Oct. 22 Zoom Event - Financial Legacies: Slavery and the History of Banking

A redlining map of Los Angeles in 1939.

UCI Humanities Center presents The 1619 Project in 2020

Financial Legacies: Slavery and the History of Banking

October 22, 2020 | 5:00 PM-6:30 PM PT

 Register: http://socs.ci/1619financiallegacies

Moderator:

     • Keeanga-Yamahtta Taylor (Princeton)

Speakers: 

     • Bill Maurer (Social Sciences, IMTFI Director)

     • Peter Hudson (UCLA)

     • Mehrsa Baradaran (UCI Law)

This event is 60 minutes and will include a Q&A session. For those who are interested, please stay for a bonus 30 minute facilitated discussion.

Discussion Facilitators:

     • Tonya Bradford (Business)

     • Mrinalini Tankha (Portland State University)

Suggested Podcast/Readings:

• Matthew Desmond, “If you want to understand the brutally of American capitalism, you have to start on the plantation,” The 1619 Project And Photo essay by Dannielle Bowman; text by Anne C. Bailey

• Mehrsa Baradaran, “Mortgaging the Future,”  p. 32; “Good as Gold,” p. 35; and “Fabric of Modernity,” p. 36

• Tiya Miles, “How Slavery Made Wall Street,” p. 40

• Trymaine Lee, “A vast wealth gap, driven by segregation, redlining, evictions and exclusion, separates black and white America,” The 1619 Project

• 1619 Podcast 2: The Economy that Slavery Built

To read the 1619 Project, see:  (www.pulitzercenter.org/sites/default/files/full_issue_of_the_1619_project.pdf)

To access the podcasts, see: (https://www.nytimes.com/2020/01/23/podcasts/1619-podcast.html)

Access The 1619 Project Curriculum through the Pulitzer Center: (https://pulitzercenter.org/lesson-plan-grouping/1619-project-curriculum)

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The 1619 Project in 2020

#UCI1619Project

The 1619 Project, published by the New York Times, retells the history of the U.S. by foregrounding the arrival 401 years ago of enslaved Africans to Virginia. Through a series of essays, photos, and podcasts, the 1619 Project charts the impact of slavery on the country’s founding principles, economy, health care system, racial segregation of neighborhoods and schools, popular music and visual representations. Conversations around the 1619 project have served as a flashpoint for intensive ideological debates about its content and impact. It has been both widely lauded and subjected to critiques from academics, journalists, pundits and policymakers who challenge its accuracy and its interpretation of history. Conservative politicians even seek to defund schools that teach the project. What is the power of the 1619 Project to reframe our understanding of U.S. history and our contemporary society? How might we go beyond the 1619 Project to develop an even fuller understanding of the centrality of slavery and race in the U.S. and in the broader Atlantic world?  Join us for month plus exploration of The 1619 Project, which culminates in the visit of Nikole Hannah-Jones, the Pulitzer Prize winning author of the project.

The 1619 Project series is presented by UCI Humanities Center and is co-sponsored by: UCI Illuminations: The Chancellor’s Arts & Culture Initiative, UCI Black Thriving Initiative, School of Humanities, Claire Trevor School of the Arts, School of Education, School of Law, School of Social Ecology, School of Social Sciences, UCI Libraries, Academic English, Composition Program, Center for Latin American Studies, Center on Law, Equality, and Race, Center for Medical Humanities, International Center for Writing and Translation, Literary Journalism and Center for Storytelling, Office of Inclusive Excellence, Student Affairs, Staff Assembly, AAPI Womxn in Leadership and Academic and Professional Women of UCI.

Libra's biggest problem? Facebook

Bill Maurer, IMTFI Director, anthropology and law professor and social sciences dean in Wired, Dec. 5, 2019

Credit: Mike McQuade

Digital currency Libra needs Facebook's global reach to succeed, but the social network is also the biggest driver of its backlash. As regulators gather, controversy reigns.

…As the controversy rages on, Bill Maurer, the dean of social sciences at the University of California, Irvine, sees a missed opportunity to have necessary discussions about important issues with the world’s financial systems and the impacts on democracy. “In a way, I think, unfortunately, because it is Facebook, it's just, ‘get them in front of us on the TV cameras, and let's yell and scream at them about privacy and security’,” he says.

For the full story, please visit https://www.wired.co.uk/article/libra-cryptocurrency-facebook.

Mobile money and savings in Mali: A potential leverage effect for greater bank access

Mariam Sangaré (with Isabelle Guerin)

In this blog post we discuss the relationship between the use of mobile services and access to other financial services, particularly savings services and bank account holding. Our purpose is to show, on one side, how Malian users try to fit available mobile financial services to their saving needs, and on the other, to what extent mobile money can be a vector of greater bank access through the development of mobile savings. Our analysis of mobile money users’ financial profiles sheds some light on these questions.

