This way of carrying babies is very common in Mozambique, south eastern Africa. It is relatively comfortable and versatile. Plus, all you need is a rectangular piece of cloth (and a baby, or course).
The baby in this picture is 9 months old. I have been carrying him using this technique since he was 1 month old. As he grew, my back got stronger!
Step 1Find a rectangular cloth
The material should be sturdy but soft. Cotton works well. What is important is that it is rectangular and also big enough (about as wide as your arm span). The cloth pictured here is a Mozambican "capulana".
The baby is being exercised by the mother's movement and this strengthens the muscles and skeletal structure. In addition, children carried in this manner exhibit far fewer signs of agression (obviously if a child is raised in a disfunctional family or violent area this benefit would be counter-acted).
The only downside is when much older children are strapped for long periods of time which then inhibits their gross motor skills as their bodies are ready to take over that task by then.
As the other viewers have said, carrying a baby in this way can be extremely helpful in freeing up your arms with no negative side effects. For people from a culture that does not strap babies to the body with a blanket, towel or cloth it can be very disconcerting but as advised in the instructions, hang around the house first to gain confidence and to ensure you have a good idea of your width.