Transcript Empowering E-Globalization at the Base of the Pyramid: Linking New Technologies with Remittances, Microfinance and Beyound Dr.

Empowering E-Globalization
at the Base of the Pyramid:
Linking New Technologies with Remittances,
Microfinance and Beyound
Dr. Raúl Hinojosa-Ojeda
UCLA NAID Center
“International Forum on Remittances 2007”
UN IFAD and IDB MIF
October 18, 2007 Washington, DC
1.
Billion In Motion at the Base of the Pyramid:
Rural-Urban Migration Greater than North-South
2.
Remittances as Tip of the BOP Iceberg: From “Dead Cash”
Remittances To Empowered e-Transactions
3.
From Global Pyramids to Global Diamonds: Technologies,
Micro Finance and Securitization
4.
Measuring Impacts from “OaxaCalifornia”
-Legalization: A Strong “Win-Win”
-Remittance Empowerment => 10x more
-Capacity Problems in Remittance Receiving MFIs
The Globalization Challenge
Shares of World GDP, 1000-2005
100
“Developing”
90
80
70
60
50
40
“Developed”
30
20
10
0
1000 1500 182 1870 1913 1950 1973 1998 2006
Western Europe
Western Offshoots
Japan
Developed
Asia (excl. Japan)
Latin America
EE & fmr USSR
Africa
Developing
Global Migrant Population Distribution, stock, by Major Region
1965-1994, 2002 Projection
180
Developed
Countries (b)
165
North America
150
135
Europe
120
105
Asia and the
Pacific
90
Developing
Countries (b)
75
60
Sub-Saharan
Africa
45
Latin America
and Caribbean
30
15
Pr
oj
ec
tio
n
(a
)
20
02
19
94
19
90
19
85
19
75
19
65
0
Middle East,
South and SouthEast Asia
Oceania
Total (b)
The Entry Market to Unbanked Services
Global Remittances 2000-2008 (Billions)
345
350
Developing Nations
311
300
281
256
250
233
213
200
159
167
183
150
100
50
0
2000
2002
Source: Banco de Mexico
2004
2006
2008
INTERNATIONAL MIGRANT STOCK IS
EQUALLY DIVIDED INTO THREE TYPES
South
53 million
61 million
North
14 million
62 million
North
South
Labour force projection for developed
countries with and without migration
Projected population aged 15-64
(medium variant)
(Millions)
900
With
migration
800
700
600
2000
100
million
Without
migration
2010
2020
2030
2040
2050
Massive Rural to Urban Shift
Developing > Global
90
80
70
60
50
40
30
20
10
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
World Rural
World Urban
Developing Rural
Developing Urban
Global Population 6.4 => 8.1 bn
Urban 4.9 bn
Rural 3.3 bn
Urban w/o
Migration
Rural to
Urban
And Internal
Migration
1. 5 bn
Urban 3.1 bn
2005
Rural 3.2 bn
2030
Pakistan Remittances by Province
Percentage of Household Income
Pakistan
NWFP
Punjab
Balochistan
Sindh
Foreign
3.12
Domestic
3.97
Foreign
7.33
Domestic
10.71
Foreign
3.36
Domestic
4.59
Foreign
1.97
Domestic
0.47
Foreign
0.87
Domestic
0.13
Pakistan Remittances by Province
Foreign/Domestic and Urban/Rural (% HH Y)
14
12
10
Total
8
Urban
6
Rural
4
2
Pakistan
NWFP
Punjab
Balochistan
Domestic
Foreign
Domestic
Foreign
Domestic
Foreign
Domestic
Foreign
Domestic
Foreign
0
Sindh
Total Income of Pueblos:
Local, National and Transnational
MUNICIPIO Santa
Ana
% INCOME
del
Valle
LOCAL
E XTERIOR
Government
San
San
San
Juan
Sebastian Mateo
Teitipac Abasolo Cajones
San Pablo
Tlacolula
Macuiltianguis
59.8 47.2
27.4
50.5
17.8
47.5
40.1 52.7
72.5
49.4
82.1
52.4
8.4
12.3
8.3
20.4
8.8
9.3
Remittances
91.6
87.7
91.7
79.6
91.2
90.7
Inter-national
78.4
32.7
43.8
26.9
9.3
18.1
National
13.0
55.0
47.8
52.5
81.8
72.4
Global Base of the Pyramid
Market
Global Transnationalism
Population
GNI (VA)
GNI/Per
Capita
Migration
Remittances
World
6,600 m
35,315 bn
5,170
190 m
300,000 m
Developed
1,100
26,994
27,678
101
185,520
Developing
5,500
9,321
1,226
89
105,901
Global
Diaspora
190
2,332
2,541
190
300,000 M
The Transnational BOP
between Developed and Developing
Countries
N. American Transnationalism
U.S.