The market for mobile financial services is witnessing a significant growth in Mali and the UEMOA zone in general.(1)  Between 2013 and 2014, the value of transactions increased by 122%, reaching 3,760 billion CFA francs at the end 2014 for 259.3 million operations. Mali occupies the second rank in the zone in terms of transaction value, with 20% out of 3,760 billion CFA francs. The country is even ranked first in terms of P2P transfers, realizing 47.48% of operations value in this category (BCEAO, 2015). Two mobile network operators (MNOs), Malitel and Orange-Mali, share the Malian market. Both offer mobile transfer and payment services.

Mobile networks presently cover more than 40% of the territory and 40% of the population uses a mobile phone. In this context of low bank access and growing mobile phone utilization, the aim of our IMTFI-funded project has been to assess how mobile services are contributing to financial inclusion in Mali.

Very frequent billboards on access to Mobile (here Mobile wifi) at the side of an avenue in Bamako. 
(Picture from the field, Mariam Sangaré)

Access to the mobile network can contribute to financial inclusion through three possible channels. First, mobile financial services can increase the range of available financial services, thereby providing broader choice and eventually lowering prices. A larger suite of mobile products can benefit the entire population, independently of access to banks or other financial service networks. The second channel impacting financial inclusion are the linkages of banks to mobile users, which can facilitate access to bank accounts by reducing information requirements. Finally, competitive pressure may incentivize banks to win new customers by developing competing or complementary mobile services.

Traditional pottery of Mali. (Picture from the field, Mariam Sangaré)

From our observations in Mali, only the first channel is running, with the development of P2P transfer services proving to be valuable in the Malian context. However, the potential of this channel to lead to greater bank access remains limited. Indeed, the current bank/MNO cooperation model in supplying mobile services has so far not resulted in a lasting connection between banks and unbanked mobile users. The current cooperation between MNOs and banks is limited to the interface with the central bank, which guarantees electronic money. Our field data in Mali show that users of mobile financial services already possess a bank account, rather than the mobile account generating new bank accounts. This suggests that the use of a mobile account has not improved access to banks for new populations in Mali.

Retail trading in Bamako. (Picture from the field, Mariam Sangaré)

More generally, the financial profiles of our sample of 300 respondents (22% of whom are women) noticeably show that users of mobile services are very dynamic in their use of formal and informal financial services. We observed that 40% of respondents hold a bank account. This figure is largely above the level of bank access in the total population (which is less than 11%). Furthermore, the gender dimension in bank access is significant here: 73% of women in the study do not have a bank account compared to 56% of men, despite the higher education level of women in the sample.(2)

A young man making a transaction
with an Orange Money agent in Bamako. (Picture from the field, Mariam Sangaré)

A second important observation based on respondents’ financial profiles is the prevalent use of informal saving groups by men as well as women: 32% of the sample is a member of a ROSCA or other savings association. This figure is quite high given the greater participation of men in the study; women, 67% of whom are members, are culturally more accustomed to take part in these clubs than are men, but are less represented in our sample. In the Malian context, the search for adequate means of saving appears to be one of the reasons that men and women are juggling between different financial services.

Indeed, the high demand for savings options actually calls for improved access to banks, because in Mali MNOs are not allowed to offer savings or investment products, which are available only through banks. Unless the mobile phone succeeds in creating a more sustainable relationship between users and banks, its effect will be minimal in facilitating clients’ access to an adequate suite of savings options.

Reliance on cash in the largely informal economy is one of the important elements impacting the adoption of mobile money in Mali. Our study suggests that mobile services in Mali are attracting people who are accustomed to bank relationships and who are generally used to “hiding” their money. These users are better able to arbitrate between multiple services to choose the one best suited to their needs. For example, 88% of the respondents in our sample declared having access to other informal and formal transfer means like bank transfers, road haulers or "hand-to-hand" sending. But only 32% actually use them in parallel with mobile transfer services. The majority ends up choosing mobile transfer due to its safety, speed and often lesser cost relative to the alternatives.(3)

In the present context then, it seems that “bank educated” users are benefiting more from mobile financial services than the unbanked. For example, users with accounts at the partner bank of Orange Money (BICIM-Mali) can now make transfers free of charge between their mobile wallet and their bank account or vice versa. With the current trend in the development of mobile payment services, the gap between the banked and unbanked may increase if mobile phone use does not encourage new linkages between banks and mobile users. Users already accustomed to bank accounts will easily follow the trend, while those dependent on cash and without formal access to banks will have trouble. The model of commissions sharing between banks and MNOs for the m-payment service may privilege those already included in the formal financial system rather than encouraging unbanked mobile users' full access to banks.

A typical multi-selling point, with the storekeeper serving as agent for different money transfer services

 in addition to his grocery trade. (Picture from the field, Mariam Sangaré) 

Our study underscores the saving potential of mobile users, which can be beneficial to banks. We observed in Mali, as studies have shown in other contexts, that respondents frequently use the mobile wallet for precautionary savings. In this sense, mobile transfers largely feed mobile saving in Mali. Mobile transfers are in fact a form of saving with the mobile phone, one that banks could channel toward greater financial inclusion.

