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Double dividend

Can poverty be eradicated with the click of a mouse? Surely not, but technology certainly could become a powerful ally in the fight against poverty by making markets more transparent, improving living conditions for the poor, and strengthening their purchasing power.
 
At a recent seminar at the IDB, Allen Hammond, director of the Digital Dividend Project at the World Resources Institute, highlighted several projects whose strong technological component is helping to alleviate poverty in Latin America, Asia and Africa. These projects not only provide high quality services for clients, but also profitable for the sponsoring organization.
 
One example is in Bolivia, where many people now have access to the banking system for the first time in their lives thanks to a debit card recently launched through 50,000 ATMs. The ATMs "talk" to the users instead of showing them information on a screen. This has proven extremely useful, since over 25 percent of customers are illiterate. Users can even choose the language they wish to use: Aymara, Spanish, or Quechua.
 
The system, created by a local company called Prodem that specializes in microfinance, is paying double dividends. On one hand, the company earns dividends from the yearly $7 maintenance fee it charges each customer; on the other, users have gained new access to new banking services including 24 hour-a-day access. Fraudulent practices are almost nonexistent, since cards use the costumer’s fingerprint for identification instead of a punched-in password. This also helps to simplify the process for a population not used to technology.
 
Customers highly value this service. During the recent period of civil unrest in Bolivia, not a single one of these ATMs was damaged or destroyed. Customers themselves protected what they consider a useful tool. "When have the poor defended a bank"?, asked Hammond during his presentation, reflecting on this and other socially responsible businesses innovatively incorporating technology.
 
The Bolivian case is not isolated. Before selling their products, thousands of soy growers in India check prices for the local and international markets at a community center with Internet access. The online information center also gives them the weather forecast and allows them to download studies and reports on fertilizers or pesticides.  The project is called E-choupal, and the company that launched it, ITC, has discovered a business opportunity in providing a valuable service to a segment of the population that has been traditionally excluded from any kind of technological initiative. Once again, all parties benefit. Producers profit from selling their crops at better prices, and ITC gains access to a market of thousands of agricultural producers.

These noteworthy innovative projects are part of a growing trend. Private organizations and companies are increasingly putting technology in the hands of the poor, improving living conditions and obtaining financial gain in the process.
 
Hammond noted that the potential market for these activities is vast, as some 4 billion people throughout the world earn less than $2,000 a year. Potential customers for these projects may be relatively poor on an individual basis, but collectively they have billions of dollars to spend.

The seminar was sponsored by the Information Technology for Development Division at the IDB’s Sustainable Development Department.