Population GDP
GDP/ per
capita
Migration Remittances
300m
13,300 bn
44,100
25m
100m
1,494
33,567
13
55
741
8,070
1
25
1,598
3,870
7
30
43
U.S.
Hispanics
Mexico
103
450
Other
Latin Am.
…Remittances are only the tip of
the Transnational Iceberg
10% Cash Remittance
90% Other Cash Transactions
Telecommunication, Insurance,
Housing, Health-care,
Transportation/Travel,
Education/Training
Huge remittance flows link the Global BOP
•10 Trillion in Income, x 1000s Transactions
•10 Trillion in “Dead Capital Assets”
Sizing the Global BOP
Payments Market
• Huge Expenditures -- over 5 trillion per
year
• Even Bigger total economic contribution –
over 10 trillion in Value Added per year
• “Dead Assets” of over 10 trillion
• Total transactions of the BOP 4 billion
people – over 12 trillion transactions a
year, undocumented and unleveraged
3. From Vicious to Virtuous Cycles of
Transnational Development:
From: Cash Remittances, local Asset
Inflation & External Dependence
=> Enabled by
Global Dysfunctional Industries
To: E-Remittances, Micro-Banking
and Productive Projects
=> A “Clintonian Industrial Revolution”
Alternative Scenarios: From
Negative to Positive Causality
“Dutch Inflation
Cash
Disease”
Remittance
Shrinking Middle
Widening base
External
Dependence
Top Growth
Electronic
Transfers
Widening
Middle
Widening
Middle
Micro
Credit
Productive
Investments
Vicious Cycles =
Widening Base of Pyramids
Global Stagnation
“Dutch
Disease”
Lower
Productivity
Shrinking Middle Incomes
Widening Base
Asset
Inflation
Cash
Remittances
External
Dependence
Virtuous Cycles =
Formation of Diamonds
Global Income
Growth
Widening
Middle
Widening
Middle
Shrinking
Bottom of
the
Pyramid
Productive
Investments
Network
Capital
E-Mobile
Transfers
Micro
Credit
Global
Capital
Markets
Income
Data
Mining
Central problem: dysfunctional disorganization across industries
-retail distribution networks
-micro-finance
-commercial banking
-card processing/networks
-remittances
-mobile telco-operators
-mobile OEMs
Forging a BOP-Led Convergence of
Telco, Banking & Micro-Finance
• Revolutionary “Leapfrog” Opportunity
• From the “prepaid phone card” to the
“prepaid everything card”
• Cost busting platform for financial delivery
• Anti-Churning VA for pre-paid telecom
• Cross leveraging of multi-level marketing
networks
• Data Mining, Scoring and Securitization
Bonanza
Money Transfer Cards’ Share of
U.S. Global Remittances Takes Off
Aite Group, 2005
5.0%
4.4%
4.5%
4.0%
3.5%
3.0%
2.5%
1.8%
2.0%
1.5%
0.7%
1.0%
0.5%
0.0%
0.0%
2002
2003
0.2%
0.0%
2004
2005
2006
2007
World Mobile Phone Subscribers:
As Growth Slows, SF Mexico Provides
More Value Added Products
Mobile Phone Penetration –
Latin America
Electronic Remittances and Payments
Branchless
Agents, Credit
Unions, Banks &
ATM/POS
United States
Telephony
Direct
Deposit
Payroll
Pre-paid
MasterCard
Other
Products &
Services
Worldwide
Agents, Credit
Unions, Banks &
ATM/POS
Worldwide
