The Mobile Phone Revolution in the Developing World

Globally, there has been an explosion of wireless communication, especially of mobile phones. Wireless-phone subscription is growing faster than fixed-line subscription. The adoption of wireless communication technologies occurs for different reasons in different types of economies. For example in countries with poor fixed-line infrastructure, wireless becomes a technological substitute for fixed lines. Even in countries with adequate fixed-line infrastructure, the competitive rates for mobile phone services is making them an economic substitute for fixed lines.

For us living in the developed world, we use mobile phones mostly for connecting with people, for entertainment, getting access to news/information etc. And although we realize the big impact its made on our lives, we still cannot grasp the magnitude of the impact mobile phones have made, and continue to make, in the developing world. Mobile phones are a transformative technology that increases GDP and, quite simply, revolutionizes people’s lives.

Impact of Mobile Phones on Development:

Some statistics from Africa:
Mobile phones have had the biggest impact in Africa. Mobile phone subscriptions in Africa have risen from 16 million in 2000 to 376 million in 2008 – or one-third of sub-Saharan Africa’s population. In 1999 the Kenya-based service provider Safaricom projected that the mobile phone market in Kenya would reach three million subscribers by 2020. Safaricom currently has over thirteen million. And mobile phone use is booming despite high costs. The cheapest mobile phone in Kenya costs half the average monthly income. In 1999 less than 10% of rural Africans lived in areas with mobile phone coverage. Today, that number is more than 60%. Cost-benefit calculations are probably at the heart of mobile phone adoption.

Here are a few ways the power of these tiny wireless devices are changing lives in the developing world:

1) Increasing Market Efficiencies:
In the developing world, prior to the introduction of mobile phones, farmers, traders, and consumers had to travel long distances to markets, often over very poor roads, simply to obtain price (and other) information. Such travel imposed significant costs in time and money. Mobile phones, by contrast, reduce the cost of information and allowed traders to better respond to surpluses and shortages, thereby allocating grains more efficiently across markets and dampening price differences. Mobile phone coverage also increased traders’ profits and decreased the volatility of prices over the course of the year.

– In Kenya, the mobile service allows employers to post job listings and job seekers to get personalized text messages based on the kind of work they are looking for, improving its labor market efficiencies.
– In Bangladesh, a service called CellBazaar provides a mobile service equivalent of eBay or Craigslist.
– In the Indian coastal state of Kerala, mobile phones reduced price differences across fish markets by almost 60 percent between 1997 and 2001. When markets work efficiently, identical goods have the same price. And hence, the fishermen’s profits increased by 8 percent, and consumer prices declined by 4 percent.

2) Harnessing the Power of Remittances:
Remittances (the transfer of money by foreign workers to their home countries) are becoming an increasingly important source of finance for developing countries. From 2002 to 2007, the flow of remittances to developing countries more than doubled from $116 billion to $251 billion. Remittances are now more than twice as much as all foreign aid provided by major donors, which was $103.7 billion in 2007. Mobile carriers can play an important role in this market by making it quick, cheap and easy to transfer funds.

– In the Philippines, wireless providers like Smart Communications allow Filipinos working overseas to send money home in minutes with a text message for a fraction of the cost of money transfer operators. Overseas workers can also use text messages to directly pay specific expenses, such as school tuition, insurance premiums, hospital bills, and mortgages.

3) Building inclusive financial services:
Nearly three billion poor people in developing countries lack access to basic financial services such as savings, credit, insurance, and money transfers.

– In Kenya, a service called M-PESA facilitates a variety of financial transactions, from purchasing airtime to paying bills, though the majority of 13 million subscribers use it exclusively to transfer money. To transfer money to friends and relatives around the country, Kenyans could use Western Union or the post office, rely on an intermediary (for example, a bus driver), or ask a friend or relative. Wire transfers via Western Union or the post office were secure but often expensive and unavailable in remote rural areas. Transport services or sending via a friend or relative was more accessible but carried high risk of theft. By contrast, sending a thousand Kenyan Shillings (about $13) from Nairobi to the Western provinces via M-PESA costs 40 percent of the post office rate and 20 percent of the bus rate.
– In India, a firm has created a “branchless microbanking system” to allow people in remote areas to withdraw cash. A fingerprint reader identifies them and the sum is deducted from their accounts via a special handset. A small printer produces a receipt. The system already has more than 3m users in India, and in the state of Andhra Pradesh it directly disburses welfare payments and pensions.

