot and thick with sugar. It was delicious. I visited Rasunan with Mercy Corps' Community Health and Investment for Livelihood Initiative (CHILI) staff. The staff is working with coffee cooperatives and communities in the Gayo Highlands of Aceh — a region famous for coffee production.

I learned Rasunan is a board member of the Arinagata coffee cooperative, a third-generation coffee farmer and the father of two girls. Rasunan recently added a new role to his busy life. In July, Rasunan will become a volunteer Financial Literacy Trainer for his village and his cooperative.

“In my community some people have only finished junior high school. I want to share knowledge with the community. Many people do not save and borrow money in between the coffee harvest,” explained Rasunan.

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Tofik Hidaya is a beekeeper who received a loan from BPR Karangampel, a microfinance institution supported by Bank Andara. In the beginning he started with three bee boxes and collected and sold the honey door-to-door himself. Over the first six months he increased his business to 18 bee boxes and employed three additional workers. Photo: Mercy Corps

In Indonesia, millions of people are self-employed through small businesses. But only a small percentage of them have had access to the formal financial services that help people move permanently out of poverty. It’s not that the country lacks the microfinance institutions designed to serve smaller business clients – on the contrary, it has one of the world’s largest concentrations of such institutions. But their products and services were not readily available to the poor.

That’s why, in 2008, Mercy Corps founded Bank Andara, which is now a fully separate commercial entity. Bank Andara is a licensed wholesale bank designed to exclusively serve the microfinance sector by providing smaller lenders with affordable access to capital and useful financial products, services and technology. Bank Andara helps microfinance institutions reach out to Indonesia’s unbanked and underbanked population, bringing poor people into the world of modern financial services – remittances, insurance, transfers – so they can stabilize and improve their lives.

Bank Andara is one of Mercy Corps’ most stunning achievements in social innovation, one that is already helping more than 1 million Indonesians access modern financial services to move out of poverty. And, we are expanding the concept to the Philippines, where we’re beginning to provide mobile banking and other financial services to the poor.

Tofik Hidayah is one of those 1 million Indonesians who are getting help thanks to Bank Andara. Tofik used to earn his living collecting and selling recycled waste. Then prices dropped dramatically, and Tofik sought a more reliable trade. He saw some neighbors harvesting honey and decided to become a beekeeper.

“I realized that could be a sustainable business for me, too,” he said. He borrowed $555 from a rural microfinance institution supported by Bank Andara, purchased three bee boxes and set up his business. Tofik learned how to collect honey, which he sold door-to-door. Within six months he owned 18 bee boxes and had three employees bringing in $27 a day selling his top-quality honey. Since little honey is collected during rainy months, the seasonal loan he obtained – with its flexible repayment schedule – was essential to his success.

Now Tofik and his employees are building a financial stability that will keep them from slipping back into poverty and bring greater prosperity to their communities. And the beekeeper is looking ahead. “I hope that my business will continue to go well,” he said, “so I can employ more workers and increase profits.”

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(From left) Mercy Corps Haiti Economic Recovery Program Manager Kokoévi Sossouvi, Representative Sheila Jackson-Lee (D-Texas) and Mercy Corps Public Affairs Program Director Jeremy Konyndyk. Photo: Cameron Peake/Mercy Corps

Congress learned something new about the power of cell phones last week – and not what you might think. Mercy Corps hosted an event on Capitol Hill to share with legislators how mobile technology can be a force for positive social change. The reception, titled "Innovation for Impact: How Mobile Technology is Spurring Grassroots Recovery in Haiti" comprised a photo and story exhibit with images from the Haiti mobile money program. The event enabled Congressional offices to interact with Mercy Corps staff and friends, and to highlight the innovative work with Mercy Corps and the United States Agency for International Development (USAID) have implemented in Haiti in front of a new audience.

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This is not the type of question you hear very often here. Everyone talks about what Haiti needs: shelter, infrastructure, healthcare. But it is rare to ask Haitians what they wish for their country.

At a recent Social Business workshop, hosted by YY Haiti in association with Grameen Creative Labs, all barriers were broken down. Entrepreneurs, business students and non-governmental organization (NGO) staff from Haiti and abroad came together to answer this question — as well as to discover how social business can answer some of Haiti’s wishes as well as its needs.

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PORTLAND, Ore. – The global humanitarian agency Mercy Corps today announced a partnership with BanKO, a joint venture bank founded by the Bank of the Philippine Islands (BPI), Globe Telecom and the Ayala Corporation in 2009.

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One of the more inspired advantages that Mercy Corps hopes to bring to vulnerable communities via mobile money is easy access to financial services. A good number of places with high cell phone penetration are many miles from the nearest banking institution. By allowing users to bank on their phones they will have access to these services without ever leaving their homes.

As is the case with any new idea, the practice is never as simple as the theory. In order for families to use their cell phones as an electronic bank they need to feel confident that — if they need cash — there is somewhere they can go to cash-out (trade their mobile money for physical cash). In an ideal mobile money ecosystem, every vendor would be willing and able to support small cash-out needs. Then there would be one vendor or institution given “agent status.” This agent would facilitate the cash-out feature for all the smaller vendors, travelling to a larger city and bank to manage their own cash flow.

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The formation of Microinsurance Catastrophe Risk Organisation (MiCRO), an innovative donor-capitalized insurance facility developed by a syndicate of strategic stakeholders, will empower Haiti's micro-entrepreneurs to protect themselves against the economic aftermath of severe natural catastrophes.

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Photo: Mercy Corps Haiti

Over the last year, Mercy Corps Haiti has been working closely with mobile network operator Voilà and commercial bank Unibank to roll out mobile money in our emergency response programs via a service called T-Cash, powered by solution provider MoreMagic.

To tell the story of this amazing partnership and introduce you to our program participants, we’ve launched Diary of a Mobile Money Program, a series of three electronic books. The first e-book, From Planning Phase to Pilot Launch, is now available. Stay tuned for the second e-book, which will be released in June.

I hope you’ll enjoy reading about reading our experience in the field.

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