We conclude that given the extent of mobile network access and use in Mali, the development of new operating models between banks and MNOs could help to achieve a higher level of financial inclusion. These models must involve greater synergies between MNOs and banks, and facilitate more information and experience sharing in order to develop a wider range of bank services that can be extended to mobile users. The operational model based on partnerships between banks and MNOs is diversifying the scope of mobile financial services in the most mature markets in Sub-Saharan Africa. Mobile savings and short-term credits are now possible in leading markets like Tanzania (GSMA, 2015)(4). In the partnership model, each partner takes advantage of their strengths in reaching new customers: the mobile networks have the advantage of technology, physical access and operational costs reduction, while banks bring the necessary licenses and experience for savings collection and credit disbursement. Exploiting synergies is thus a key element in speeding up financial inclusion and can impact considerably the level of accessibility and diversity of mobile financial services.


Notes 
(1) BCEAO, (2015), Situation des services financiers via la téléphonie mobile dans l’UEMOA, BCEAO ; 24 pp.
(2) In the sample, 71% of women have at least a secondary school level, compared with 43% for men.
(3) Nevertheless, we point out that the price of mobile financial services is considered too high for users, as a large part of our sample (29%) reported that high cost is the greatest inconvenience in using them.
(4) GSMA (2015), State of the Industry: Mobile Financial services for the Unbanked, 2014 Report. http://www.gsma.com/

Read Mariam Sangaré's final report “Mobile money and financial inclusion in Mali: what has been the impact on saving practices?”

Going to where the Women are: Insights from the Making Finance Work for Women Summit in Berlin, Germany

By Ursula Dalinghaus, IMTFI Postdoctoral Scholar

BMZ Berlin, Germany (Photo Ursula Dalinghaus)

On November 11th and 12th I attended the Making Finance Work Summit in Berlin, Germany, co-hosted by Women’s World Banking and the BMZ (Federal Ministry for Economic Development and Cooperation). At a time when Germany is responding to its own financial inclusion challenges with regard to integrating refugees from war-torn Syria, the agenda of closing the gap in formal financial inclusion globally could not be timelier.  

In his welcoming remarks, Thomas Silberhorn, Secretary for the Federal Ministry for Economic Development and Cooperation, began with an oft-cited quote in Germany by Fyodor Dostoyevsky, “Money is coined freedom,” noting that "access to this freedom, access to money is key” for addressing the summit topic of making finance work for women where global access to financial services is uneven and unequal between men and women.

Speakers across the panels emphasized the importance of getting to know women’s priorities as entrepreneurs and for their households. Research cited showed that women made 70% of household decisions and invested 90% of their income in the household. And yet as some speakers pointed out, the reason for the summit was the paradoxical statistical finding that women still remain largely underrepresented in, and excluded from, formal financial channels and services, from the boardrooms and decision-making entities of financial service providers, and from impact investments.

The story of women entrepreneurs who conduct business literally at the doorsteps of banks and yet do not have bank accounts was picked up by many at the summit as a powerful metaphor for showing the gap in formal financial inclusion as one not only of access but acknowledgement of a whole constellation of women’s concerns around access, empowerment, and autonomy.


"A BETA Way To Save Pilot"

A BETA Way To Save (Photo Women's World Banking) 

Several panelists also emphasized a need for financial products and services that target and reflect women’s priorities and needs, especially for saving and greater autonomy over household income. Diamond Bank and Women's World Banking's pilot study, “A BETA Way to Save,” stood out as a successful case of a commercial bank adapting to this market segment and their existing practices. Low-income self-employed women vendors in the Balogun market in Nigeria continued to rely on informal financial services for savings and short-term loans. But the problem was not only one of access; women experienced emotional distance too. The BETA Savings product moved the bank closer, physically and emotionally, to where women already are. By bringing the doorstop of the bank to the women, with regular visits by BETA agents to the market stalls, women vendors no longer faced the logistical problem of leaving the market stall to deposit savings in the bank and the time-consuming security measures this required.

In the session, How Can Technology Drive Financial Inclusion for Women, Anna Gincherman (Women's World Banking) explained how the BETA Savings pilot “developed a product that mimicked the informal sector.” BETA “replicated” the informal susu system found in Nigeria and West Africa. Adapting the informal financial practices of savings deposit schemes known as “susu,” or here “ajo" (“daily contribution scheme”), she noted that we can learn from the informal sector “in creating a better proposition by employing a sales force of ‘BETA friends’ collectors that go around every day opening accounts using mobile technologies, so it's solving that issue of mobility.” BETA (or “good”) saving accounts integrated the face-to-face interactions of agents (BETA Friends) with the opening and maintenance of accounts using mobile technologies and other financial tools.

