Why are banks so scarce in developing countries?

The trading of goods and services creates wealth, which is materialized by currency. In ancient Africa, some territories used “cauris” as a means of exchange between actors. 

The history of banking dates back around 2000 BC. According to the site Investopia, “The history of banking began when empires needed a way to pay for foreign goods and services, with something that could be exchanged more easily. Coins of varying sizes and metals served in the place of fragile, impermanent paper bills.” For the website Britannica, though the emergence of capitalism as a system dates only from the 16^th century, practice of capitalist institutions existed in the ancient world during the later European Middle Ages. 

If the banking system is fully developed, adopted and used in the developed world, banks are scare in developing countries. They are several reasons to that situation.

In their paper “Why are banks so scarce in developing countries? A regulatory and infrastructure perspective », Ignacio Mas lists 3 reasons:

1. Poverty: poor people do not have enough money to live. So, there is no need to use banking system and to save.
2. The Infrastructure gap: there are few bank branches for people to access and use the banking system “as banks do not find it profitable to build branches near where the poor live and work” 
3. Regulatory Barriers: regulatory limitations (in India for instance), approval and inspection constraints (in Kenya for example)

If these reasons can explain the low penetration of banking system in developing countries, we need to go deeper into the structure of the society and the economic system to understand more the problem. 

For me, as an African who was born, educated and who works and live in Africa, these are additional reasons that can be added.

The socio-economic structure

The economic system of rural area is based on family, not individuals. One person cannot have wealth. The wealth is for the family and the father, the head of the family is the guardian of the family wealth. Any revenue is handed to the chief of the family that keeps everything together to care for the family. In that sense, there is no need to use banking system. This is amplified by the fact that the rural population is style higher than the urban population. For example, in Burkina Faso, urban population represents 26% of the 21 million Burkinabè. Also, population mostly rely from agriculture for living. Farming is done traditionally and manually during rainy season and the crops are kept to feed the family during dry season.

Literacy rate

Banking system requires the capacity to read and right. With low literacy rate, banks are finding it hard to get customers.

Trust

Trust is fundamental when it comes to money and the cumbersome banking procedure coupled with low literacy rates are obstacles to the development of banking system in developing countries

The development of Mobile Money by Mobile Operators

The development of Mobile Money gives the opportunity for a greater financial inclusion, allowing users to send and receive money, pay bills, receive their salaries and other types of remunerations, without the need to go to a bank. 

Banks are scare in developing countries for various reasons. But the development of Mobile Money by Mobile Operators and the development of Mobile Banking by some banks, the security issues and the need for credit to invest will push the development of the banking system in a near future.

12 Podcasts on Tech and Digital you Should not Miss

Podcasting has been around for a while. But we have started seen an increase in its use over the past years, amplified by the pandemic and the lockdown. Some analysts assert that if the majors want people to consume a product, they have the power to make it happen. True to that, Apple Podcast, Google Podcast, Spotify Podcast, Deezer Podcast, SoundCloud are all pushing the consumption of Podcast. Spotify for example teams up with public personality like Barack Obama, the Sussex to have native, dedicated and podcasts content.

Personally, I listen to a wide variety of podcasts, ranging from digital, technology, business, marketing, sales, distribution, personal development, science, health history, etc. on Apple Podcast.

In this article, I propose to you five Podcasts to take your digital and tech knowledge and experience to another level.

1. Masters Of Scale

In this podcast, Reid Hofman (co-founder of LinkedIn) and Bob Sapian discuss business success with guest, scalability.

Masters of Scale – LIVE HOMEPAGE

2. Ahead of the Game

In this podcast discusses Digital Marketing from Social Media Marketing, Email Marketing.

Click here for more: https://digitalmarketinginstitute.com/resources/podcasts/podcast-trailer-ahead-of-the-digital-marketing-game-will-francis

3. Social Media Marketing

In this Podcast, Mickael Stelzner helps you navigate through the jungle of social safari.

4. Africa Tech Summit Connects

In this Podcast, the Africa Tech Summit discusses with guest the digital evolution and opportunities in Africa.

5. McKinsey Africa

This podcast discusses digital and technology in Africa, ranging to FinTech, AgriTech, etc.

