PORT-AU-PRINCE, Haiti — Getting money in Haiti can be a harrowing experience: Bank branches are few, most of them are in the capital and a simple transaction can take half a day. Cash machines are scarce as well, and often broken or empty. And then there are the thieves who often wait nearby in hopes of finding a mark.
So aid agencies trying to remake Haiti after a catastrophic earthquake are promoting a new way to bypass banks altogether: easy money transfers by cellphone. The U.S. government and the Bill & Melinda Gates Foundation have pumped millions of dollars into the plan, which lets people save and move money in mobile phone accounts and quickly withdraw it at a network of retail stores around the country.
As yet, though, few Haitians are buying the idea, which has become one of many post-quake projects to fall short of expectations and a reminder of how hard it is to change a society that has been repeatedly set back by political upheaval and natural disasters.
"I'm not going to invest my money in something I don't see," said James Alexis, a 33-year-old truck driver, as he stood in line at a bank in downtown Port-au-Prince, a wait he expected would take two hours. "It could be a trick."
Backers admit adoption has been slower than expected, though they remain optimistic it will expand, in part because so many Haitians rely on cellphones, often to find jobs. Some 800,000 people initially registered for the service, even if only about 22,000 people regularly use it.
The service "has gone on in the face of political violence, political instability, cholera, gas shortages, you name it, and we're this far," said Greta Greathouse, director of a U.S. Agency for International Development program to improve financial services in Haiti. "Does it mean we're there yet? No. We want it to be sustainable and there's a lot of work that needs to be done."
A spokesman for the Gates Foundation in Seattle, Chris Williams, said by telephone that the project is a "work in progress" but that it's going well.
"It's not a huge surprise to find some disconnect between the number of registered users and currently active users," Williams said. "It takes some time to build up to scale."
The project began months after the January 2010 earthquake when the Gates Foundation announced that it was creating the Haiti Mobile Money Initiative with a $10 million donation. USAID contributed another $5 million for technical assistance.
The idea was to help the 90 percent of Haitians who don't use banks by replicating a mobile money-transfer system that has gained popularity in countries such as Kenya, Uganda and the Philippines.
Two local cellphone companies, Digicel Group Ltd. and Voila, rushed to compete for the money by setting up their own mobile money transfer systems, and so far have been awarded a total of $6.8 million from the foundation.
The system is essentially an account linked to the telephone. Users can transfer up to $250 at a time to another subscriber, who can then withdraw the money from a network of shops ranging from auto-parts stores to internet cafes. As much as $1,500 can be transferred in a month. So far, international transfers are not allowed.
Digicel-Haiti's former CEO, Maarten Boute, said at a Barcelona conference in February that it wasn't easy to explain the system.
"Our main lesson learned is how difficult it is to educate customers," said Boute, who is now a senior adviser to the Jamaica-based company. "When we launched the service we assumed it would be something like selling a mobile phone, where you stick a mobile phone into someone's hand and almost anyone can start using it quite quickly because it's very easy to understand. With a mobile banking service or a mobile money service it's not quite that easy."
The Christian charity World Vision joined the program, seeing it as a simple, cash-free way to pay small rental subsidies to help people move out of the gloomy settlements that sprang up after the earthquake.
But many people didn't understand how to use the technology and were leery of it, said Keith Chibafa, who oversees the project for World Vision. The nonprofit registered 6,000 subscribers for the service, but only 1,000 actually use it.
Confidence was undermined on one occasion when residents of a camp in the city of Croix-des-Bouquets, outside the capital, went to collect their payments and were told there was no money.
"We did have an agent running out of cash," Chibafa said. "It was a problem, a serious problem."
Cab driver Ernst Figaro said he doesn't trust the new service any more than the banks, which are not known for their customer service.
"The electronic system in Haiti is not standing on its feet yet," Figaro said while taking a break from work on a park bench. "I just don't trust putting my money in this system."
Others, such as Wilner Destina, have become converts. The 40-year-old street painter signed up six months ago because he was eager to avoid the frustrating hour-long lines at commercial banks. "It allows us to do (money) transfers with ease," Destina said outside a Digicel store in downtown Port-au-Prince after sending the equivalent of $50 to a friend in Gonaives, a port city 110 kilometers (68 miles) northwest of Haiti's capital.
David Sharpe, Digicel's director of products and services, hopes to find more people like Destina, attracting them with features such as a lottery played on the cellphone and, later, international wire transfers.
More users will arrive through a new government program that will use the service to make transfers to as many as 100,000 mothers who keep their children in school.
With the recent acquisition of Voila, Sharpe joked in an interview that mobile banking will take off in the coming years. "I'll put 10 bucks down that we beat all of your expectations."
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Euro zone agrees to lend Spain up to 100 billion euros - Reuters
BRUSSELS/MADRID |
BRUSSELS/MADRID (Reuters) - Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its teetering banks and Madrid said it would specify precisely how much it needs once independent audits report in just over a week.
After a 2 1/2-hour conference call of the 17 finance ministers, which several sources described as heated, the Eurogroup and Madrid said the amount of the bailout would be sufficiently large to banish any doubts.
"The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to 100 billion euros in total," a Eurogroup statement said.
Spain said it wanted aid for its banks but would not specify the precise amount until two independent consultancies - Oliver Wyman and Roland Berger - deliver their assessment of the banking sector's capital needs some time before June 21.
