Being one of the richest couples in the world has allowed Bill and Melinda Gates the freedom to help alleviate world poverty in the ways that they think work best.
In their view, shifting financial payments for the world’s poorest from cash to digital, can only make their lives easier and help bring them into the formal economy.
According to its 2013 annual report, the Gates Foundation distributed almost $1.8 billion in funding in the 2013 calendar year to global development programs, with 5 percent, approximately $90 million, going to the Financial Services for the Poor program.
Rodger Voorhies, director of Financial Services for the Poor recently appeared as a witness before the Senate of Canada’s Committee on Banking, Trade and Commerce to talk about the foundation’s approach to digital currencies.
Gates Foundation funds digital payment systems
The Financial Services for the Poor program aims to reach the majority of people in poor and rural areas with low-cost digital payment systems who use their countries’ current currencies.
As Voorhies explained to the Canadian senators, they are taking advantage of the fact that cell phones are even more plentiful than indoor plumbing for many of the world’s poorest.
“We believe digital services will be transformative and will improve the lives of the poorest over the next 15 years, and we will see a greater acceleration in this service than at any other time in history,” Voorhies said.
The Foundation hopes that by 2030, 2 billion people who do not have a bank account will be storing money and making payments with their phones and other digital devices.
Waiting to see about Bitcoin
The Gates Foundation is an advocate and an enabler for digital payment methods for the developing world including M-PESA’s M‑Shwari in Kenya, M‑Pawa in Tanzania and bKash in Bangladesh that are based on current currencies.
But the foundation is staying away from digital currencies for the moment although Voorhies told the senators they are eagerly awaiting the Senate’s report and haven’t made any formal decisions about Bitcoin.
“[W]e have stated, or as has been quoted by Bill Gates and others, the technology is exciting, but it does have some weaknesses on anonymity and fluctuation,” Voorhies said. “I think that governments need to look at that carefully. I don’t have a good answer; and it sounds like I’m trying to be evasive about whether the Canadian government should regulate.
“That being said, we think that cryptotechnology is a very exciting area and one that we’re currently doing research on and are engaged with many of the large providers in this space trying to understand it better, and maybe even doing some testing around it,” he said.
At the moment, the foundation is concerned about the anonymity of Bitcoin making it more risky for the unbanked instead of these people becoming a known quantity. This case wasn’t clearly made, so the senators seemed a little puzzled.
But the Canadian senators did understand the foundation’s problem with the “volatility” of digital currencies.
The senators said they also were glad to be told that the Gates Foundation is interested in their work as they go into the report-writing stage of the hearings into digital currencies.
The final report release date has not been set, but Bitcoin Magazine will be covering the report when it is released.
Photo by World Economic Forum from Cologny, Switzerland [CC BY-SA 2.0], via Wikimedia Commons