Natural disasters -- earthquakes, floods, tsunamis -- leave many homeless and without any water, food, medicines and other critical supplies. The world community, eager to help the victims, begins to mobilize help and support. Many aid advocates and experts have argued against sending aid-in-kind -- old shoes, clothes etc. -- because the costs of collecting and sending such items are way too high. Instead, we are asked to send cash -- we can auction our goods on eBay and send the cash proceeds to victims, or we can text a code using our cell phones and $10 will be deducted from our next phone bill and the cash is on its way to help the needy. Great. We solved the first mile problem in aid delivery.
Now, let us make sure that critical supplies reach the victims in time of need. We still need to solve the last mile problem. How do we do it currently? Sometimes, we load food, water and medicines on helicopters, fly these helicopters to affected areas and do a helicopter drop. There is a mad stampede to grab whatever is being dropped. Some are lucky to get it. Some are luckier -- or physically stronger -- to get even more than what they need. Many others -- perhaps too old or weak or not fortunate enough to be present during the helicopter drop -- don't get anything at all. Survival of the fittest.
Other times, we give away supplies to local relief agencies and ask them to distribute it -- free of cost, of course, we won't imagine charging anyone in time of emergencies -- to disaster victims. Sometimes it works - if we are lucky. Often, unscrupulous intermediaries might see an opportunity to steal the supplies instead and stealthily sell these in the black market at the time of the emergency, or perhaps later when the scrutinizing eyes may not be present. The last mile problem is much more pernicious.
Here is an alternative proposal. If people had bank accounts that were integrated with mobile payments, as in increasingly popular M-Pesa in Kenya, the world relief agencies that collected cash from you could transfer cash to all bank accounts in the disaster struck region in an emergency. Separately, we could rush water, food, medicine to as many private local merchants and sell these to them. The profit motive will get these merchants to use their most efficient delivery mechanisms, and competition among them will hopefully ensure that price gouging is minimized. People will receive notification, with the help of cell phones, radio and television broadcasts, or even helicopter drop off leaflets, that their bank accounts have been credited with a particular amount of cash which they can use to buy what they need the most.
But nearly half the world population does not even have bank accounts. A group of us, consisting of academics, philosophers, social entrepreneurs and executives, have proposed a remedy. We propose that every child born in this world start life with a Financial Access at Birth (FAB) bank account. The opening of these "FAB" bank accounts would be integrated with the official birth registration process and with electronic banking. Governments, with the help of institutional/individual donors will make a deposit of $100 in each FAB account. Not only does this solve the last mile problem in delivery of aid to people in emergencies, FAB accounts open the possibility of building savings, delivering health benefits, educational aid and catastrophe insurance.
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