The final speaker at IBM’s Business Partner Leadership Conference in Los Angeles was Nick Donofrio, the company’s Executive Vice President for Innovation and Technology. Always an emotional, enthusiastic and at times nostalgic speaker, little did the audience know that the next day IBM would announce that Nick will be retiring on October 1 after a fantastic career of forty-four years. I have no doubts that he will end up involved in many activities and will find that he may need to go back to work to regain some spare time.
One of Nick’s many leadership roles at IBM has been with the Global Innovation Outlook program. One of the recent GIO events brought together a diverse group of global thought leaders for a series of brainstorming sessions about the future of innovation and economic advancement in Africa. One of the greatest needs identified was to provide access to capital and financing to more of the African population. It was clear that there could be significant growth and transformation if there was a more open, scalable, lower-cost microfinance hub serving the African continent.
IBM and CARE have announced plans to enable microfinance institutions to dramatically lower the costs of providing financial services to large populations in the region who have no access to banks. The goal of the new Africa Financial Grid is to help alleviate poverty and promote economic development in the Sub-Saharan Region. The two organizations plan to establish an Africa Financial Grid built around a shared services and infrastructure model designed to significantly reduce operating costs, streamline lending processes, scale rapidly, and integrate with other resources such as credit bureaus, financial institutions and international payment networks. The Grid will also eventually be able to link with mobile payment providers in Africa to enable customers to repay loans or transfer money via mobile phones. The project will initially target 11 countries with a combined population of more than 400 million people.
There are millions of people with business ideas and aptitudes but with incomes of less than $100 per month, it has been impossible to get financing. A small loan can make a big difference. For example, a loan of $50 enabled a mother of six to purchase fabric and sell embroidered products. Based on her success she was able to get subsequent loans and expand her business. Very small loans can have a big impact but it has been too costly for financial institutions to make the loans practical. The combination of technology and expertise that IBM and CARE bring to the table has the potential to change the model and have a huge impact. One more example of how the Internet continues to empower people.