Photo Diamond Bank

Accounts were easy to open and maintain, enabling interpersonal deposit and withdrawal transactions in addition to traditional and mobile-based channels (such as ATMs and mobile transfers). Women could check and observe how their accounts were updated in real time, building trust in the system. Women earned interest on their deposits and could enter lotteries for cash prizes and other rewards by keeping money in the system. The bank created its own platform rather than partnering with MNOs to create a multichannel hub that could provide a seamless user experience. Marketing of the project used simple everyday language rather than “bank” language and BETA agents had a variety of means available to educate clients about the product and technical use, supplemented by financial education, “BETA Talks.” BETA Friends agents were the key success factor. The technical aspects worked because human agents could explain, connect, and build trust with clients, supplementing technology with face-to-face interaction. From the provider perspective, the scale and incentives for local agents who interact with clients was an important part of the design, one that is hoped can be scaled up.

Key Takeaways
I was impressed with how the ‘BETA’ case study resonates with the findings of many IMTFI projects affirming how social relationships and new technologies work together. Eric Osei-Assibey’s related research in Ghana on Susu collectors and mobile money also showed the importance of face-to-face interaction as the basis for trust in savings and repayment strategies that could not be captured by the phone. Mobile phones and other new financial technologies reflect and remake women’s social relationships. New forms of inclusion empower women, such as making the household budget a subject of intra-household dialogue between men and women. Greater inclusion may also create new hierarchies and tensions in the household that women must negotiate anew. The importance of “the human factor” for how low income earners are adopting new technologies requires ongoing research as new products and services are designed.*

Another key takeaway for me from this panel on digital inclusion, then, is that programs like the BETA pilot which take into account these local practices may only be sustainable in the long term if they can be scaled up, and only if they can provide an affordable and reliable service for users while also making money for the bank. On the same panel, Liz Kellison (Bill & Melinda Gates Foundation) underscored that "the solution to inclusion is digital. Without it, it will not be possible to reach the necessary scale." Developing products with women’s needs in mind means they can be “accelerators” but this depends on "making sure we have the rails in place to offer digital financial services -- the rails, the rules, the regulations. As soon as we do that then we have to think about the players that could be using this ecosystem.” Kellison noted that conditional cash transfer and support programs like those in South Africa and India show how digital payments can scale up to connect governments and citizens.

This goes hand-in-hand with the rollout of identity and biometric programs that can ensure women’s ability to open and access their own accounts. Louise Holden (Master Card) reminded listeners at the summit of the startling statistic that women are not only financially but also legally excluded, with even more women without the legal identity (or in some cases eligibility to secure one) necessary for transactional banking. “Legal identity and digital identity are fundamentally linked. It’s fundamental.” Holden views Fintech as a solution and described the South African case where multiple welfare programs could be linked through technology available on and offline and provide “proof of life” identity checks necessary for pension payouts, as one example.

Worn-down fingerprints of Rickshaw pullers in Delhi 

illegible to biometric scanners (Photo Mani Nandhi/Liz Losh)

The importance of IDs for accessing formal financial services is crucial and one that IMTFI researchers have also been documenting. But like digital inclusion, the challenge is not only one of access. In India, where a national biometric ID program  (AADHAAR) continues to be rolled out, programs seeking to formally include every citizen must take into account how biometric cards pose important questions about “stable identities” or how some forms of labor erase the physical signs by which unique identities are verified.

Greater digital financial inclusion also raises new questions about data protection as a public good. In the Q&A one participant asked how end users might monitor how their data is used. Louise Holden noted that data integrity is reputation; “data allows the network to be secured.” Tom Delucca (AMP Credit Technologies) added that paradoxically, the greater a “data subject’s ability to pick and choose what data is used, the less reliable for us who wish to use it for purposes which are beneficial to you as the data subject.” Paying attention to women clients’ needs and preferences, as well as to the gendered and social relations of which financial technologies are a part, is important to answering these questions, improving design and adoption, but also observing how women are negotiating these new credit and data relations.

The importance of collaboration, partnerships, and shared incentives between commercial providers, states, and regulators was an important theme throughout the summit. Low-income women, the target segment for these entities, should be seen as a partner. In an earlier panel on targeting women as a new growth segment, Debra Mallowah (Unilever Africa) picked up the thread about “who owns the customer?” saying, “Don’t tell her you own her. You need to get in a relationship. Create the love. Understand her influence and power.”

The Making Finance Work for Women Summit generated a productive forum for fostering dialogue around client-centric design and how it is working on the ground, from different provider perspectives. I was encouraged by how the partnerships showcased across the panels, as well as the careful research being done on the ground by product developers, service providers, and analysts from a variety of institutions, are placing target communities front and center. Going to where the women are means empowering while taking seriously locally specific needs and practices in the collaborative endeavor to close the financial inclusion gap.