Click here for more: https://podcasts.apple.com/us/podcast/the-mckinsey-podcast/id285260960

6. Exponential View with Azeem Azhar

From the HBR Presents network, Azeem Azhar discusses with various subjects such as Artificial Intelligence, etc. Click her for more: https://hbr.org/2019/04/podcast-exponential-view

7. DNTS

This podcast by Tom Merritt discusses Daily Tech News Show (DTNS) as its name says.

Click here for more: https://podcasts.apple.com/ca/podcast/daily-tech-news-show/id790864884

8. The Social Media Talk Show

In bonus for those who speak French, I add these 4 Podcasts

• Culture Numérique by Siècle Digital: https://siecledigital.fr/podcasts/culture-numerique/
• Chose à savoir tech: https://www.radio.net/p/chosesasavoirtech
• No Pay No Play par Joseph Donyo: https://neomedia.io/podcast-no-pay-no-play/
• Le Super Daily: https://lesuperdaily.com

I know there are way more podcast on digital and tech out there. So, please feel free to add in comments your recommendations for podcast for the community.

Paper Title: Digital 2021 Global Overview Report

Author: Simon Kemp

Paper content summary

In the report, Hootsuite and We Are Social studied the digital landscape around the world. The world population is 7.83 billion with 5.22 billion unique mobile users and 4.66 billion people that have access to Internet. This figure has large disparities. If Northern Europe has 96% of Internet access, Middle and Eastern Africa show respectively 26% and 24%. Web traffic is dominated by mobile phones (55.7%) and computers (41.14%) and is shared between Google Chrome (63.4%) and Apple Safari (19.3%).

4.2 billion social media users with the largest growth in users compared to previous year. The world added 490 million Social Media users, 13.2% increase. The main reason was the Covid19 pandemic, especially the lockdown and social distancing. Facebook still dominates social media with 2.74 billion users, followed by YouTube with 2.291 billion and WhatsApp with 2 billion. The FACEBOOK GROUP has a cumulative 7.261 billion users worldwide.

The report also highlighted concerns about misinformation and fake news, mostly in youth population. 62.5% of female aged 18-24 and 53.2% of male. 59% of female aged 25-34 and 54.9% of male. Top three countries with most concern about misuse of personal data are Portugal (53.9%), Spain (53.4%) and Brazil (50.7%).

Game apps are the top downloads both on Google Play and App Store while social media apps showing most monthly active users.

E-commerce: 68.5% of world’s population have at least an account with a financial institution. 29% make online payments and/or pay bills online. 76.8% purchased a product online and 55.4% purchase using a mobile phone. With 3.47 billion people purchasing consumer goods via the Internet, total value of this market is $2.44 trillion with an annual growth of 25.7% and a $703 annual spend per user.

The total annual value of digitally enabled consumer payments is $4.93 trillion, an annual growth of 24% and an average total annual value of $1,421 per user.

The top two primary channels for brand research are search engine (53.1%) and social media (44.8%). It is important to note that for Youth (16 to 24), social media is the primary source with 53.2% versus 51.3% for search engine.

The value of the digital advertising market is $355.6 billion.

Quality of the Research

The research question is about the latest insights into how people around the world use the internet, social media, mobile devices, and ecommerce, which I find clearly stated. The results cover a wide range of areas on digital usage world wild. 

The research question is interesting and important because in the digital world with zillions of zillions of data out there, professionals, constructers, users, platforms, etc. need to have digest information about digital business to make good decisions.

The work is original. It gives a global view, includes graphs, images and other data. The report also points out to specific country reports for those who need to go deeper.

The background research is clear and relevant. They used various sources such GSMA, CIA, TU Statistics; Eurostat Data Explorer; GWI; local government authorities, Statista Digital Market Outlook and Statista Mobility Services Outlook, etc.

We did not find any ethical problem in the report.

The Research Method

The research used various methods, from data mining and analysis from different sources to survey to qualitative information on the reasons why people use social media, search engines, etc. 

This method is appropriate as it combines quantitative and qualitative data collection and processing. 

The methods are adequately described, and the analyses done correctly. At each section and at the end of the report, there is a conclusion which is supported by the data.

