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The essay discusses mobile money and how it changes lives in developed countries, empowers the vulnerable, compensates for weak infrastructure, and makes for open knowledge exchange. According to the author, mobile money is quicker, more reliable, and less expensive than financial transactions through banks and post offices. Furthermore, the article claims that mobile money serves as a forum for structured financial institutions in countries with underdeveloped financial systems. Because of its existence and development, millions of people who do not have access to savings accounts, credit, or insurance can save for unforeseen events. According to the author, mobile money is one of the most innovative technologies that is expected to revolutionize the finance industry.
I concur with the author that mobile money plays an important role in the development of a sound financial system. I believe that developing nations should fully adopt the mobile money technology because it alleviates poverty, boosts prosperity, and generates jobs. Adoption of such a robust financial technology would give the poor confidence to invest, save, and achieve financial inclusion. Including the poor in the financial system of a country would help them manage consumption, saving, housing, healthcare, education, small businesses, and insurance in an adequate manner.
According to the article, many people in the Maldives lost their savings in the tsunami of 2004 because they stored their wealth in physical forms such as cattle, gold, and banknotes among others. In case they had used mobile money to save their funds, no one would have lost their hard-earned wealth. Reading the article reminds me of what we learned in class. We discussed how the poor are vulnerable to risk, especially in the absence of a formal insurance market. The poor use animals as banks and insurance, a phenomenon known as "livestock saving". During favorable periods, households invest in animals and when conditions become unsuitable for keeping livestock, they are sold. Livestock saving is not entirely secure mainly when farmers sell their animals during times of disaster. The prices of animals are often low or some farmers are exploited due to their situation, leading them to lose their wealth. With microfinance institutions focusing on people near or below the poverty line and those excluded from the formal credit market, those who would not have qualified for bank loans have access to different financial facilities that improve their welfare. Furthermore, microfinance institutions do not ask for collateral, which makes it the most appropriate poverty alleviation strategy to help the poor household overcome their emergency needs.
The article further mentions that mobile money is not as widespread as imagined because banks and regulators have impeded its growth. Banks fear that mobile money operators will grab a share of their market and regulators worry that fraudsters and money-launderers will abuse the mobile money scheme. Connecting to my own experience, I realized that my American friends are quite indifferent to mobile money. After talking to them, I found out that they are very confident about the American banking system because of its accessibility. In contrast, when I was in China, I frequently used mobile money in metropolitan cities such as Beijing and Shanghai to make money transfers. I used mobile money in small local businesses, large established firms, taxi rides, luxury stores, and butcher shops among others. Mobile money is ubiquitous in China, and as the article mentions, it allows small retailers to act like bank branches, a feature that is quite convenient.
Finally, it's ironical how mobile money is more popular and acceptable in nations such as Kenya, a country not known for technical innovation, than in America, a country which is synonymous with technological advancement. Why would western technology users remain uninterested while Kenyans accept money transactions over the phone? How profitable would it be for the companies to facilitate a small amount of payment?
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