References

*p. 11, Osei-Assibey, Eric (2014) What Drives Behavioral Intention of Mobile Money Adoption? The Case of Ancient Susu Saving Operations in Ghana. IMTFI Working Paper

For Women’s World Banking blog posts on the summit panels, see the Women's World Banking Blog and to view panel videos from the summit, see Quick Cuts from the Making Finance Work for Women Summit 2015 

Revisiting IMTFI Researchers: Rickshaw Pullers in Delhi with Mani Nandhi

In March of 2015 IMTFI arranged for a comprehensive visit to India to gather updates on four of their sponsored research projects, introduction can be found here. This first of the four case studies takes a look at rickshaw pullers in Delhi with Mani Nandhi. 

For IMTFI researcher Mani Nandhi, the first research questions about the rickshaw pullers of Delhi grew out of her own personal experiences with a rickshaw puller. "When I went out of my colony – to go shopping, to go to the bank – I didn't have much time, so I took the rickshaw. I came to ask him questions about his background, and why he came to this work, and I learned about the rickshaw pullers’ lives, the harsh conditions, and why they migrate here. In some ways, it’s the easiest occupation to take. There’s no entry barrier. You just had to be taken to the contractor and pay the hiring charges for the day.” Trained as an economist Nandhi also manages the administrative responsibilities as a department head at the Department of Commerce at Jesus and Mary College in New Delhi. Her commitment to studying financial inclusion has always been driven by human interests.

According to statistics there are about 8-9 million rickshaw pullers in India. Out of these, only one million hold licenses, and fewer than 10% of those in the occupation own the rickshaws that they cycle. Despite the country's rapid modernizing, human-powered transportation remains an important part of urban living, particularly to fill in the gaps in existing public transportation of bus lines and metro networks.

As I travel with Nandhi to a rickshaw pullers’ camp, I notice the obvious affection they have for her. They mostly call her by the familiar but respectful “Auntie” (rather than the more usual and impersonal "ma'am" or "madam"). There is considerable laughter, joking, empathy, and personal attention in the interactions as Nandhi inquiries about particular men, some of whom are back at their villages and some of whom have been in trouble with the law. The conditions in which the men live in the encampment indicated their marginal economic status, even though government-funded toilets had introduced improved hygiene conditions in the camp, and the men were diligent about sweeping garbage out of our way and shooing away feral dogs.

As Nandhi explained, “I started at Microfinance Research Alliance, and we were asked to apply for IMTFI funding . . . It suddenly struck me that I have a very important segment, which we could study – with interesting demographic profiles, ways of saving, and financial practices. I knew the group of pullers who would stay outside my colony. I was chatting with them when I was preparing my abstract, learning about their informal practices, how there was no easy option to remit.”

Like other IMTFI researchers in India, Nandhi emphasized the importance of doing qualitative as well as quantitative research. "In my pilot study I had a very long questionnaire and two research surveyors. I decided on areas that I had to explore, areas that I could get pullers for my sample. In my test questionnaire – where I found problems – I got to know about remittance channels, including about the Eko channel, in which money has to be collected."

"They used the hawala channel to send money," Nandhi said, referring to a pre-digital system of money transfer popular among Muslims, "but it was impossible for them to let me explore this particular area. It was definitely an eye-opening experience, the underground channel. They said, 'yes, you come in the evening,' or 'he will come early morning at seven.' But nobody ever came. It was impossible to break through. There is some kind of fear factor, for obvious reasons. There are entire transactions to be done, and that’s the best way of ensuring that money reaches their houses." (For more about IMTFI research on the hawala channel for sending money home, see the IMTFI research of Amrit Pal.)

"The pullers had many different strategies. One of these pullers would stay in the open space so he could hire out a room once a year when his wife came to stay with him. 'I won’t be saving money if I rent a room.' By being an open squatter, he could save on money to be used for his family. People who are illiterate -- with no means of support, no government support -- look after money very well." As a savings strategy she described how they would also bury money in polyethylene bags at uninhabited parts of their camp.

The IMTFI visiting team observed many forms of economic activity as we accompanied Nandhi making her rounds among the pullers she considered "orphans" from society. Within the seemingly chaotic environment of the camp, there were shops that sold small items and beverages, a barber shop, an eatery. There was even a stall for selling colors for the upcoming festival of Holi. As we moved around the camp, we came across surprising ways in which money circulated through a variety of payment flows.

The camp holy man showed us a selection of talismans and coins from the temple, which included a U.S. quarter among his collection of currency.

Nandhi also described arrangements that some of the men made with local shopkeepers who served as depositors for their savings. This helped them to protect it from losing them to someone who might squander away their savings in gambling or alcohol binges. "They sleep outside the shop," Nandhi explained, "the shopkeeper has a system" in which the puller provides security for the proprietor, and the money kept is recorded in a small diary. "The men say, 'I don’t get the interest. But at a bank I cannot open an account. I need an ID card.'"

