Bill and Melinda Gates want to fix another messy global problem: banking

22 Jan 2015 | Author: | No comments yet »

Bill Gates Is About To Unveil The Most Powerful Tool In The History of Social Activism.

SEATTLE – Melinda Gates says she and her husband, Microsoft co-founder Bill Gates, are most likely going to see their hometown team play in the Super Bowl. On the occasion of Bill and Melinda Gates’ annual public letter, Quartz asked Bill Gates for advice on what parents of young children should focus on. “You can certainly control your kids’ exposure to being read to and encouraging them to read. Their friend and Microsoft co-founder Paul Allen is the owner of the Seattle Seahawks, so they shouldn’t have any trouble picking up some tickets to the game on Feb. 1 in Arizona. And the breadth of vocabulary and amount of discussion—taking whatever they’re curious about and giving them time to talk to them about those things.

The Gates foundation’s seventh annual letter includes several “big bets” from the philanthropists on what they predict will be the big breakthroughs in global health, education and agriculture. As the world decides on the most crucial goals for the next 15 years in defeating poverty, disease and hunger, the $42 billion Gates Foundation announces its own ambitious agenda. (AP Photo/Seth Wenig) (The Associated Press) Melinda Gates listens while her husband Bill Gates talks during an interview in New York, Wednesday, Jan. 21, 2015. There’s the genetic elements and there are the environmental elements, and those exposure times—breadth and depth—clearly have long-term impacts.” His answer is noteworthy, given the years and funding that the Gates Foundation has devoted to improving education.

Specifically, Gates and his wife Melinda, who co-wrote this year’s letter, will commit to fund the creation of a massive self-registered database of “global citizens,” who will detail the causes and topics that interest them. Their argument is predicated on advances in agriculture, health—including progress against youth mortality, polio, malaria, and HIV—and access to education, including online courses delivered to children in the developing world via cellphones.

The progress we’ve seen so far is very exciting – so exciting that we are doubling down on the bet we made 15 years ago and picking ambitious goals for what’s possible 15 years from now.” The world will have a vaccine to prevent people with malaria from spreading it to the mosquitoes that bite them, a single-dose cure that clears the parasite completely out of a person’s body, and a diagnostic test to show whether a person is infected with malaria. But we’re using that as our entry point to draw them in.” Gates says the database number will be in the “millions” and he’s not messing around – Gates Foundation executives have been telling non-profits that the number will far exceed 10 million by this summer.

And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance. The Gates Foundation’s own ambitious 15-year agenda, spelled out in its new annual letter, foresees the elimination of polio and three other diseases and says Africa will be able to feed itself.

Instead, Gates tapped the Global Poverty Project, which runs the annual Global Citizen Festival in Central Park and has pioneered a model of using incentives, such as concert tickets, to register people willing to take social actions. The foundation has previously provided funding to help the spread of the M-Pesa mobile-money service pioneered in Kenya, and invested in bKash in Bangladesh. “The thing we’re trying to create is essentially a debit card with your cell phone where you have transaction costs for digital transfers under 2%,” said Bill Gates in an interview with Quartz. “So whether it’s savings or transferring to other accounts or taking out loans, you have that basic capability, and innovators can do educational or agricultural offerings on top of that.” The consumer survey data below for Tanzania from Financial Inclusion Insights show the relatively low usage of traditional banks and high cell-phone penetration. GPP will serve as the database gatekeeper for what Gates terms “a big tent,” which encompasses everything from Greenpeace to a relatively small national organization from Sri Lanka. Having access to savings banks, loans, and cheap money transfers is important for the poor because it allows them to better weather financial shocks—brought on by poor growing seasons, for example—that make it hard to feed their families, get health care, or educate their children. “It’s the savings piece that we saw as so fundamentally key in this, that people can make these micropayments in their own accounts where they’re saving money,” said Melinda Gates. “Then when they go through these hunger seasons that happen every year in Africa, they can tide over in the hunger seasons in terms of buying food. They’ll navigate the “somewhat political” process of determining which groups can access which names without throttling any registrant with more than what the Microsoft founder estimates might be 3 to 4 emails in the first six months. (Disclosure: GPP CEO Hugh Evans is a Forbes 30 Under 30 alumni, and I’m on the board of GPP, though I had nothing to do with the Gates partnership.) At some point, the list will presumably open up to even smaller groups who pass muster.

But they really talk about then being able to have the school fees, when it comes time in the fall to pay the school fees, they don’t have to sell a cattle or a piece of jewelry or hope that the money is still around under the mattress. Says Gates: “The dream is to have people in the big list declare, ‘OK, I’m particularly interested in the environment.’ And then we go to Al Gore’s people or whatever, and say, “OK those people, you figure out what messages go to them.” If they say health, OK we’re enough of a fair broker in the health game that we can come up with a finite set of messages that would include all the health people, if it’s hunger, if it’s education, and how you partition that out the right way. It’s also more cost-effective for financial institutions, since it’s otherwise not worth the overhead expense for them to handle tiny accounts and money flows.

Traditional micro-finance—which typically requires a network of staff spread out in rural areas to dispense and manage the loans—has higher transaction costs than mobile banking, and can’t scale to reach as many people. Are we really making progress?” The UN will be meeting in September to hammer out a new 15-year plan, with the goal of ending extreme poverty by 2030, and Gates has been thinking about how to use the Global Citizen initiative to leverage that moment: “Do you have companies make commitments to these goals? So there’s a lot of dialogue about, what does it look like digitally on September 15?” In lockstep with the UN’s timetable, Gates spends most of the foundation letter focusing on where he and Melinda see the world in 15 years. He elaborates on how close the foundation is in its effort to eradicate polio, and singled out malaria as the next major disease the foundation wants to help conquer. “That one is very much in our sights,” says Gates, who intends to see the mosquito-borne plague erased in his lifetime. “Huge level of investment.” He also cites climate change, which he tackles through personal investments, mostly in battery and solar companies. But he’s skeptical that an explosion of consumer finance in poorer countries will give rise to serious rivals to the existing global banks, because regulations in the developed world are a big hurdle.

He adds that these energy investments are coming in at “an increasing level” — perfectly consistent with the rest of activities of the world’s richest person, who clearly views 2015 as a year, not of theory or reflection, but direct action.

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