GSM Association is on the Money; with Western Union

A lot has been said and heard about the role of mobile telephony to boost the economies of developing and emerging countries, and the same is true for micro-finance, so perhaps this should not come as a surprise: the GSM Association, an umbrella association for 700 GSM operators, has announced a project with Western Union, the money-transfer specialists, under which they will roll out a P2P (peer-to-peer) framework that mobile operators can use to deploy services that enable consumers to send and receive low-denomination, high-frequency money transfers using their mobile phones. The first commercial services that make use of the framework are anticipated to be rolled out beginning in the second quarter of 2008.

Similar services have also been developed by private sector start-ups, such as P2P Cash. However, the combination of a giant like Western Union with more than 300,000 "cash points" around the globe and the dominant trade association of operators shifts the focus, in particular as the project is driven by a host of operator groups with interests in countries that will be on the forefront for such projects. They include Bharti (India), MTN (Africa and Middle-East), Orange (Europe, Caribbean, Africa), Orascom (Africa and Middle-East), Smart (Philippines), Telenor (Norway with interests in Europe and Asia, including a majority stake in Grameenphone in Bangladesh, more of which below) and VimpelCom Apparently, already 35 operators with a reach of more than 800 m customers in more than 100 countries have confirmed their participation in the programme.

The significance of small amounts of money for the development of poorer nations has last but not least been highlighted with the award of the Nobel peace price 2006 to Muhammad Yunus and his Grameen Bank from Bangladesh: it was awarded for "their efforts to create economic and social development from below". One of Mr Yunus'/the Grameen Foundation's projects was the so-called "Village Phone". A sister company of the bank holds a 38% stake in Bangladeshi mobile provider Grameenphone. And thus the circle closes...

The idea is simple: combine the two major development drivers, namely communication and money transfers and you're on to a potentially very powerful lever for economic growth. Great effort!