Telephony
Dollar Stored
Value Card
Peso Stored
Value Card
Direct
Deposit
Payroll
Pre-paid
MasterCard
Other
Products &
Services
Imagine A Integrated World of
Products & Services for the BOP
Global Platform for Micro-Finance
Affiliated Banks &
Credit Unions
Global
Load
Locations
Central
Processing
IP-based
System
Local Telco
Affiliated Banks & Micro
Finance Institutions
NB
Secured
Internet
Local Telco
Pay-Out Locations Worldwide
Grameen e-Remittances to
Grameen Phone Ladies
(3) Worker Sends
e-Remittance by
Free Phone Call
$
$
(1)
Worker
Takes
Cash To
Merchant
(2)
Merchant
Loads Cash
to SFCard
by Free Phone
Call
(4)
Grameen
Phone Lady
Unloads Cash
From SFCard
to Villager
By Free Phone
Call
Micro Credit e-delivery and
e-payments via Grameen- Card
(3) Grameen Member
uses Funds for
Investment
(5) Grameen
Automatically
Withdraws funds
From SFBanCard
On Sundays
(1) Grameen
Delivers
Credit to
SFBanCard
(2) Member
Withdraws
Funds via:
-Merchant or
Phone Lady
-GB Branch
-POS/ATM
$
$
(4) Member
Load Funds to
SFBanCard via:
-Merchant or
Phone Lady
-GB Branch
-POS/ATM
GRAMAEEN PILIOT EVALUATION: CUT OPERATING COSTS BY 43%
2005, Thousand Taka per Branch
L: 100% = 14,294
•Collection Cost (C)1
•
Income
•
Expense
Initial Portfolio (L)
100
• 7
Non-performing loans (N)
• 19
• 9
Loan Interest (Il)
Savings Interest (Is)
•Distribution Cost (D)
• 135
• 317
• 159
• 217
• 1
• 153
Opportunity Cost (R)
• -17%
• Current • Pilot
• 12
• -20%
• 123
• 6Collection Cost (C)
• 3
Distribution Cost (D)
Final Portfolio (L + π)
105
5%
1
• Current • Pilot
1
•Opportunity Cost (R)1
Additional Investment Opty
•10%
operationa
l costs vs.
2% for
traditional
retail
banks
• 643
• 321
• 443
• -17%
Reflects increased capital expenditures of 70,000 Taka per year
•Total Operating Cost1
• 561
• 960
• -17%
• 603
• 660
• Current • Pilot
πg = 859
Advance to Two-Way Cash Flow
and Real-Time Payments
(5) Cash Reload
To Cards
(2) Less Cash
to Bank
(1) Cash for Phone Minutes
(3) More Real Time Transfers
(4) Cash Withdrawals
Lessons from the “OaxaCalifornia”
Communities and Families Project
-Legalization: A Strong “Win-Win”
-Remittance Empowerment => 10x more
-Capacity Problems in Remittance Receiving
MFIs
Global CGE Impacts of Trade versus Migration
Liberalization
Source: WB 2003
Static CGE
Model
WTO “Doha”
Global Trade
Liberalization
Global
Migration
Liberalization
132,219
354,918 bn
Over 10 Years Over 10 Years
160,000 bn
Per Year
Dynamic CGE
Model
?????
Alternative Scenarios: NAFTA CGE Static
Impacts of Trade versus Migration
Liberalization
Source: NAID Center CGE
Model
(i) NAFTA Trade
Liberalization
Mexico
US
45 billion
65 bn
Over 10
Over 10 Years
Years
(ii) Proposition 187 21 bn, annual -157 bn,
annual
(3 a) Legalization
12 bn, annual -11 bn + 35 bn,
and HK Self Inv
annual
(3 b) Legalization
190 bn,
285 bn,
Ubicación de las seis localidades del Proyecto OAXACALIFORNIA
por Región, Distrito y Municipio en el Estado de Oaxaca.
