Improving Microfinance Through Telecommunications

This article describes how the village phone can be used by rural poor to sustainably benefit from information and communication technologies (ICT). It explains how village phone operators can set up strong, thriving businesses. Private businesses benefit as they provide financial services to operators by tapping a previously inaccessible market, while governments meet their rural telecommunications access demands. Individuals living in rural communities gain access to affordable telecommunications services, linking them to their friends, family, business contacts, and the world. The article shows that success in using information technology as a tool of development depends on three factors, viable and locally determined business models, effective private-public partnerships, and proactive government regulation. Some of the other lessons include:

• Understanding the needs of the local community and involving them in the process enables an appropriate technology solution to be implemented;
• Makeup and development of services should be driven by the local market, beginning with the most basic services;
• Village phone model is more easily adapted to the developing world since issues such as electricity or access to the mobile network can be solved with solar power, car batteries, and antennas.