> Posted by Sonja Kelly, Director of Research, CFI

(click to enlarge)

This week at the Mobile World Congress in Barcelona, Verizon announced that it’s unveiling new 5G wireless connectivity for its mobile customers. More “G”s are not a surprising announcement, as mobile networks strut their speed at this annual event like body builders at a weightlifting competition. For those unfamiliar with what exactly 5G means, the network will provide speeds of a gigabit per second and faster, but only in a select group of cities in high income economies.

As we celebrate global innovation, we can also take a moment to highlight those who continue to have limited to no connectivity—with implications for global development. While 5G revs up, an astounding number of people are left out of mobile connectivity and therefore mobile money—even in countries known for their digital financial services uptake.

Our CFI Fellow Leon Perlman examines this phenomenon in his upcoming report. As a sneak preview, in his report Leon shows connectivity maps in a select group of emerging markets, such as the one above. Take this example of Tanzania, a market with growing mobile money usage. In this market, mobile network coverage misses large swaths of rural areas toward the center of the country. Certainly, those areas have lower population densities than other areas, but they are home to many people. The mobile financial services ecosystem depends on connectivity infrastructure that provides reliable and sufficiently high-speed data transmission. Lacking that, people in rural areas are left out in large numbers. In the map above, the blue splotches indicate mobile network coverage, and the dots are where mobile money agents are located.

Not only is wireless connectivity in many countries far from ubiquitous, it is also far from reliable. In CGAP’s work on “Doing Digital Finance Right,” evidence from 16 markets showed that while customers appreciate and benefit from digital financial services, there is a significant issue in network downtime. Customers identified this as their top problem with digital financial services. When it comes to cash-in services, for example, customers have been forced to leave cash with a mobile money agent without confirmation that the money has been deposited in their accounts.

Today’s cutting edge fintech apps are built for customers with high connectivity. Next week at LendIt I’m leading a panel discussion with four CEOs of fintechs that are harnessing smartphones to provide access to credit. Their business models are creative, and the pace of their expansion is dizzying. This conference – like most events of its kind – will focus on innovations that are enabled by increased bandwidth and smartphones, providing a glimpse of the future. But if innovative mobile financial services require newer and faster telecoms systems, poorly connected customers will still have to rely on an older generation of financial services.

At a closed roundtable last week on digital security, hosted by the Brookings Institution, the term “digital exclusion” was mentioned, and participants—from private sector, government, thinktanks, multilaterals—nodded their heads in recognition. We’ve all grown familiar with large groups of people and even entire economies being left out of development because their infrastructure is lacking. As Verizon speeds toward 5G in a select few densely populated urban areas in high income economies, other parts of our world languish on the slow road.

So, let’s take a moment to think about and make a plan for those who won’t be getting 5G. For those in attendance at Mobile World Congress, this means you! Looking forward to continuing to see how mobile money can work for development.

Map source: fspmaps.org

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Mobile Money in Myanmar: Going Directly from Cash to Digital