Región Sierra Norte
Municipios del Distrito Ixtlán
Región Valles
Municipios
Centralesdel Distrito Tlacolula
Tlacolula de Matamoros
Santa Ana del Valle
San Sebastián Abasolo
San Juan Teitipac
Regiones de Oaxaca
01 Cañada
02 Costa
03 Istmo
04 Mixteca
05 Papaloapam
06 Sierra Norte
07 Sierra Sur
08 Valles Centrales
San Pablo Macuiltianguis
Muicipios del Distrito Villa Alta
San Mateo Cajonos
Potential Remittance-Investment
Multiplier Effects
Santa Ana del Valle
Base
Scenario I
Consumption
510,400
Added Remmittances as Investment
Added Remmittances as Consumption
Real Peso GDP and % Change
Multiplier effects
Scenario II
Artesanía
510,400
4,862,708
1.86
4.40
9.72
26.20
Alternative Futures
OaxaCalifornia Transnationalism
California
Oaxaca
OaxUS
Oax/Cal
Total Population (millions)
GDP (billion of 2000 US$)
34.48
1,344.0
3.438
6.7
1.05
29.5
0.6
14.5
GDP/per capita (2000 US$)
Migration
Foreign Born
38,996
1,970
29,500
28,500
8.8m
900 k
525 k
First Generation
12.8m
150 K
75 K
Mexican Origin
Foreign Born
11.2m
4.1m
Remittances (billion US$)
30bn
Source: US Census, UN, WB, IMO, IMF, MIF
480m
275m
Total Income of Pueblos:
Local, National and Transnational
MUNICIPIO Santa
Ana
% INCOME
del
Valle
LOCAL
E XTERIOR
Government
San
San
San
Juan
Sebastian Mateo
Teitipac Abasolo Cajones
San Pablo
Tlacolula
Macuiltianguis
59.8 47.2
27.4
50.5
17.8
47.5
40.1 52.7
72.5
49.4
82.1
52.4
8.4
12.3
8.3
20.4
8.8
9.3
Remittances
91.6
87.7
91.7
79.6
91.2
90.7
Inter-national
78.4
32.7
43.8
26.9
9.3
18.1
National
13.0
55.0
47.8
52.5
81.8
72.4
Degree of Marginalization by Municipality: 1980-2000
Abasol
o
Santa
Ana del
Valle
San
Tlacolula San Pablo
San
Juan
deMata Macuiltia Mateo
Teitipac
moros
nguis
Cajonos
1980
Very
High
High
Very
High
High
High
High
1990
High
High
Very
High
Low
Medium
High
1995
High
High
Very
High
Medium
Medium
Medium
2000
High
High
Very
High
Very
High
Very
High
Very
High
Source: CONAPO. 2000
Potential Remittance-Investment
Multiplier Effects
Santa Ana del Valle
Base
Scenario I
Consumption
510,400
Added Remmittances as Investment
Added Remmittances as Consumption
Real Peso GDP and % Change
Multiplier effects
Scenario II
Artesanía
510,400
4,862,708
1.86
4.40
9.72
26.20
Modelos de Multiplicadores
(Pesos y cambios porcentuales respecto a la
base)
San Juan Teitipac
Base
Ejercicio I
Remesas
Cambio al Sector Productivo
Cambio a las Remesas
Internacionales
Real GDP
Multiplier effects
Ejercicio II
Artesanía
100,057
100,057
3,969,521
0.98
3.52
3.88
19.65
Modelos de Multiplicadores
(Pesos y cambios porcentuales respecto a la
base)
San Sebastián Abasolo
Base
Cambio al Sector
Productivo
Cambio a las Remesas
Internacionales
Real GDP
Multiplier effects
Ejercicio I
Remesas
Ejercicio II
Artesanía
64,858
663,951
2,868,036
0.46
2.72
1.99
21.28
Modelos de Multiplicadores
(Pesos y cambios porcentuales respecto a la
base)
San Mateo Cajonos
Base
Cambio al Sector
Productivo
Cambio a las Remesas
Internacionales
Real GDP
Multiplier effects
Ejercicio I
Remesas
Ejercicio II
Artesanía
165,998
165,998
1,815,329
1.63
5.98
7.83
25.40
Modelos de Multiplicadores
(Pesos y cambios porcentuales respecto a la
base)
San Pablo Macuiltianguis
Base
Cambio al Sector
Productivo
Cambio a las Remesas
Internacionales
Real GDP
Multiplier effects
Ejercicio I
Remesas
Ejercicio II
Artesanía
14,052
14,052
2,028,520
1.38
4.18
4.4
31.20
Modelos de Multiplicadores
(Pesos y cambios porcentuales respecto a la
base)
Tlacolula
Base
Ejercicio I
Remesas
Cambio al Sector Productivo
Cambio a las Remesas
Internacionales
Real GDP
Multiplier effects
Ejercicio II
Artesanía
233,889
233,889
67,662,558
0.19
0.51
4.97
47.54
4. Massive Opportunity for Community
Economic Development
• Legalization Reform should also empower
workers and their families to fully utilize
the banking system
• Creates more savings and reinvestment in
Los Angeles communities and financial
institutions
• Faster movement to credit histories for
cleaner cars, home ownership, education
and small business investment
4. Massive Opportunity for Community
Economic Development
• Moving Remittances into the Mexican
banking/micro-finance system with local
reinvestment in Mexican migrant sending areas
has more direct effect than all the trade,
investment and foreign aid combined
• New Mobile Banking/Debit Technologies open a
new world of opportunities