Internet, mobile phones can help reduce poverty – UNCTAD

THE Internet and mobile-related micro-enterprises are offering more hope for escaping poverty in the Philippines and other developing countries, according to the United Nations Conference on Trade and Development (UNCTAD).
In a study titled, “Information Economy Report 2010: ICTs, Enterprises and Poverty Alleviation,” the UN body said that on the back of the widening diffusion of information and communications technologies (ICTs)—especially mobile telephones—new micro-enterprises are mushrooming in developing countries, creating new livelihoods for the poor.

This micro-enterprises include selling airtime on the streets, refurbishing mobile phones, repairing personal computers and running cybercafés.

In some developing countries, the UNCTAD report said that mobile phones now allow people without bank accounts to make person-to-person payments, money transfers and pre-paid purchases.

It cited Globe Telecom and Smart Communications Inc. as pioneers in mobile money offering GCash and Smart Money, respectively.

With some three out of four Filipinos without traditional banking services, UNCTAD said that mobile-money has stepped in to fill the void with 10 million subscriptions in 2008.

“Around half of mobile-money users in the Philippines do not have traditional banking services and almost one in four live below the poverty line,” it added.

UNCTAD said that the country’s poverty rate in 2005 stood at 22.6 percent, or 19.13 million poor Filipinos.

“Mobile-money services seem to have been taken up quickly by farmers and are used extensively to facilitate trading in rural areas,” it added.
A study from the Consultative Group to Assist the Poor (CGAP) said that mobile-money services were on average 19-percent cheaper than formal banks.

“Mobile-money has also been credited with reducing the risk of theft since users do not have to walk around with large sums of cash,” UNCTAD said.

Rizza Maniego-Eala, the president of G-Xchange, the wholly owned mobile commerce subsdiary of Globe, said that the company has a monthly value transaction of P5 billion for its GCash service.

Globe on Thursday launched GCash Card, the first customizable ATM card linked to a mobile wallet in the country, giving its subscribers 24/7 access to GCash.

In the Philippines, the Bangko Sentral ng Pilipinas approved the process of mobile money transactions in a wider number of outlets.

In the case of GCash, this covers some 18,000 outlets including sari-sari (variety) stores, pharmacies, Internet cafés, food establishments, rice dealers, farm and poultry stores, gas stations and multipurpose cooperatives.

CGAP estimated that there are at about 4 billion “unbanked” people around the world, and 1 billion of the people who do not have a bank account have a mobile phone.

UNCTAD said that business process outsourcing (BPO) has the potential to contribute to poverty reduction.

Its report mentioned outsourcing and offshoring as a potential source of employment and export revenues.

In the Philippines, BPO export revenues rose from $100 million in 2001 to $6 billion in 2008.

The BPO sector employed about 400,000 people in 2008 and expectations are for this number to grow to more than 900,000 by the end of 2010.

In addition, the country’s ICT manufacturing industry employed some 222,000 people in 2005, corresponding to about 22 percent of the entire manufacturing workforce, and 23 percent of total wages and salaries paid in the manufacturing sector.

ICT exports have soared, amounting to $27 billion in 2008, or more than half of the country’s total merchandise exports. –Darwin G. Amojelar, Senior Reporter, Manila Times