"The Spanish government declares its intention to request European financing for the recapitalization of the Spanish banks that need it," Economy Minister Luis de Guindos said at a news conference in Madrid.
He said the amounts needed would be manageable and that the funds requested would amply cover any needs.
A bailout for Spain's banks, beset by bad debts since a property bubble burst, would make it the fourth country to seek assistance since Europe's debt crisis began.
With the rescue of Greece, Ireland, Portugal and now Spain, the EU and IMF have now committed around 500 billion euros to finance European bailouts.
Washington, which is worried the euro zone crisis could drag the U.S. economy down in an election year, welcomed the announcement.
"These are important for the health of Spain's economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area," U.S. Treasury Secretary Timothy Geithner said.
Likewise, the Group of Seven developed nations - the United States, Germany, France, Britain, Italy, Japan and Canada - heralded the move as a milestone as the euro zone moves toward tighter financial and budgetary ties.
HEATED DEBATE
Officials said there had been a heated debate over the International Monetary Fund's role in Spain's bank rescue, which Madrid wanted kept to a minimum. The IMF will not provide any of the money.
In the end it was agreed that the IMF would help monitor reforms in Spain's banking sector, while EU institutions would ensure Spain stuck to its broader economic commitments.
IMF Managing Director Christine Lagarde said the euro zone's plan was consistent with the IMF's estimate of the capital needs of Spain's banks and should provide "assurance that the financing needs of Spain's banking system will be fully met."
Sources involved in the talks said there had been pressure on Madrid to make a precise request right away, but Spain had resisted.
Euro zone policymakers are eager to shore up Spain's position before June 17 elections in Greece which could push Athens closer to a euro zone exit and unleash a wave of contagion. Spain's auditors could report back after that date.
Nonetheless, analysts said financial markets may be calmed by the announcement when they reopen on Monday.
"The figure of up to 100 billion is more encouraging and pretty realistic; it's an attempt to cap the problem," said Edmund Shing, European head of equity strategy at Barclays.
"The issue, however, is there is still a lack of detail about where the money's coming from, which is crucial. The market will treat it with some caution until they see how it will be funded."
The Eurogroup said the funds could come from either from the euro zone's temporary rescue fund, the EFSF, or the permanent mechanism, the ESM, which is due to start next month. Finland said that if money came from the EFSF, it would want collateral.
EU sources said there was a preference to channel money to Spain through the ESM, rather than the EFSF. Under the ESM, an approval rate of 90 percent or less is needed to trigger aid, and the fund also has more flexibility in how it operates.
"That's why it's so important that the ESM ... be ratified quickly," German Finance Minister Wolfgang Schaeuble said.
The Spanish government has already spent 15 billion euros bailing out small regional savings banks that lent recklessly to property developers. Spain's biggest failed bank, Bankia, will cost 23.5 billion euros to rescue and its shareholders have been wiped out.
"Whatever the formula being used, we need to say two things: first the innocent should not suffer for the guilty, second public money should come back to public coffers," said Socialist opposition chief Alfredo Perez Rubalcaba after speaking with Prime Minister Mariano Rajoy on Saturday morning.
LIGHT CONDITIONS
The race to resolve the banks' troubles comes after Fitch Ratings cut Madrid's sovereign credit rating by three notches to BBB, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
It said the cost to the Spanish state of recapitalizing banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between 60-100 billion euros ($75-$125 billion).
Italy could yet get dragged in too. Its industry minister, Corrado Passera, said the economic situation in Italy had improved since the end of 2011, but remained critical.
"Europe was more disappointing than we had expected, it was less capable of tackling a relatively minor problem such as Greece," Passera told a conference on Saturday.
While Spain would join Greece, Ireland and Portugal in receiving a European financial rescue, officials said the aid would be focused only on its banking sector, without taking the Spanish state out of credit markets.
That would be crucial to avoid overstraining the euro zone's rescue funds, which would struggle to cover Spanish government borrowing needs for the next three years plus possible additional assistance for Portugal and Ireland.
Conditions in the plan did not appear to add to the austerity measures and structural economic reforms which Rajoy's government has already put in place.
"Since the funds being asked for are to attend to financial sector needs, the conditionality, as agreed in the Eurogroup meeting, will be specifically for the financial sector," de Guindos said.
EU and German officials have cited national pride in the euro zone's fourth largest economy as a barrier to requesting a full assistance program.
The European Commission and Germany both agreed in principle last week that Spain should be given an extra year to bring its budget deficit down below the EU limit of 3 percent of gross domestic product because of a deep recession.
The Eurogroup also said money could be funneled to Spain's FROB bank fund although the government would "retain the full responsibility of the financial assistance".
Irish Finance Minister Michael Noonan said the funds would be provided through the EFSF or ESM at the same interest rates that apply to funds provided to other bailout countries.
(Additional reporting by Luke Baker and Justyna Pawlak in Brussels, Erik Kirschbaum, Annika Breitdhardt and Matthias Sobolewski in Berlin, Antonella Ciancio in Italy, Conor Humphries in Dublin, Martin Santa in Bratislava and Tim Ahmann in Washington. Writing by Mike Peacock and Fiona Ortiz; Editing by Bill Trott)
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