Fighting Poverty by Removing the Extortionist (I Mean Legitimate Businessman)

From David Talbot at Technology Review, a brief story about how something that seems so simple can make such a big difference.  In India, hundreds of millions of people have essentially no access to basic banking and credit.

‘People who have no access to credit at all—like really small farmers—pay sometimes up to 10 percent per day. They literally take 100 rupees’ worth of goods from a vendor and have to give back 110 rupees in the evening. If they have even a tiny shock one day—a tiny accident—and can’t pay back the vendor, it is devastating.’ Around the world, she explained, ‘A lot of poverty comes from having not even the tiniest amount of financial slack.’

To address this need, folks from Xerox Research Center India have been developing banking kiosks that will be able to transcribe and translate written transaction slips, and then communicate with banks through low-bandwith satellite connections. Such a system could enable banks to establish presences in remote locations that are not served now, providing opportunities for people in the most tenuous situations a better chance at subsisting.  As Talbot put it:

If it works out, it means more farmers and would-be entrepreneurs can say “no thanks” to the local mafia charging ten percent a day.

This might mean that a lot of those lender/vendors may see their profits fall, but I’m ok with that. I like it when —metaphorically speaking—the hens get a bit more leverage against the wolf at the door.

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