Nandhi described how the pullers often feel excluded from the bank and how they don’t tend to see it as a public resource to which they have access. "They are not allowed into banking outlets. Lower level employees are not facilitators in that sense. Bankers at the top level, they are keen; they understand." Although executives understand the imperative for financial inclusion, "it is at the ground level where sensitivity training is needed," according to Nandhi. She described banking officers who used their own experiences in places like East Bihar to confirm their own negative stereotypes and who would even accuse the pullers of lying. "They are poor," she lamented. "It’s like a bigger vehicle who hits a smaller vehicle and says they are too blame. You are small. I am big. I am powerful." Banking hours and banking holidays could also be obstacles to pullers.

It is also worth noting that banks require proof of identification for opening accounts. Among the acceptable identification document for opening an account is the the biometric ID cards issued by the AADHAAR system which requires clear fingerprinting as a way to identify an individual.The heavy labor of maintaining these vehicles often wear the fingerprints in the hands of the rickshaw pullers and makes them illegible to the technology and debars them from acquiring their unique AADHAAR number, once again prohibiting possible access to banking facilities.

The other major factor that makes informal channels preferable is the question of access to credit. (In Africa, innovative experiments with providing credit to those in the informal sector using mobile money systems are being analyzed by IMTFI researchers studying M-shwari and the Jua Kali in Kenya.)  "Unless there is access to credit, access to payment alone is not enough. They can’t get credit from the formal banking system."

Moreover cash may be insecure for these men, but so is maintaining control over cell phones and biometric cards. Nonetheless, she described an increase in ATM card use among the very poor despite suspicions that government involvement might lead to unwelcome forms of oversight, because if the government "started this account" tied to debit card use, it could also use electronic banking records as a means for surveilling unreported income. After all, as Nandhi observed, "90 percent of the population is migrants, and everyone is able to make money one way or the other." Financial inclusion even with intense hand-holding can be difficult to attain. In her second study in 2012, she described how the initial group of 75 was soon whittled down to 50 participants, and ultimately only 13 became banked despite energetic efforts.

In our visit to the pullers’ camp with Nandhi we met a contractor who manages to control much of the men’s economic lives. He provides "loans, the rickshaw, gambling, entertainment, the store, the attraction of urban living, an escape from harsh reality in village, their livelihood, their opportunities."He was polite in the presence of visitors and showed us the record books in which he recorded his daily transactions with his men. She described what she called the "loan trap" in which many of the men are confined and how they are economically constrained by perpetually owing to the contractor, who might bring them from the village by the dozens, although they pay their own travel expenses.

"One of important insights, which I have stated in my study, was expressed by a puller: 'Madam, when you come, we feel motivated to think of saving, and after you leave, we go about our daily routine and the thoughts of saving is far removed.'" Nandhi argued that two things should be prioritized: "a champion like a bank motivator to keep in touch with them, as is done in the microfinance model, where a motivator goes around the group members to reinforce the benefits of the group and savings and other benefits of being in self-help groups" and "a savings collection financial product akin to a piggy bank scheme." She argued that her own experiments with having pullers deposit small sums indicated the potential for larger scale success, and she cited the Syndicate Bank Pigmy Deposit Scheme as a possible model. She wanted to see this approach combined with doorstep collection at the location of a pullers' temporary or permanent abode, because even small distances to bank services could be large obstacles. "If top policymakers could agree to introduce this kind of program compulsorily in some public sector banks in an experimental manner, it would be a test for motivating the poor to deposit."

She countered the misconception that the poor "don't like technology" by explaining how they adopt technologies selectively and according to their own personal needs. In the camp we could see that some rickshaw pullers had even acquired more expensive "smart" phones, which could be a powerful mobile communication channel with access to global networks of information, data storage, and the ability to document their financial and personal lives. Nandhi had her own smartphone with her and discussed the benefits and drawbacks of the device with one of the men.

She also explained how less formal cybercafe spaces -- which kept later hours and maintained fewer class barriers -- could be an important part of financial inclusion, particularly for completing first steps in becoming banked, such as acquiring an AADHAAR card. She noted that "RBI [Reserve Bank of India] is supposed to have digital literacy" as well as financial literacy training. (For more on financial literacy training in India, see the research of IMTFI researcher Deepti KC and Mudita Tiwari.) Unfortunately agents have more incentives to promote remittances than to promote saving.

As a rhetorician, I found the end of our interview particularly moving. In her commitment to the cause of the rickshaw pullers, Nandhi still had energy despite coming to the end of a twelve-hour day. She became especially animated as she described her frustrations about reaching policymakers with her message. The changes that she is arguing for implementing involve relatively modest costs, and some initiatives should cost almost nothing other than a modest outlay for training in techniques. Nandhi insists that the sensitivity and civility that she models in simple interactions with the pullers could lower barriers to financial inclusion dramatically. She has written a book, The Urban Poor & Their Money published by Pinnacle Learning, illustrated with photographs from her first study in 2009-10 that personalizes the rickshaw pullers by presenting them as individuals to make her case to policy makers. Yet she feels that they often turn a deaf ear to her pleas for empathy for the poor.

