2 posts tagged “africa”
The rise mobile banking as a phenomenon is owed to two trends -- the growth of the world mobile phone network and the technology-driven prominence of micropayments in the field of finance (a topic a future post). As the technology improves, mobile banking will gain traction internationally, but the intriguing thing about it is that the world's poor are the most significant early adopters.
By year's end, according to Reuters, the number of mobile phone subscriptions will equal half the world's population. Each day, a million people open new mobile phone accounts -- eighty-five percent of those are said to live in the poor areas of the world. In India alone, five million new subscribers are added each month. According to the World Bank, one in nine Africans has a cell phone. Big players like Samsung and Nokia are manufacturing and marketing mobile phones specifically with the world's poor in mind.
Along with its obvious function as a basic communication tool, the mobile phone is emerging as a platform for financial transactions in parts of Africa and Asia where access to conventional banks by rural and city populations alike is limited by poverty and poor infrastructure. Mobile banking utilizes the SMS (text messaging) protocol to do such things as repay loans, collect loan disbursements, send remittences to family and friends from abroad, buy airtime, and pay utility bills. Here is the skinny:
Pay-as-you-go -- It goes without saying that the poor populations of the developing world don't have a lot of folding money for cell phones or airtime. Pre-paid airtime, which can be rationed and purchased as more money becomes available, has brought mobile phone service within the reach of an astounding number of low-income consumers. Pioneering Philippine provider Smart Communications offers the "Smart Buddy" cellular phone which is equiped to purchase pre-paid airtime in increments priced as low as $0.54. As an easily transferable and widely desirable commodity, cell phone minutes themselves have become a kind of currency and are exchanged as such for goods and services.
Banking without Banks -- Poor populations are isolated from bank branches, can't afford the minimums an account requires, and have financial needs conventional banks don't service. Mobile banking provides extremely simple, flexible financial services that require only a handset and mobile service. In cooperation with Kenyan provider Safaricom, Vodafone has introduced M-PESA, a service that allows Kenyans to deposit, withdraw, or transfer money. According to the New York Times, around 2,500 Kenyans sign up every day for a total of more than 175,000 subscribers since the service went online three months ago.
M-PESA is not a bank and isn't regulated as such, allowing it to focus on facilitating the simple transactions its customers demand. An M-Pesa transaction simply changes the computer record of how much money belongs to which user. The fee for each transaction, which amounts to less than a dollar, is split between the sender and receiver.
For both Smart and M-Pesa, the cash points (venues where physical money from mobile transactions can be collected) are a network of widely dispersed brick and mortar businesses, like gas stations and sundries stores. Use of the service is open-ended, allowing transactions with financial institutions or person-to-person. M-Pesa was built to facilitate institutional loan transactions, but person-to-person transactions have proved to be most popular. Filipinos living abroad are using Smart's service to send an estimated $50 million in remittances back home every month.
Relationship Selling -- Poor infrastructure and hard-to-reach rural populations make distribution a major obstacle to large scale business in the developing world. The innovators of mobile banking have skirted this by adding the reach of the cellphone network to existing personal and commercial relationships.
The products themselves -- pre-paid airtime and money transfers -- are delivered over the mobile network. Marketing and service are delivered entirely by existing small merchants and private individuals. Smart Communications of the Philippines has built a network of over 500,000 retailers including not only small merchants, but individuals set up to "network market" airtime locally. According to Smart, these roving agents of the company can earn up to $18 per day in airtime re-load sales.
In South Africa, where over half the adult population has no bank account but 30% have cell phones, a mobile banking service called Wizzit employs over 800 "Wizz Kids" - typically unemployed university graduates from low-income communities - to promote the product in the townships and help customers open accounts.
In Conclusion -- By using a simple technology (text messaging), mobile banking lowers transaction costs, enabling flexible use by the consumer and the opportunity for the service provider to profit from many small transactions. It surely won't be long before governments in the developing world discover that accepting mobile payments will help overcome their own infrastructural barriers to collecting taxes and utilities fees.
The mobile phone's role in development is sustainable because it offers clear benefits and an affordable price for consumers at the bottom of the economic pyramid and is proving profitable for the companies who sell the phones and the service.
Mobile banking is a frankly exciting example of how new technologies can leap-frog over the massive infrastructural limitations of life in the developing world. Can't get to a bank -- cool. Unreliable power grid -- that's OK. Only have two coins to rub together this week -- let's set you up with two coins worth of air time. How futuristic is it that the world's poor use their cell phones more intensively and with greater sophistication than we do?
