Archive for November 17th, 2009

Mobile Banking lessons from Kenya

November 17, 2009

Mwangi Kimenyi of Brookings and Njuguna Ndung’u Governor of Central Bank of Kenya have a very insightful paper on how Kenya has used mobile phones to increase banking inclusion. The number of people having bank accounts and using banking services has exploded after combining banking with mobile phones.

In Kenya, the last three years have seen dramatic changes in the financial sector landscape. First, commercial banks recognized that lowering barriers to entry (no requirements of minimum balances in opening bank accounts) can increase retail accounts. Second, banks realized that lowering costs of transacting across other bank accounts attracts more customers to open accounts.

Technological innovations have now made it possible to extend financial services to millions of poor people at relatively low cost. A case in point is mobile telephone money transfer services that allow mobile phone users to make financial transactions or transfers across the country conveniently and at low cost. Kenya’s mobile payment service, known as M-PESA, provided by the main mobile phone company, Safaricom in conjunction with Vodafone, represents a good example of how low-cost approaches that use modern technology can effectively expand the financial services frontier.

How does this translate into numbers?

 As a result of these changes, the number of bank accounts has increased from 2.3 million in 2006 to about 6.7 million in July 2009. Equally, deposits increased from Ksh 540bn (US$ 7.2bn) in 2006 to Kshs 950bn (US$12.6bn) in July 2009. This growth notwithstanding, many Kenyans still do not have access to financial services.

The lessons from Kenya are:

  • Conducive Environment for the Private Sector
  • Private-Public Policy Dialogue
  • Balancing Access with Stability
  • Ensure a Contestable Market

Read the fineprint for further details.

Food security in South Asia

November 17, 2009

Surabhi Mittal  and Deepti Sethi of ICRIER have a very good paper giving an overview of food security issues in South Asian economies:

Food security is defined as economic access to food along with food production and food availability. Agriculture in the SAR (South Asian Region) is caught in a low equilibrium trap with low productivity of staples, supply shortfalls, high prices, low returns to farmers and area diversification – all these factors can be a threat to food security. South Asia still has the highest number of people (423 millions) living on less than one dollar a day. The region has the highest concentration of undernourished (299 million) and poor people with about 40 per cent of the world’s hungry. Despite an annual 1.7 per cent reduction in the prevalence of undernourishment in the region in the past decade, the failure to reduce the absolute number of the undernourished remains a major cause for concern. Estimates by the Food and Agricultural Organisation (FAO) indicate that by 2010, Asia will still account for about one-half of the world’s undernourished population, of which two-thirds will be from South Asia.

Though SAARC countries have established a food bank to meet the needs of food security in the region, it has not been operational even during times of crisis. This is despite the felt need of member nations to evolve mechanisms to make the SAARC Food Security Reserve operational.

It is against this background that this study has been undertaken. Conducted in collaboration with think-tanks from South Asian countries, it aims to identify issues relating to food security, the policy initiatives taken to tackle these issues, evaluate these policies and suggest measures to overcome identified constraints in order to improve the food security situation in the region.

It discusses the agrcultural growth and aspects of food security in each South Asian economy. Then it looks at safety net programmes in each of these economy. This compilation of the various safety net programmes is very useful.

I didn’t know that there is a Food Bank in South Asia however it has not been used. The authors then point the need to work on this food bank and increase trade for addressing food security. It should also look at agricultural research as a solution to the food woes.

A good crsip paper on food security issues.

Economic lessons from the playground

November 17, 2009

Steve Almond has a superb article on how he used economics lessons to manage his children in the playground.

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