Quality of Presentation

The paper is well presented, in particular the GLOBAL ECOMMERCE USE as this section provides data about specific areas business values and digital payment, which is essential to digital business. 

The paper is very well structured and gives deep insight at each step. 

But we would have loved to see more adequate definitions of symbols, terms and concepts.

Paper Review 2

Paper Title: Reshaping Business With Artificial Intelligence, 

Authors:  Sam Ransbotham, David Kiron, Philipp Gerbert, and Martin Reeves

Paper content summary

The paper by MIT Sloan Management Review, in collaboration with The Boston Consulting Group provides insights for companies to get a better understanding of their Artificial Intelligence (AI) standing point and ambitions. The research found that there is still a gap between ambitions and practice of AI in companies. Most executives believe in AI to grow their business. Three-quarters believe it provides new business opportunities and revenue streams and 85% believe AI can provide competitive advantage to their companies. When it comes to execution, only 30% incorporated AI in some offerings and less than 39% of all companies have an AI Strategy in place. The research also found that leaders might not have an appropriate approach about data in AI. With regards to adoption and understanding, the report shows disparities with four distinct organisational maturity clusters: Pioneers (19%), Investigators (32%), Experimenters (13%), Passives (36%). Most organisations foresee more sizable effect of AI on IT with the opportunities of business processes outsourcing and automation. The paper also gives recommendations on what to do next: ensure customer trust, perform an AI health check, brace for uncertainty, adopt scenario-based planning, add a workforce focus 

Quality of the Research

The research question is to understand the challenges and opportunities associated with the use of artificial intelligence, which I find to be clear as in-depth data analysis and large survey reports have been used to support the answer.

The research question is important and interesting indeed. In this Industrial Revolution 4.0 driven by digital and powered by AI to extend human capacity, this report really provides insights and ways forward for organization. 

The work is original. It used real world and work case studies and best practice. 

The background research is clear and relevant, and the research do not show any ethical problems.

The Research Method

The research is global, survey-based: over 3,000 executives, managers, and analysts and in-depth interviews with more than 30 technology experts and executives. The research covered 112 countries and 21 industries.

The research methods are appropriate. As we can read in the About the Research Section, inaugural annual survey has been conducted with experts, business executives, managers, and analysts. 67% of respondents were from outside of the United States. 112 countries and 21 industries. The sample was drawn from a number of sources, including MIT Sloan Management Review readers, and other interested parties. In addition to the survey results, interviews have been done. 

The methods have been adequately described in the report.

The analysis has been down properly with graphs and figures, supported by data.

The conclusions also are supported by data to provide better understanding and guidance.

Quality of Presentation

The presentation is very qualitative, please and easy to ready, in particular section Disparity in Adoption and Understanding, page 6 with the four distinct organisational maturity clusters.

The paper used real work cases studies, such AI at Work with the Airbus 350. When they started to ramp up production, they turned to AI.

Figure3: Reasons for adopting AI

Organizations expect to create competitive advantage from AI — but also anticipate increased competition, Only about a quarter of all organizations have adopted AI so far. 

Figure4: Adoption level of AI Graph

While AI talent limits Pioneers, Passives don’t yet discern a business case for AI 

Figure5: barriers to AI adoption Graph

The paper is well structured. It provides definition of symbols, terms and concepts. For example, Artificial Intelligence has been defined using the Oxford Dictionary: “AI is the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”

Paper Review 3

Paper Title: why are banks so scarce in developing countries? A regulatory and infrastructure perspective

Author: Ignacio Mas

Paper content summary

In this paper, Ignacio Mas discusses the reasons why the banking system is not developed in developing markets. More than 2,6 billion people in developing countries do not have access to banking system. The author identifies three reasons. The first reason is that banking for the poor people might not be profitable as poor people do not have enough money for living, let alone use banking. On the other hand, costs for operating banking are high. The second reason is related an infrastructure gap. There is not enough or appropriate banking infrastructures to be profitable. The third and probably the main reason in regulatory barriers. The regulatory landscape is so limitative and constringent that it makes it difficult for opening banks branches for example. The author also notes that the development of Mobile Payment solutions, and the development of Microcredit are alternatives to the classical banking system.

