The Evolution of Action

Where a risk is unacceptable (outside of an organisation’s appetite), there should be an action plan, a path to green, to bring it into line.

One quarter of the world’s population are financially excluded, a status that keeps them in poverty.  Financial exclusion is also a risk to the economic and social well-being of a country as a whole.

A pilot mobile phone scheme in Kenya was financed by the British government’s overseas aid agency (DFID).  DFID researchers noticed in the pilot that users were transferring mobile air-time between each other as if it were money.  That led to the pilot becoming, M-PESA, a mobile phone-based money transfer system which now has 30 million users.  It has helped poor Kenyans by avoiding the risks of leakage and corruption within the cash-based system.  This then led to M-Shwari, a paperless bank account with the Commercial Bank of Africa (CBA) that uses M-PESA as the channel, and which enables poor Kenyans to receive micro-credit.  CBA uses the know-your-customer checks used to open the M-PESA account, and the M-PESA payment history to gauge creditworthiness.  On the back of this, CBA’s customer base has grown from 50,000 to 22 million in five years.  And it is estimated that it has lifted 194,000 Kenyan households out of poverty.

Where a risk is unacceptable, it is necessary to have an action plan.  If the action plan doesn’t appear to fully address the risk, it is worth following it anyway, because the answer may lie further down the path.

Story source: Economist Survey on Financial Inclusion

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