Magic in the Marketplace
The last decade has seen the emergence of a new breed of consumer whose demands go far beyond traditional concerns like price and performance. They are empowered by unprecedented access to information, take charge of their own well being, and insist that sourcing, materials, and trade practices are key features of the brands they endorse.
Collectively referred to as the LOHAS (Lifestyles of Health and Sustainability) market segment, these consumers are interested in products like green building supplies, socially responsible investing, alternative health care, organic clothing and food, personal development media, and eco-tourism. Annual US sales in this market segment amount to $335 billion -- an impressive total said to be growing by 10 percent every year.
From freshly greened-up oil giants like BP to upstarts trumpeting their carbon neutrality via press release, corporations kick up considerable dust trying to get the attention of this powerful new consumer. More profoundly, the shift in consumer desires has prompted a new generation of start-up to take environmental, health, and social issues as profit drivers rather than a PR problem or footnote in the annual report. The meeting of these social entrepreneurs and LOHAS customers represents an historic opportunity to make what's good for the bottom line good for the world.
The purpose of this document is to explain how a new venture called Sortilege Mystical Solutions is uniquely positioned to take advantage of this opportunity. Sortilege is an online service that facilitates direct access to authentic magic from around the world. We have not only a magical product, but a magical business proposition -- that in their quest to improve their health, financial fortunes, and relationships, our customers will directly and visibly improve the lives of small producers in the developing world.
The Products
We carefully select products from around the world that are known to offer protection, healing, and fortune. Our expertise and global reach allow our customers an authentically supernatural experience, otherwise available only to a few. Our core products are from Senegal, a former French colony in West Africa, where they are alternately called tere, lekki, or gris gris.
The price tag for a basic off-the-shelf Sortilege product will be around $20. Our offerings come in all shapes and sizes, from glass jars containing bundled twigs, to hollowed out animal horns filled with powder of unknown origin. The the most basic Senegalese gris gris is a small leather amulet, which makes for a distinctive piece of jewelry to be worn around the waist, neck, arm, or leg. You'll find among our offerings protection from specific injuries, assurance that the person of your choice will think of you favorably, and the guarantee of fertility. As we grow, Sortilege will continuously incorporate new products from different countries and traditions that broaden the range of benefits available to our customers.
Emphasizing the novelty and wonder of trying a new, one-of-a-kind product, each order we fill features unique product packaging. From re-purposed dyed glass bottles to intricately folded paper packages, the presentation of every product is calculated to surprise. Our reference point for package design is the innovative literary journal, McSweeney's, whose presentation changes radically with each issue.
Each package comes with detailed instructions for use, information about the producer, and the part the product plays in local tradition. Our products are a window onto life in a place our customer wouldn't otherwise be able to see. Unlike watching a movie or reading a book about people in a far away place, Sortilege products allows the consumer to actually participate in the experience of a radically different culture. The Sortilege experience is an adventure to be pondered and shared with others.
How do Sortilege Products Work?
When the famed 19th Century German writer Goethe described superstition as "the poetry of life," he put his finger on the source of magic's persistence through the ages -- the common feeling that profound forces are at work in the world that defy natural explanation. Even as science gives us an ever sharpening picture of the workings of the physical world, the belief that religion and magic offer fundamental insights about life has never flagged.
The marketplace for products and services that baffle science has flourished with the rise of the internet. According to the National Center for Complementary and Alternative Medicine, 50 percent of U.S. adults age 18 years and over have used some form of alternative medicine -- a percentage that grows each year. At the root of this trend is a profound distrust in mass marketing, politicians, the healthcare industry, and large corporations in general. From reiki to tai chi, consumers are seeking options that put them in charge of their own well being instead of relinquishing it to an outside authority.
Straddling the alternative medicine and personal development categories, Sortilege offerings are like nothing available today in the marketplace. Different from familiar "new age" and "occult" fads, Sortilege products come with a long history and a large body of satisfied users in their country of origin. How do they work? We do not know. Like many practices under the umbrella of alternative medicine, the "technology" behind of our products is known to only a few, but hundreds of everyday users confirm that they offer personal, spiritual, and hence, real physical benefits.
