New US Aid fund for mobile banking in Haiti

US Aid and the Bill and Melinda Gates Foundation have begun a fund to encourage mobile banking services in Haiti. 10 million dollars will be awarded to several different companies who will start up mobile banking services. Only 40 percent of Haitian residents have mobile phones but that number is far greater than regular land lines.

From the Seattle Times blog The Business of Giving, writer Kristi Heim explains the new program.

Modeled on the success of services such as Kenya's M-PESA, mobile money is considered safer than cash and can encourage savings.

The first company to launch a mobile money service in the next six months will receive $2.5 million, and the second operator launching within 12 months will receive $1.5 million. Another $6 million will be divided between the operators that perform the first 5 million transactions, based on the number they carry out.

USAID Administrator Rajiv Shah teamed up with his former employer on the project.

The Gates Foundation is putting up the $10 million, while USAID said it will offer $5 million worth of "technical and management assistance and other funding," through its existing Haiti Integrated Finance for Value Chains and Enterprise (HIFIVE) project.

More than a third of Haiti's bank branches, ATMs, and money transfer stations were wiped out in the earthquake, causing cash shortages. Even before the quake, less than 10 percent of the population had ever used a commercial bank, Shah said.