4) Health Sector Benefits:
– Health practitioners have been at the forefront of using mobile phones as a development tool in Africa. Mobile phone services monitor measles outbreaks in Zambia; support diagnosis and treatment by health workers in Mozambique; and disseminate health-education messages in Benin, Malawi, and Uganda. In Malawi mobile phones not only remind HIV-positive patients to take their anti-retroviral drugs, but also allow community health workers to share information on their patients’ status, saving considerable time and money.
– Fighting Fake Drugs – 25% of drugs sold in the developing countries are fake. Last year, a mobile service was launched in Ghana and Nigeria to counter the fake-drug trade. People buying medicine scratch off a panel attached to the packaging. This reveals a code, which they can text to a computer system that looks it up in a database. Seconds later comes a reply saying whether the drug is genuine.

5) Impact on Literacy:
– Simple and affordable mobile phones are also being used as a means to promote adult literacy in Africa. In addition to a regular literacy curriculum, adults in the Nigerian village of Falenko learn where to find letters and numbers on a mobile phone and how to send and receive SMS messages. Early results suggest that students who use a mobile phone as a learning device make faster progress and achieve greater literacy than those relying solely on traditional classes.
– In Bangladesh, the BBC World Service launched a mobile service where for a few dollars a day, one can listen to hundreds on English lessons and quizzes – 3.1 million people have used it so far.

6) Helps Reduce Corruption:
– During the 2008 presidential elections in Ghana, a thousand locally trained PVT observers were able to transmit electoral results and violations via SMS to a central system, thereby giving almost instantaneous independent verification of the election results.
– In India, a farmer needing a land-ownership certificate can now get it directly using a mobile phone. This cuts off the middle-man – usually a corrupt government official who takes bribes.

7) Crowdsourcing:
– Following the 2007 election in Kenya, citizens reported on escalating violence via voice, SMS, and the Web.
– Crowdsourcing was also used to facilitate search-and-rescue operations following the earthquake in Haiti, allowing individuals to send messages on the locations of survivors, which were then mapped and broadcast to rescue teams.

8) Crowdvoicing:
Text messages are also being used to broadcast information from violence, to natural disasters, to election results.

9) Creating Innovative Ways to Communicate:
The developing nations have come up with innovative way to use the mobile phone technology – like the “missed call techniques” of communication that is used to compensate for the lack of calling minutes, or due to its simplicity and convenience in delivering a message.

10) Connecting the Excluded:
Mobile phones have helped in providing information to those who would have been excluded from the loop otherwise. Example – sending our market prices or other agricultural information for farmers in Uganda, or helping the Sri Lankan farmers time their harvest to maximise their income.

11) Citizen Media:
The term ‘citizen media’ refers to forms of content produced by private citizens who are otherwise not professional journalists. It is characterized by everyday citizens producing, collecting, and sharing information. Mobile phones can help facilitate this concept, and sometimes can also assist in winning freedom and democracy by allowing everyday citizens to participate in E-activism. This was clearly visible in the recent revolution in Egypt, where mobile phones played a crucial part in delivering messages and information. Since many web-based services couple with mobile phones for immediate posting of media, local citizens who have mobile phone access can become citizen journalists without a computer or access to an Internet connection.

The fact that most of the world’s population is entering the electronic communications age in a wireless mode has social and cultural consequences, the importance of which we are only beginning to perceive. The developing world have shown that poor people can become digital producers and even innovators. I think we haven’t even scratched the surface yet. With the introduction of 3G technology and access to high bandwidth data in the developing world in the near future, and with the prices of smart-phones and mobile-services continuing to fall, the possibilities are endless.

So, will mobile phones bring the developing world out of poverty? Years of development experience have taught us that there are no magic bullets. The promise of economic development in Africa cannot be fully realized in the absence of roads, schools, electricity, and finance. When IT is appropriately integrated into this larger framework, the transformation of the poor nations will finally be underway.

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About pritamkabe

Originally from Bombay, India. Relocated to the United States in 1997 for attending graduate school at The University of Texas. Completed my Masters in Electrical Engineering in 1999 and then worked in the Hi-Tech industry for the next 11 years in Austin, Texas. I have a passion for travelling, meeting new people, and experiencing new cultures...and i've been very fortunate to have gotten the opportunity to travel quite a bit. Sports and food are my other big passions in life. Some life-changing experiences in my life a years ago changed my perspective of life, after which, just have an engineering job was not meaningful to me anymore. Hence i quit my engineering career, and I'm now motivated to give back to society and make a positive impact in some way. To get started on that journey, i went back in graduate school, and recently graduated as a "Mid-Career Fellow in Foreign Service", from the Edmund A. Walsh School of Foreign Service, at Georgetown University, Washington DC. Currently in New Delhi, India, on a research fellowship, to learn about the educational issues in India, and brainstorm my ideas about technological interventions for resolving those issues.
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