"A little more than a year ago, I was invited to participate by someone from the UNDP (United Nations Development Programme) for a discussion on pullers. It was a small group of 6-7 men who were associated with -- the Rickshaw Bank Project, a rickshaw manufacturing unit, NGOs, etc. One gentleman had got a contract from I think the World Bank to produce a status paper with policy recommendations on pullers in a month to be presented in international fora. I participated in the discussion but the sense I got created unease in me, because the purpose of meeting was to rapidly scan data to arrive at findings. When I did venture to suggest that the time is not adequate enough, I knew my suggestion was considered unworthy to take note of. Though I was asked to be a member of a working group, I knew I would not be informed and never was called for it. It rankled me not because I was not called, but because it was not going to be fruitful for the large majority of pullers. I do intend to persist, but one needs the networks to connect with, something I do not have. I shall have to do something, just to feel that my research findings could open up possibilities for the pullers."

[Photo Credit: Carolyn Ledlie]

The Socio-Political Context of the New Financial Architecture and Public Electronic Money System in Ecuador

By IMTFI researcher, Javier Félix

A proposal for a “New Financial Architecture” has emerged in Ecuador as a response to the previous neoliberal financial model, to reclaim the role of the state in financial regulation. It aims to strengthen the state’s monitoring system and its institutions and build a financial safety net to avoid catastrophic events in a crisis, like the one experienced in Ecuador at the end of the 1990s, which resulted in the adoption of the U.S. dollar as Ecuador’s official currency. Furthermore, this proposal seeks to adjust the monetary and financial framework of the Central Bank to the country’s system of dollarization. An additional and equally important component, which reflects a political economic strategy, is the inclusion of the so-called “popular and solidarity financial sector” (sector financiero popular y solidario)—which includes credit unions, savings and credit cooperatives, community banks, and so on—as a focus of this new domestic financial architecture. The proposal thus seeks to expand financial services, in particular, to the rural sector.

Central Bank of Ecuador’s stand of the Electronic Money System
at the 2014 Campus Party in Quito (Photo by Javier Felix)

One of the most groundbreaking components of this New Financial Architecture is the implementation of an electronic monetary system, operated mainly through mobile phones, for which the Central Bank of Ecuador (CBE) will serve as the issuer and administrator. Officials at the CBE consider money to be a public good and see the electronic money system as a way to democratize its use. This is a unique proposal in the global context of other mobile money deployments. There have been many experiences in the private sector, which have shown that there are a variety of factors influencing the success and failure of a project, as well as a variety of ways to measure the impact of mobile money on financial inclusion and the household economies of its users. In many examples, partnerships between financial institutions and mobile network operators have resulted in privately run initiatives, oriented primarily to profit by directing users’ consumption to particular companies.

However, this would be the first state-owned experience of public mobile money.

The proposal responds to Rafael Correa’s left-leaning political project embodied in the National Plan for Well-Being (Plan Nacional del Buen Vivir), which serves as a guide to the implementation of public policy for the coming years. The participation of the Central Bank, as the leading authority for the implementation of electronic money, corresponds to the government’s objective to reclaim its role as regulator and administrator of public goods. As a consequence, public policies and regulations have been created to limit and restrict the participation of the private sector, including companies and non-governmental organizations, in the interest of consolidating governance. Furthermore, this political agenda includes reforms to the financial sector in order to strengthen the entire system, especially the “popular and solidarity financial sector,” and, it is often argued, to prevent financial crisis.

For the implementation of the system, the state had to amend the Monetary Regime and State Bank Law (Ley de Régimen Monetario y Banco del Estado). One of the main provisions of this regulation is that “electronic money issuance must be an exclusive function of the state, which ensures and gives confidence to the carrier of this payment method, its free availability, and its condition as legal tender.” This limits the development of private projects of mobile money in Ecuador. With the imminent implementation of the electronic money project, which will most likely be rolled out by the end of 2014, there have been objections and arguments questioning to the proposal, especially coming from some representatives of private banking, financial analysts, and the press. The main concern was that the Central Bank could issue electronic money without backing, thus bypassing dollarization and enlarging the supply of money in the country. However, some of these doubts were assuaged after a new manual for the operation of the electronic money system was issued in June 2014.

The electronic money system, as defined by the Central Bank team in charge of implementation, is a set of operations, mechanisms, procedures, and regulations that facilitate the flow, storage, and real-time transfer of monetary value between different economic agents. These transfers will be made ​​through the use of electronic means such as the Internet, mobile devices, smart cards, and others. Like elsewhere in the world, the objective of implementing an electronic money system in Ecuador is to improve the inclusion of marginal sectors to financial services and use financial inclusion as a mechanism to ameliorate poverty. But the Ecuadorian Central Bank wants to set a precedent in the world, that such systems should ensure the open and democratic participation of all stakeholders. In creating a public system, it seeks to be broad in terms of the interaction and the relationship between the state and the actors of the financial system, whether they are public, private, or belong to the “popular and solidarity” sector.