Our motto, "Why leave your fortune to chance?" expresses the desire of our customers to venture down unfamiliar avenues in the quest for self-improvement. It also positions magic as a leg up in the face of uncertain, momentous events -- a new venture, striking out alone in the world, having a child.
To seek the aid of magic is to allow that the normal means of accomplishing our aim may not be enough. By the protection it offers or the good fortune it promotes, magic is a kind of insurance for our aspirations in the world -- a mysterious advantage, but an advantage nonetheless. Sortilege customers can find their way to a drug store, a financial planner, or a church -- what we offer is a compelling set of options that can complement the well-worn, but uncertain paths to health, success, and happiness.
Participatory Retail -- The Web 2.0 Experience
The experience of corporations like Nike and Starbucks has shown that, in response to consumer demand, manufacturing and sourcing have taken a place alongside marketing and design as key ingredients of the brand experience. Information about who makes a product, how they are compensated, the environmental impact of production, and the safety of inputs will play an increasingly important part in the decision to buy.
The aim is to do for retail what Kiva, a site that allows users to loan directly to small entrepreneurs in the developing world, did for philanthropy. Before Kiva, philanthropy was a black box -- money disappeared into the coffers of a charitable organization and the donor was gratified in the hope that it did some good. The only significant control conventional donors have is how much and to what organization they'll give.
With Kiva, no matter how small the contribution, the lender chooses the recipient with a clear understanding of how it will be used. Just as important, feedback on the effectiveness of the giving is built into the process. If, for example, you pitch in $25 toward and $800 loan to a seamstress in Nigeria and she is able to pay the loan back on a regular schedule, it's a fair indication that your giving provided her with a real benefit. From a lender's perspective, a Kiva transaction is direct, transparent, and participatory.
Transactions in the retail sector are similarly opaque and ripe for Kiva's brand of transparency. Consumers who plunk down money for products labelled organic, healthy, eco-friendly, or fair trade must take these claims at face value. Catering to the desire of LOHAS customers to understand and control where their dollar goes and what it buys, Sortilege will leverage information and self-service functionallity to create a mindful, participatory retail experience. Let me count the ways:
1. Retail as Social Networking - The average consumer is an anonymous individual standing before a brand, a product, some minimal specifications, and a price tag. The Sortilege customer links herself purposely with a named producer in a specified location who can tailor a product to her stated needs. The retail transaction becomes a social relationship. Sortilege users will be able to connect with like-minded people who care deeply about social justice, wellness, and personal growth. Sortilege aims to be a MySpace-style community for the LOHAS consumer.
2. User generated content - As a Sortilege community develops, we will cultivate a body of user feedback, reviews, and recommendations. This will add depth to our original content and provide users with another means of engaging with and shaping the experience.
3. Customization - In societies that traditionally rely on it, magic tailored to the needs of individual customers is the norm -- the power of the internet is to extend that personalization across the globe. Sortilege will be a platform for delivering made-to-order products and interaction between consumers and service providers. The website interface will allow the customer to choose off-the-shelf products or from many levels of customization, including one-on-one consultations.
4. Transparent Transactions - From production to distribution to fulfillment, the Sortilege website will present a compelling graphical representation of the step-by-step progress of each order. For each item they purchase, Sortilege customers will know the producers, understand the production steps, and the split of the purchase price among the producer, distributor, and retailer. The guts of each transaction, traditionally concealed behind the slick veneer of the brand, are on prominent display at Sortilege -- the process is the product.
To Wit
In a recent issue of Fast Company magazine, the editors named its "Fast Fifty" emerging innovations in business. Among them is Village-to-Village Networks -- connectivity, knowledge, and financial exchange that will "become significant new means for the spread of innovation across the developing world, even as they become conduits for first-world businesses to deliver low-cost services everywhere."
Ultimately, this is our unique value proposition as a business -- we will provide the infrastructure for transparent, participatory village-to-village retail channels that enrich users at both ends of the retail stream.
Sortilege Mystical Solutions:
- offers a unique, compelling range of self-improvement options in an underdeveloped area of the alternative health/personal development category -- authentic magic,
- provides an information-rich, radically customizable retail experience,
- positions the retail transaction as a personal relationship -- it is the ultimate extension of the Fair Trade concept, allowing one-on-one interaction that is verifiably ethical and results in a personalized product.
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If you're interested in getting more information about this business proposal or would like to become a partner, contributor, or investor drop me a line.
