gates notes The blog of Bill Gates
SEARCH
or Exit Search

2015 Gates Annual letter Our Big Bet
for the Future
Bill and Melinda Gates

Forty years ago, Bill and his childhood friend Paul Allen bet that software and personal computers would change the way people around the world worked and played. This bet wasn't exactly a wager. It was an opportunity to make computers personal and empower people through the magic of software. Some people thought they were nuts. But the bet turned out well.

 

Fifteen years ago, the two of us made a similar bet. We started our foundation in 2000 with the idea that by backing innovative work in health and education, we could help dramatically reduce inequity. The progress we've seen so far is very exciting — so exciting that we are doubling down on the bet we made 15 years ago, and picking ambitious goals for what's possible 15 years from now.

 

Our Big Bet

The lives of people in poor countries will improve faster in the next 15 years than at any other time in history. And their lives will improve more than anyone else's.

Scroll

Our Big Bet

We see an opportunity and we want to make the most of it.

We're putting our credibility, time, and money behind this bet — and asking others to join us — because we think there has never been a better time to accelerate progress and have a big impact around the world.

Some will say we're irrational to make this bet too. A skeptic would look at the world's problems and conclude that things are only getting worse. And we shouldn't lose sight of the fact that a handful of the worst-off countries will continue to struggle.

Bill and Melinda Gates in Tanzania
When we travel, we meet with people to learn what they need to live a healthy, productive life. Mapinga, Tanzania, 2011

But we think the next 15 years will see major breakthroughs for most people in poor countries. They will be living longer and in better health. They will have unprecedented opportunities to get an education, eat nutritious food, and benefit from mobile banking. These breakthroughs will be driven by innovation in technology — ranging from new vaccines and hardier crops to much cheaper smartphones and tablets — and by innovations that help deliver those things to more people.

The rich world will keep getting exciting new advances too, but the improvements in the lives of the poor will be far more fundamental — the basics of a healthy, productive life. It's great that more people in rich countries will be able to watch movies on super hi-resolution screens. It's even better that more parents in poor countries will know their children aren't going to die.

A quick overview of the bet we’re making about the next 15 years

A quick overview of the bet we’re making about the next 15 years.

It is fair to ask whether the progress we're predicting will be stifled by climate change. The most dramatic problems caused by climate change are more than 15 years away, but the long-term threat is so serious that the world needs to move much more aggressively — right now — to develop energy sources that are cheaper, can deliver on demand, and emit zero carbon dioxide. The next 15 years are a pivotal time when these energy sources need to be developed so they'll be ready to deploy before the effects of climate change become severe. Bill is investing time in this work personally (not through our foundation) and will continue to speak out about it.

We're excited to see how much better the world will be in 15 years. Here are some of the breakthroughs we see coming.

Banking — Mobile banking will help the poor transform their lives

Three: Banking Mobile banking will help the poor transform their lives Bill and Melinda Gates

Scroll

The financial lives of the poor are very complicated.

The Kenya Financial Diaries, a fascinating project documenting the financial lives of hundreds of Kenyans over the course of a year, tells countless stories of people who had to forgo medical care or take their children out of school for want of a few dollars.

The reason poor people face these agonizing choices is not just that they don't have enough assets. They also don't have access to a bank to help them use their assets effectively. If their savings are in the form of jewelry or livestock, for example, they can’t very well chip off tiny pieces to cover routine daily expenses.

Mobile banking will make it easier for the poor to borrow and save

Mobile banking will make it easier for the poor to borrow and save.

Instead, the poor use financial services that are extremely inefficient. They save by hiding cash around the house or buying commodities that lose value over time. When they send money to friends and relatives to help them through tough times, they either take a day off and deliver the cash themselves or trust someone else to do it for them. If they need to borrow money for an emergency, they have to pay usurious interest rates to a moneylender. Not having access to a range of cheap and easy financial services makes it much more difficult to be poor.

bKash mobile station in Dhaka, Bangladesh, 2014.
Photo courtesy of bKash, Ltd.

Community-based mobile financial services like bKash, above, are enabling Bangladesh's low-income population to participate in the country's growing digital economy.

But in the next 15 years, digital banking will give the poor more control over their assets and help them transform their lives.

