January 2004

Microfinance and new technologies

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At first glance, microfinance and ICT appear somewhat unrelated. The former is meant for continents where almost all of the population has no access to the Internet and where half of the inhabitants die without even having ever used a telephone. ICT helps accelerate the process of communication between networks that have already achieved a high level of technical sophistication but can hardly be seen as a priority for people deprived of water, food, homes, garbage collection systems, whose countries lack proper social care services, educational structures and democracy.

The digital divide does not seem to be their primary concern, and bridging the same is given a far less priority as compared to any of the aforesaid elements.

Nevertheless, ICT can play a major role in the fight against poverty and at the same time, it is precisely in the context of the fight against poverty that these new technologies can help to reduce the digital gap most effectively.

New ICT for microfinance
The experience acquired by PlaNet Finance in this field demonstrates that development of microfinance can be achieved not only through the existence of effective, stable, transparent but also through well managed microfinance institutions capable of keeping their operating costs at the lowest possible level. In terms of execution and follow-up however, a microfinance loan is an expensive proposition. The implementation of efficient information systems and the computerization of the networks, to which the microfinance institutions belong, are hence conditions essential to both their survival and growth. They are also key factors in the transparency of their accounts and in the rating operations carried out by agencies such as PlaNet Rating.

Once connected to the Internet, a microfinance institution can create their own website and thus become more accessible to the rest of the world. The Internet also allows them to make themselves known to prospective donors while accessing on-line vocational training facilities for their staff. The web can also facilitate information exchanges with institutions that are potential microfinance gateways in their own countries, contributing to the consolidation and amplification of all of the efforts devoted to the fight against poverty.

In a nutshell, new information and communications technologies constitute essential factors in the growth and ability of a microfinance institution to build capacity and are consequently vital tools in the fight against poverty.

The contribution of microfinance to the development of ICT
Microfinance can also be a privileged way of introducing new technologies in developing countries, contributing to the reduction of the digital gap. By giving microfinance institutions access to ICT, better dissemination of these technologies in underprivileged areas can be achieved. Amongst all efforts dedicated to decreasing the digital gap, the ones dedicated to providing equipment and training, as well as to the implementation of these technologies by microfinance institutions may be stated to be the most effective. Using ICT in the fight against poverty is one of the best ways of decreasing the North-South disparity in the fields of development.

Microfinance institutions can also provide excellent opportunities to test software or specific types of equipment needed by millions of people who may not be solvent for the moment but will hopefully become so one day. This is a challenge that deserves to be taken up.

 

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