According to a recent report, over 200 million migrant workers transfer money to their home towns -- using the global Western Union (with over 170,000 agents worldwide) -- and a variety of informal networks (also known as Chinese fei ch'ien ("flying monkey"), phei kwan in Thailand, hundi (Pakistan/Bangladesh), hawalah (India/Middle East), padala (Philippines) and hui kuan (Hong Kong)). Such informal networks work in a number of interesting ways, essentially, an individual pays an agent in the UK who then informs an agent (a shop keeper in Kenya, for instance) to pay an equivalent amount to another individual. According to the report, "globally, the total amount sent home by migrant workers through remittance transfers is roughly $300bn (£170bn); money sent via informal networks and money laundering is believed to add a further $150bn. Remittances far outstrip foreign aid to the developing world and can contribute up to a third of a country's GDP." With the significant recent take up of mobile phone technology in many developing countries (for instance, according to Cellular Networks, mobile subscription growth stood at 39% annually in Africa between 2005-2007, and 28% in Asia over the same period. India and China added 154 million and 143 million new subscribers respectively), G-Cash and M-Pesa are now becoming alternatives to the traditional systems facilitated through mobile telephone networks. Essentially, "Users pay cash into an `mWallet'; and whenever they want to transfer money using their phone, the recipient gets a text message, which provides them with a code to show to a local agent." With the government control that is now being exerted over informal networks (often tied to money laundering and other crimes), G-Cash and M-Pesa are more regulated, and offer an excellent alternative to traditional banking transfers (often with a 1% commission, compared to the 10%-23% or so requested by banks -- depending on the transfer time involved). Additionally, "the mobile transfer networks could also change the way humanitarian agencies administer aid, as a pilot scheme launched during the Kenyan post-election violence this year demonstrated. With the country in chaos, cattle rustlers took advantage of the security vacuum in the remote Kerio Valley to attack communities and livestock, making the transportation of food, money and materials to affected communities unfeasible. The aid agency Concern Worldwide entered into an agreement with M-Pesa, sending money to over 560 households within a month." Perhaps, mobile phone technology, used in this way, could provide an important application for sustaining communities and families relying on overseas remittances, and avoid the need for the involvement of major banking institutions (many of which seem to be collapsing right now!).
image from: http://www.textually.org/
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