The key to this will be mobile phones. Already, in the developing countries with the right regulatory framework, people are storing money digitally on their phones and using their phones to make purchases, as if they were debit cards. By 2030, 2 billion people who don't have a bank account today will be storing money and making payment with their phones. And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.

Mobile Money in the Developing World

Kenya got an early start with mobile money—its M-PESA service launched in 2007—which is one reason the country is a leader in this area.
A chart showing the number of active mobile money accounts per 1000 adults in Kenya in 2004 as compared to adults per 1000 in Tanzania, Botswana, Zimbabwe, Cameroon, Philippines, Bangladesh

Traditional banks cannot afford to serve the poor because of their costs. That's why 2.5 billion adults don't currently have a bank account. In villages where people borrow or save in tiny denominations, building and maintaining a bank branch just doesn't make sense. And when most people think about financial services specifically for the poor, they think of microcredit, such as small loans to businesswomen in poor countries. Indeed, small loans have helped millions of people, but loans are only one of the financial services the poor need, interest rates are relatively high, and these services have reached only a small fraction of the poorest.

The companies pioneering mobile banking find it profitable to serve the poor because the marginal cost of processing a digital transaction is near zero. And because so many people in developing countries have mobile phones — more than 70 percent of adults in many countries are subscribers now — the volume of transactions can be very high. By making small commissions on millions and millions of transactions, mobile money providers can make a profit serving poor customers, just as brick-and-mortar banks do serving the wealthy. Once these services get going, then there will be competitive innovation in offerings like special savings or credit plans related to farming or education.

2.5 billion adults without a bank account in poor countries Source: The World Bank

In Bangladesh, the fastest-growing financial services company is a mobile money provider called bKash. Less than four years after launching, it processes roughly 2 million transactions per day, with a total value of nearly $1 billion each month.

Mobile Phones Can Help People Make the Most of Their Money

Old Methods of Banking VS New Mobile Banking

  • Old
    Keep Cash at Home
    Old Method

    Keep Cash at Home

    Con

    Insecure

  • Old
    Invest in Assets
    Old Method

    Invest in Assets Like Jewelry or Livestock

    Con

    Difficult to liquidate

  • Old
    Deliver by Hand
    Old Method

    Deliver by Hand

    Con

    Time-consuming, unsafe

  • Old
    Transport by Courier
    Old Method

    Transport by Courier

    Con

    Costly fees, unsafe

  • New Mobile
    Stored Digitally
    Mobile Banking

    Stored Digitally

    Pro

    Money is safe, secure, can be accessed only by the account holder

  • New Mobile
    Money In = Money Out
    Mobile Banking

    Money In = Money Out

    Pro

    Savings can be spent in any amount (minus a small transaction fee)

  • New Mobile
    Instant Transfers
    Mobile Banking

    Instant Transfers

    Pro

    Money can be sent to any other user instantaneously and at very little cost

  • New Mobile
    Safe and Efficient
    Mobile Banking

    Safe and Efficient

    Pro

    Modest fees and a safe, reliable transfer of funds

Source: United Nations

This vision of the future isn't going to materialize by itself. There are barriers that people in the field are working hard to solve. Mobile phone access, for example, still isn't equal; only 46 percent of Bangladeshi women own a phone, compared to 76 percent of Bangladeshi men, which means women lack access to services like bKash and the opportunities that the digital economy is bringing to Bangladeshi society.

There is a lot of work ahead to get regulators in developing countries to update their financial regulations. If the regulations limit digital banking, as is still the case in most countries, innovators can't enter.

Mobile subscriptions in developing countries went from zero in 1990 to over 80 million today.

Another key factor to getting the use of digital money to critical mass is making sure there are enough locations where people can convert digital money into cash and cash into digital money. Without this as an enabling factor, the digital economy can't get started. Making sure that enough retail stores in every community provide this service allows the digital economy to bootstrap into the mainstream.

One interesting feature of digital financial innovation is that some of it is happening in poor countries first. If we waited a few decades, banks in developed countries would invent digital banking tools, and they would trickle down eventually to developing countries. But because there is strong demand for banking among the poor, and because the poor can in fact be a profitable customer base, entrepreneurs in developing countries are doing exciting work — some of which will "trickle up" to developed countries over time.