Quality of the Research

The research question is about the causes of scarcity of banks in poor countries and alternative solutions.

It is important and interesting as it highlights the fact that over 30% of the world’s population are excluded from the banking system.

The work is original with factual examples from developing countries.

The terminology may “poor” may pose some concerns. Some of the questions we may ask are What is poverty? Who is poor? How is poverty defined and who defines it for whom? For example, an African man who travel to a Western country, finds that people do not have farms, cattle, large homes; would this African man qualifies the Westerner as poor? 

Asked what’s the difference between Globalization and Globalism in the Azeem Azhar Exponential View Podcast Ian Bremmer answers: “Globalization is a process by which people and ideas and goods and services, and data move across borders faster and faster all over the world and creates and unlocks a lot of economic growth. Globalism is a political ideology promoted largely by leaders in Western societies that the process of globalization is good for everyone and should be supportive. The former is clearly true. The latter is not right because the latter absent active intervention by government actors that are fair arbiters and affective representatives of all the people not just those that are empowered and benefit most from globalism becomes an incredibly unequal and unfair system.

The point of bringing globalism and globalisation in the discussion is to highlight the fact that globalism as an ideology is tending to define and take the world as a unique civilisation and culture. Meanwhile, each society and culture evolved over centuries with practices, traditions, beliefs, ways of life. Each society defines wealth and fortune according to their own history and culture. 

The Research Method

The research method has not been clearly described. But from studying the document, we think the author used previous studies and personal analysis. Though it is not deep, the research method properly dealt with the subject and the analysis were correctly done. To us, author should have also produced field information by talking to people. 

Quality of Presentation

The work is well presented, in particular the regulatory barriers section. Clear instances are provided. The paper is well structured, and terms, symbols and concepts are adequately defined.

Additional Notes

Here, we point out the facts that sociological and cultural factors also explain the non-use of classical banking system in other parts of the world. We discussed it in our blog title “Why banks are scarce in developing countries”. This paper is from 2011. Developing countries are more and more focused financial inclusion. In West Africa, l’Union Economique et Monétaire Ouest Africaine (UEMOA), produced a document titled “GUIDE POUR LA DIGITALISATION DES PAIEMENTS DES ÉTATS MEMBRES DE L’UEMOA”. It lays foundations and guidance of the usage of digital means of payment in The Economic and Monetary Union.

Reflective Summary on our Blogging Experience

In this reflexive summary, we will use the reflection, analysis and action structure.

Reflection 

Each year on August 31^st, the blogosphere celebrates World Blogging Day. 

In the Information Systems and Digital Transformation module, we were given the wonderful opportunity to practice blogging activities. I have been blogging for four years. Blogging is still a great experience and each blog article written is a totally different assignment to oneself. I created my Blog Le Kiosque Digital du Burkina, https://lekiosquedigitalduburkina in December 2017. Since then, I wrote over 200 blog articles. The blog deals with digital matters, business oriented, ranging from digital marketing, social media, applications reviews to advise on information technology and security. The Blog is in French.

Analysis

Each time I have to write an article, I go through the same challenge. Translating the ideas and words in my mind into a text for people to read and share my ideas and experiences. Instead of focusing on what I have to say, I make sure I put myself in the mind of those reading to see how they understand, interpret, relate and how useful my intellectual production can help them. A lot of research and reading are required to produce and article. 

This blogging activity during the module has pushed me to go deeper and search. For example, I got to know more about Systems Thinking, the differentiation between IT and IS. The paper review allowed me to through and even deeper in paper and reports I read before. Sharing is caring and I enjoyed sharing my inputs with other students. On the other hand, I learned a lot reading other people’s production. It is always enriching to read different views or different approach to the same subject from other people all over the world and various background. That is one of the beauties of using online collaborative technology. 

If one teaches once, they learn twice. Each contribution I shared allowed me to learn more and grow better. 

Action

My blogging and discussion in forum as strengthened my blogging experience. It also gave me ideas. Writing about what you learn is one of the best ways to learn. Sharing what you write allow people to comment and give feedbacks to learn more and contribute to positively impact the society. I will continue writing and reflecting on what I learn.