The Central Bank’s cutting-edge proposal to create a public electronic monetary system still needs to answer the question of how can it generate a more significant impact than privately run systems. Since the project hasn´t yet been implemented, it is unknown how Ecuadorians will respond to the system. Will they trust in this new means of payment? Are people from rural areas and marginalized urban neighborhoods willing to use their mobile phones for daily purchases instead of cash? Money, as a social agreement, needs people’s trust and approval to be part of their lives. Is electronic or mobile money going to herald a new kind of social contract? How will it unfold in Ecuador?

Funny Money Roundup 3: On Wall Street, the Great Recession, and the Occupy Movements, Part 1

Welcome back to the occasional link collection we here at IMTFI call the Funny Money Roundup. This installment focuses on the Occupy movements that have sprung up around the United States and around the world over the past several months. Part 1, below the break, shares links from our archive on the Occupy movements. Part 2 will look at the recession and Wall Street generally. As always, what follows is idiosyncratic and incomplete. If you’d like to share a link or several, please send them to Taylor Nelms at tnelms@uci.edu.

Liz Losh's Guest Blog: Beyond the 99%

In welcoming participants to the annual research conference for the Institute for Money, Technology & Financial Inclusion, where chocolate coins dotted the reception table, director Bill Maurer noted that the very value of membership in the formal banking system was already being hotly debated by conference participants at dinner the night before conference sessions even began. With the fate of the Euro in jeopardy, people being kicked out of the formal financial system in the developed world, bank protests, consumer rebellions against unfair fees and profit taking, and bank failures too frequent to be worth reporting in the nightly news, Maurer argued that banking the unbanked from the so-called "bottom of the pyramid" of financial life might be a missionary activity increasingly worth examining. Of course, as Maurer also observed, the Institute had always been interested in the many ways that the "end of banking" might be imagined from the apocalyptic to the mundane as a response to perceived crises in the formal economy.

Maurer reminded attendees that this was a conference known for providing a corrective to the just-so stories told by economists about twenty-first-century money as a set of transparent frictionless transactions that could be easily aggregated and numerically abstracted. As Maurer explained, it was a conference intended to draw on the knowledge base of a variety of other disciplines -- including agriculture, anthropology, design, and IT -- to explore material culture and social practices that might otherwise be treated as ephemeral or insignificant. Of course, this conference had welcomed papers in the past on everything that relates to IMTFI from an uncovering of underwear money to accounting with the bodies of dead migrant workers. To acknowledge the fact that the conference often celebrated money as well as studied it, Maurer introduced Catherine Eagleton of the Money Gallery of the British Museum.

Maurer told the story of the founding of the institute, which he traced to his initial experiences at a mobile money workshop at the Federal Reserve, where he apparently thought “now here’s a kind of financial innovation that we can all be excited about.” Although these "bridges to cash" might have been built most rapidly in the case of M-PESA and its 14 million accounts, Maurer asserted that this kind of "entire new business" was most notable because it reopened discussions of "the definition of money itself," which "changed the terms of discussion at moment when we need new terms."

Rather than have U.S. specialists "parachute in" to a given country, IMTFI emphasized funding the research of local and regional experts and suspicion of the tendency to "overuse economists." Maurer explained how there were now 100 researchers working in 50 countries who represented "other kinds of disciplinary training" and an "alternative sets of voices" at a conference that was tolerant of exploratory work that had not yet produced "completed research results" in the interest of facilitating conversation and disseminating new ideas. As Maurer pointed out, there was even "an ethnographer studying us" as a "community of scholars," whose work had already appeared in Critique of Anthropology. (Author Anke Schwittay presented a talk about Kiva last year.)

Alternative Banking and Social Inclusion

by IMTFI researchers Kurt von Mettenheim and Olivier Butzbach

This post reports on an international seminar sponsored by the Rockefeller Foundation in July, 2011 that brought together several of IMTFI's researchers with colleagues from around the world to discuss alternative banking and "social" inclusion. Often we read and research financial inclusion without reflecting enough on social justice and social welfare policies that may or may not accompany financial inclusion goals. This conference took up this issue.

These ideas were first explored in 2006 at an international seminar in São Paulo and developed further at the 2009 Meeting of the Society for the Advancement of Social Economics in a session entitled “An Alternative Banking Business Model? Savings, Cooperative and Public Banks in the Current Financial Meltdown.”  We have since worked with business and public policy schools and alternative bank groups and associations to build a network capable of launching new Core Principles for Alternative Banking and Social Inclusion. The July seminar confirmed the potential for new technologies at large alternative banking institutions in developing and emerging countries to accelerate social inclusion (and maintain it in advanced economies).