With mobile banking taking off around much of the developing world, how long will it be before international aid is delivered electronically? Sound crazy? If you think so, you might be surprised to hear that it's already started happening.
Getting aid directly to those who need it in the most timely and efficient manner possible is a topic that's always fascinated me. For some time I've taken particular interest in the level of "overhead" (costs) that charities take from their donations, particularly the ones I give to. Long ago I came to the conclusion that, wherever possible, I was going to give -- either in the shape of a loan or a donation -- directly to organizations working on the ground, by-passing as many middle-men and -women as possible. That's been a relatively easy exercise for me, since I've been fortunate enough to visit many grassroots conservation and development projects in the course of my work. This gives me the personal connection and level of trust required to take such a leap of faith before waving good-bye to my hard-earned cash.
For those who don't have that connection, there are organizations like Kiva, which cleverly solves the problem by linking lenders in the "developed" world with borrowers in "developing" countries through the Internet. Rather than giving handouts, individual lenders -- that's me and you -- can select an entrepreneur in a developing country and choose to lend them money to help build their business. Currently Kiva take no overhead on the loan amount, although with a commitment to reach full sustainability by the end of the year this might not remain the case for much longer.
The beauty of Kiva is that lenders get a real sense of connection with the person receiving their money, something sadly lacking in more traditional charitable relationships. I, for one, have no idea who ended up benefiting from my last Salvation Army donation, for example.
As our ever-expanding digital world slowly reaches some of the poorest and marginalized members of society, opportunities to deliver financial aid to them electronically becomes less myth and more reality. Mobile phone users in a growing number of developing countries can already pay for goods and services wirelessly through their mobile phones, and there are few technical challenges in allowing someone in the UK, for example, to make a direct donation to a user in Kenya by way of airtime credit to their phone. Just as the Internet redefined the way we shop, the mobile phone will likely end up doing the same for international aid.
Handing out money electronically isn't always going to be the answer, of course, but it may be in surprisingly more cases than you think. In times of famine or hardship, for example, the typical Western response is to send over plane-loads of food aid. Although this might seem like the most logical thing to do, often it overlooks the chief cause of famine. Lack of food generally comes below politics, political instability, access to resources and markets, and civil conflict in the famine equation. In other words, it's rarely about a simple lack of food. And flooding a country with food aid creates its own problems, from feeding the militia in conflict situations to destroying what's left of the local and national agricultural market systems. The problem is considered so serious that last summer CARE International turned down a US government donation of US$45 million in food aid.