IBM and CARE today announced
plans to enable microfinance institutions (MFIs) in sub-Saharan Africa
to dramatically lower the costs of providing financial services to
previously unbanked populations in the region.
The two organizations will jointly establish an Africa Financial
Grid built around a shared services and infrastructure model designed
to help MFIs reduce operating costs, streamline lending processes,
scale rapidly, and integrate with other resources such as credit
bureaus, financial institutions and international payment networks.
The grid will also eventually be able to flexibly link with telcos or
other mobile payment providers in Africa to enable customers to repay
loans or carry out money transfers via mobile phones or other devices.
Over the next ten years, the Grid will help millions of people in
Africa tap into the economic opportunities that microfinance can
provide.The grid will also help MFIs expand into
additional financial services such as micro-insurance, bill pay, credit
scoring and history, and international remittances. The project will
initially target 11 countries with a combined population of more than
400 million people. As CARE and IBM build out the grid, open platform
technologies and standards will be used wherever possible so that
additional third-party services and capabilities may be offered.
"Microfinance is crucial for sparking economic development in
emerging markets," said Mark Harris, country general manager for IBM
South Africa. "Hundreds of millions of people on this continent live
on less than $2 per day, so access to even the smallest of loans can
make a huge difference in helping entrepreneurs establish or expand
their self-supporting operations. In the past, it has been
cost-prohibitive for most lenders to target this market, but the
combination of technology and expertise that IBM and CARE bring to the
table will help overcome those barriers."
IBM will design and manage the Grid's technology platform, providing
deep banking and software knowledge from its financial services
business as well as experience gained operating microfinance hubs in
other geographies. CARE will contribute substantial resources and
local infrastructure to this effort, leveraging its long-standing
experience in and contributions to the global microfinance industry,
its strong governmental relationships, and many years of experience
operating as a trusted development partner in Africa.
"Over the past 50 years of working with communities in Africa, CARE
has found that one of the most effective ways to address poverty is to
promote access to financial services such as savings and credit," said
Steve Hollingworth, CARE chief operating officer. "We believe this
partnership with IBM will open new channels for millions of people in
Africa to invest in their own futures."
IBM and CARE's decision to partner on the Africa Financial Grid was sparked during IBM's recent Global Innovation Outlook
(GIO) program, which brought together a diverse group of global thought
leaders for a series of nine brainstorming sessions about the future of
innovation and economic advancement in Africa. The need to provide
access to capital and financing to more of the African population
proved to be a prevalent theme during these sessions. Participants
highlighted the growth potential and transformative possibilities that
could be fostered if a more open, scalable, lower-cost microfinance hub
could be created and deployed on the continent.
Over the next decade CARE will provide 30 million households, or
roughly 150 million people, with access to a suite of basic financial
services, including savings, credit, insurance and remittances. This
initiative will help improve standards of living, increase investment
in income generating activities, and diminish vulnerabilities to
environmental shocks, create employment and grow economies.
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