Everywhere I go in Bolivia I see huge billboards that advertise “Mini Carga desde 1 Bs” (Mini recharge from 1 Boliviano) with a picture of a guy holding a 1 Boliviano coin and a cellphone.
After having my Bolivian cellphone for only a day, I couldn’t for the life of me understand why companies were advertising such a small sum of money to recharge your pre-paid phone. Especially since a phone call of a few seconds would eat that 1 Boliviano before you could say “hola” (although text messages are much cheaper, around 20 Bolivian cents each depending on the company – Entel, Tigo or Viva). It seemed so inefficient. But then I talked to a friend who has lived in Bolivia longer than I have, after which I couldn’t help but think of the similarities between mini carga and microfinance.
So here’s the scoop: My friend told me that recharging 1 Bolivano allows some parts of the Bolivian population to access mobile phone service that they might not have been able to afford otherwise. With 1 Boliviano, you can have an active phone line to keep connected, but still use cheap public fixed lines to actually make outgoing calls. This keeps communication affordable yet convenient.
First, they both have small in the name. Yes, that’s a technical point, but a rather important one. Both consider smaller sums of money.
Both business models work with small amounts for many clients as opposed to large amounts for a few big clients.
Both include an excluded group from a service. In the case of mini carga it’s cellular service and microfinance in financial services.
Both cultivate clients that otherwise may not have been clients and possibly in the future become larger clients, whether it’s a loyal customer who could eventually be rich enough to charge their phone with more than 1 Boliviano at a time or someone who becomes eligible to take part in the formal financial sector.
Both help with mobility. Mini carga allows someone to stay connected with business contacts, family, etc while on the go while microfinance, with traveling loan officers who may visit clients at their place of business or in a rural area to collect payments while the clients are away from the bank.
Both services fit the needs of their clients. Mini carga allows someone with little savings to access wireless phone service while microfinance organizations have specialized services like agriculture loans, emergency loans, or more generally, smaller loans for small businesses.
Both are some ways inefficient. To recharge your phone with 1 Boliviano means that you have to recharge it more often, which requires going to a kiosk or store and standing on-line. Microfinance is inefficient and more expensive than “macrofinance” because it takes the same amount (or more) paperwork and collection time for a smaller amount of money, possibly more frequent payments, and group meetings which take clients away from their businesses. See my earlier post of Group Loan for more info.
Both make use of technology. In the case of telecom, a mobile phone would be considered an upgrade from a landline (unless your call drops which often happens). Some microfinance institutions use technology like mobile banking to collect payments. Please see the CGAP blog for a couple articles about mobile banking and microfinance.
And finally, I’ve seen loan officers use their mobile phones to call their clients’ mobile phones when the entrepreneurs haven’t come to a group meeting or to make sure they are home to visit or to make their payments. With luck, the client will have mini recharged their phone so they can accept the call.
I guess mini carga makes sense after all.
Sheethal Shobowale is working as a Kiva Fellow at MFI Emprender in Bolivia. In recent weeks, she has been visiting Kiva clients in La Paz, Santa Cruz and Cochabamba. Please click here to make a Kiva loan to entrepreneurs who work in the mobile phone business. If there aren’t any mobile phone loans available, please click here to make a loan to another Kiva entrepreneur.