Please describe the goal of your initiative; outline what you are trying to achieve
The main objective is to disseminate an innovative system that involves migrants in local economic development processes of their rural geographic area of origin, facilitated by the use of mobile phones, informatics, economic literacy workshops and the construction of community endogenous regeneration values. This project addresses problems related to migration and remittances as well as the opportunities that this fact brings along, through an integral approach. The goal is to generate a 15% costs reduction regarding transference of remittances through the use of internet based software, improving their use by spending them in a local rural business network through the use of POS and SMS, strengthened by a local campaign for maximization of local money flows for generation of LED.
Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)
Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,, Other (Please describe below).
If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
Alternative endogenous solutions for complementing financial services
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?
We hope to spread our approach to rural communities in Honduras, El Salvador and Nicaragua. These communities are characterized by economical activities related to subsistence agriculture, small businesses, high levels of migration to the U.S. (implying remittances) and employment in sweatshops in the closest bigger cities. The communities we wish to approach show high levels of isolation from regional economic activity, due to weak infrastructure regarding roads, which indirectly leads to lower levels of access to education and health. Also, previous development interventions have created dependency dynamics among people in these communities, meaning that their inhabitants expect to receive financial support from institutions who implement projects, which is a behavioral pattern we expect to transform.
Could your solution work in other geographies or regions? If so, where?
Yes, our solution can work in any region that displays similar characteristics to the ones described in the last question, which are very common in rural Central America. Our actions are appropriate for communities that show high levels of income generated through remittances and low levels of economic growth linked to investment of remittances received, thus , showing strong pattern of external consumerism and great potential for revitalization of the local economy. The model can be replicated wherever there is unavailability of convenient local systems to collect remittances that would help avoid exposure to robbery and security risks. Furthermore, according to current research in the field of remittances, senders often feel frustrated because they have little influence on how the money they send is spent by their families back home. Our model can work in any community where remittances senders would like to be more involved in the investing and spending decisions their families make
If your solution is dramatically successful, how will things be different in 10 years?
We expect our model to have consolidated and still be generating benefits to the local community due to a behavioral voluntary change on the perception of poverty by our target group. In ten years, we imagine people in rural communities of the central American region enjoying the benefits of having established their own small businesses, creating a vibrant local economy where offers and demands successfully meet. We also expect to have generated higher levels of satisfaction from remittance senders, who would fully support the creation of a better socio economic environment in their communities. Finally, we expect our model to have geographically spread into other communities in the Central American region, through partner local institutions.
What will have had to have changed to make this happen?
Changes required to make this happen can be seen in progressive steps. The first change regards a mindset change towards appreciation of local assets, including creativity, reliability and self-esteem by our target group. We expect to achieve this change by delivery of tailor made community workshops and coaching sessions tackling these pressing issues. On second instance, remittance senders would have to be motivated by a better use of the money they send to their families back home, which we expect to accomplish through awareness generation campaigns regarding the potential of local money flows to boost the local economy. Finally, we would have to be able to fully develop our activities at pilot level and to disseminate results among the region, to spread the methodology and its benefits for its users.
What has been the impact of your solution to date?
So far, we have implemented our solution through the first stage of a pilot project. Technical results have been achieved, such as running feasibility studies, coverage investigations of the mobile network, etc., but the main results regarding improvements in the local economy are yet waiting to take place after settling necessary technicalities in the field. However, due to community workshops on awareness generation on the importance of local money flows, remittances receivers have already increased their consumption patterns towards local products, as evidenced by a local cooperative store.
What is your projected impact over the next five years?
Remittances transferred through this channel add 10% multiplier effect in the local economy. 15% of the remittances sent through the local business network can be used to create additional credit by partners.For example, in two different communities, 2000 clients will receive remittances via mobiles, leading to90% reduction of time collecting and 10% cost reduction. Also, we would expect 4000 migrants from the target group use the system to transfer remittances.We expect 10% of participants develop a business idea and request coaching, 1/3 of which implement ideas in less than year (250 created businesses).Proportion of business ideas implemented with remittances’ funds increases in 30%, and 60% of the participants acknowledge change in consumption patterns benefitinf the local economy.
What barriers might hinder the success of your project? How do you plan to overcome them?
The innovative character of the methodology poses a challenge, given that project officers are merely facilitators of local community mobilization and “coachers” of entrepreneurs (in case they request it), not advisors or experts that provide solutions to local communities. This shift demands openness towards a behavioral change from the project officers and a break-down of assistentialist patterns from communities. To overcome this, STRO provides close advisory and includes additional methodological “reinforcement” sessions to the basic training program, including also adaptation to specific conditions of the target group. Regarding remittances administration, some countries have intricate regulatory processes for approval of our procedures. To overcome this, we advance legal work before
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