OK, so National Ethical Investment Week may have concluded a couple of weeks ago, but I thought that you might like to know a little about some of the “reasons why” some shares are held within an ethical portfolio.
Take Ecclesiastical, they hold Vodaphone, which to most of us may not seem like much of big deal – but the stock fits on ethical grounds because of the work that Vodaphone is doing in countries like Kenya, Tanzania, Afghanistan, Fiji and South Africa with their M-PESA scheme.
The initial concept of M-PESA was to create a service which allowed microfinance borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers. This would enable microfinance institutions (MFIs) to offer more competitive loan rates to their users, as there is a reduced cost of dealing in cash. The users of the service would gain through being able to track their finances more easily. But when the service was trialled, customers adopted the service for a variety of alternative uses; complications arose with Faulu, the partnering microfinance institution (MFI). M-PESA was re-focused and launched with a different value proposition: sending remittances home across the country and making payments.
Vodaphone effectively make it very easy for payments to be transferred between people in nations where banks are few and far between. For example, in Tanzania only around 10% of people have a bank account, but over 50% have a mobile phone. In many senses, this leaves the UK and many other developped nations way behind in terms of mobile banking.
Already in Kenya the amount of money transferred between mobile phones is equivalent to 11% of their GDP with mobile phone ownership at 42.1% of the 38.6m population (end 2008).
The scheme has attracted the attention of the Bill and Melinda Gates Foundation who have provided assistance to improve take up in Tanzania.
Developments that Vodaphone have been involved with “M-Health” (a UN initiative) which includes the transfer of medical information, dispensing medication and mapping of disease outbreaks.
By way of another example – fishermen in Kerala use their mobiles to call ahead to find out which marketplace is offering the best prices. As a result of this advantage their profits have increased by 8% but consumer prices fell by 4% due to less wastage. So everyone wins.
The Vodaphone shares are held because they offer significant potential reward for investors as these initiatives and others like them are developped – whilst also meeting many of the requirements for ethical or socially responsible investment.
Let me know if you would like more stories like this.
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