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Mobile Phones and Development
Jamais Cascio, 9 Mar 05

The BBC reports about a new study, undertaken by Vodafone and a group called the Center for Economic Policy Research, which claims that mobile phone use is growing faster in Africa than anywhere else in the world, and that those countries in Africa with the greatest use of mobile phone also saw higher growth rates. The Vodafone report is available here (PDF); fair warning, it's full of fairly dense academic economics prose. Read on for some of its observations and some discussion of its conclusions.

That mobile phone use is growing faster in Africa than anywhere else shouldn't come as much of a surprise, given a moment's thought. Only 6% of African citizens owned a mobile phone in 2004, so as prices drop (and low-cost phones made for the developing world come to market), there's a huge potential market available. In Asia, North America and Europe, conversely, mobile phone use approaches saturation, so any remaining growth will be far slower.

The report suggests -- but, at least in my once-over, doesn't prove -- that the higher mobile phone usage rates helped to cause the higher economic growth rates, not vice-versa. It is possible, and there's some logic to the notion: as more businesses rely on information and communication, access to information/communication technology would help trigger economic growth. I'd like to see more data to support that argument, though, at the very least a demonstration that the onset of mobile phone proliferation happened prior to the onset of new growth.

Setting aside the question of whether more phones = more growth, the report does include some interesting pieces of data about how and where mobile phones are used in Africa. They include (from the report summary):


  • 97 percent of people surveyed in Tanzania said they could access a mobile phone, while only 28 percent could access a landline. Income, gender, age, education and even absence of electricity do not create barriers to mobile access in rural communities, and mobiles are one of the most widely-owned consumer assets.

  • Mobiles save people living in rural communities the financial costs and time involved with travel. As a result, 85 percent of people in Tanzania and 79 percent in South Africa said they had greater contact and improved relationships with families and friends as a result of mobile phones.
  • Over 85 percent of small businesses run by black individuals in South Africa rely solely on a mobile phone for telecommunications.
  • Mobiles have a 'social halo' effect and are being used as a community amenity. Over half of mobile owners in South Africa allow family members to use their handset for free and a third do the same for friends.
  • There are now more than 82 million mobile users in Africa.
  • In the UK, the ratio of outgoing voice calls made to SMS messages sent is 0.6:1; in South Africa as a whole it is 3:1 for pre-pay phones; yet in rural communities it is 13:1 reflecting the effect of illiteracy and indigenous languages on use of SMS.

Communication and information technologies are as much (or more!) about social interaction as they are about economic interaction. A world of increased urbanization in developing nations means a world of families and friends broken apart by distance; electronic communication media help to shorten that distance, reinforcing social ties and helping to reduce the anomie of a life alone in a crowd. The villager in a mud hut (referred to in comments to earlier posts about developing world telecom) may not need a phone or a computer to live her day-to-day life, but if it allows ongoing contact with her son in a city hundreds of miles away, that phone or computer will be something she'll treasure.

The economic aspect is important, too, however. If the report's conclusions about the connection between economic growth and mobile phone use are correct, several development policy suggestions come to mind. Aid programs could support increased access to communication devices as an effective means of bootstrapping development. Developing nations with government-controlled telecoms could be encouraged to reduce the service fees for mobile phones, as access costs are just as much a barrier to use in the developing world as handset costs. And phone manufacturers could look more closely at developing handsets with features and interfaces designed to appeal to the needs of people in more traditional African communities, as there would certainly be a positive-feedback aspect to increased economic growth fueling demand for even more mobile phones.

Lastly, I'd like to see similar research undertaken in South America and South Asia. Is there a difference in growth rates in the parts of India with lower mobile phone penetration, for example? Is there a correlation between phone use and economic growth in Latin America?

Who's up for a bit of research?

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Comments

Jamais,

It's obviously hard to tell sometimes which comes first the economic growth or the technology usage. However, below is a recent report from WEF - titled "Global Information Technology Report 2004-2005" - see http://www.weforum.org/gitr

In these rankings, Chile which has had the best economic growth in SA over the last decade or so is the highest ranking Latin American country and Bolivia, a country that many consider to be the poorest Latin American country, is at the bottom of the rankings.


Posted by: Joe Deely on 9 Mar 05

My colleague, James Goodman, carried out some of the research cited on the BBC site and has posted his own thoughts on the research at Forum for the Future Comment: Africa Calling.

A copy of his presentation from the conference at CEPR is also there to download.

I think it is important to note that the 97 per cent figure being quoted is a little misleading. That figure relates to the sample, which was not chosen to be representative of Tanzania as a whole. The same is true of the 85 per cent of small businesses in SA - again this relates to the sample, which is not necessarily representative of the whole of SA.


Posted by: Tim Aldrich on 10 Mar 05

Joe, Tim, thank you for the added information.


Posted by: Jamais Cascio on 10 Mar 05

The Grameen Technology Center's Village Phone project has put over 1300 mobile phones in rural villages in Uganda in its first year of operation. (See http://www.gfusa.org/technology_center/village_phone/ for more on the program). Village Phone provides an interesting blend of social and economic benefits - as mentioned in the post, people are able to save time (oppty cost in many cases) and travel costs if they don't have to travel tens of kilometers to access a phone. The phones get used for a wide variety of purposes - staying in touch with families, getting commodity prices (gets them a fairer price for their goods), calling for medical care, etc. The phone is a community resource and is also economically beneficial to the individual operator, who is able to run a business by selling usage of the phone to others in the community at competitive rates (and fixed rates - this is important as it stops people with mobiles from extorting their neighbors @ 3 AM when they have a sick child).

1300 phones is clearly a tiny fraction of the 82 million phones in Africa, but the model is an interesting one from the perspective of combining ICT and development - rural development in particular - with an eye toward direct economic benefit to entrepreneurs along with tangible community benefits. I'm currently in Rwanda preparing to pilot the VP program here with the hope of seeing similar successes.


Posted by: George Conard on 16 Mar 05



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