This is a joint post with Caroline Decker.

With the expansion of cell coverage and mobile banking, millions of poor and rural people can now access financial services. But as financial institutions reach new populations, it is becoming clear that there are other issues keeping people from formal banking, such as the need for identification. Thankfully, there seems to be an easy solution. Just as mobile phones have helped overcome the issue of proximity for banking, biometrics could do the same for identification.

This is a joint post with Caroline Decker

Last week CGD published our working paper on the use of fingerprint and iris scans for cash transfers. As we continue to look into this topic, we are even more convinced of the potential this technology has for transfer systems, particularly those in resource-rich countries.

Cash transfers are increasingly being used by developing countries and development agencies to address a range of economic and social problems, including human investment and greater equality. But the option to directly distribute natural rent to citizens of resource-rich developing countries may also be especially relevant. Such an approach could encourage better resource management and head off the governance problems associated with the concentration of large rents in the hands of the state. Unfortunately, it is often difficult to establish efficient transfer programs in developing countries, many with a record of corruption and leakage. Evidence suggests that even well designed transfer programs experience 10-20 percent leakage, if not higher.

This post is joint with Caroline Decker

The application of biometrics to promote development and democratization is proceeding rapidly in the developing world—and largely below the radar of the media and development experts in high-income countries. Monitoring press releases on biometrics with the help of a news Google alert, I’ve been struck by the astonishing spread of this technology for use in voter registration in developing countries... Nepal, Zambia, Ghana, to name just three and ongoing cases.

Related Working Paper

Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries

Most recently, Gabon announced plans to introduce a biometric voter roll in advance of the next election: the opposition parties have been urging this for years. The election is due in December 2011, but the President is to seek a court ruling on its deferral to 2012 to allow for the orderly introduction of biometrics. The proposal has been supported by a group of NGOs and associations, as well as the Secretary General of one of the main opposition parties. Bolivia provides an example of what can be done to increase political inclusion. Over 5 million people were enrolled in 2009 within a period of 76 days by some 3,000 enrolment stations, increasing the voter roll by an astonishing 2 million people. The main drivers were the opposition parties, which were reluctant to contest an election with the old, discredited, roll. The exercise was very successful, in the assessment by the Carter Center.