MobileActive.org

Project ABC, implemented in collaboration with Catholic Relief Services in Niger and Christopher Ksoll (Oxford University) and Travis Lybbert (University of California-Davis), is an innovative, three-year pilot program to use cell phones as a platform for literacy in Niger. The purpose of the pilot program is to use information technology (mobile phones) as a complement to traditional literacy training, providing households with the opportunity to practice their literacy skills via SMS.

This paper presents the results from a quantitative impact study of the Grameen/MTN Village Phone in Rwanda, which was conducted between June 2006 and August 2007. We find that the introduction of a Village Phone had a substantial impact on reported access to telecommunications for local entrepreneurs.

While the introduction of phones did not follow the intended randomized design, we compare the changes observed in 94 study communities that received the phones to the 284 that did not. We find that the placement of a Village Phone in a community was associated with both an increased use of phones to transmit news and a greater propensity for farmers to arrange their own transit.

Despite this improvement in access to telephony, the actual prices received by farmers were not affected. Impacts at the household level were muted by the relatively small size of Village Phone businesses and airtime usage rates, implying that profits must be transferred from other sources to pay off the phone in six months. Reported labor time in household enterprise increased dramatically for Village Phone operators, but positive impacts on consumption or overall business profits were not found.

The SME sector has an important role to play in the present and future economic development, poverty reduction and employment creation in developing economies (Hallberg, 2000). Stern (2002) stresses that the SME sector is the sector in which most of the world's poor people work. SME sector growth largely exceeds the average economic growth of national economies in many countries and contributes significantly to employment creation. Accordingly, governments and donors alike have recognised the important role of the SME sector for overall development. As a result, many government policies are geared towards supporting their growth through a variety of programmes that range from tax incentives to technical assistance; from regulatory provisions to policy interventions; training and other types of business development services (O'Shea & Stevens, 1998).

Arising from this, one of the key issues is to identify the current information practices and needs, as well as the obstacles that SMEs face in their daily business activities, and to provide guidance in creating relevant policy initiatives that will lead to more economic growth and employment. The SME e-Access and Usage survey was carried out by the Research ICT Africa! (RIA!) network in 14 African countries between the last quarter of 2005 and the first quarter of 2006. Its primary objective is to understand the impact of ICTs on private sector development, and how ICTs can contribute to a vibrant SME sector and economic growth in the context of developing economies.

The countries covered included Botswana, Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. To this end, the SME e-Access and Usage survey was motivated by the lack of clarity about the impact of ICTs on small businesses. The literature to date has failed to create a tight link between the use of ICTs and issues such as profitability and labour productivity. There are so many competing claims against government resources and time that a vague link between ICTs and economic growth and employment creation is not convincing enough evidence for governments to commit their resources. This survey aims to change that perception by providing solid empirical evidence of the link between ICTs and business performance based on firm-level evidence.

A major contribution of this survey to the existing understanding of SMEs in Africa is its use of a formality index to categorise SMEs. Past studies have treated formal, semi-formal and informal businesses uniformly, reducing the applicability of their analysis. A formal business is fundamentally different from an informal business in Africa. A formal business pays its taxes, is more likely to export and often is included in official census of SMEs. In contrast, the primary survival strategy of an informal business is to remain below the radar screen, not to pay taxes and not to form part of any official data. Apart from the obvious survey difficulties this presents, there is a more mundane business difference: informal businesses are also more likely to sell or produce anything that might make money, in contrast to more formal businesses that have a tendency to concentrate on a single product or set of products. The implication of this is that a Cobb-Douglas production function, for example, cannot be used to analyse SMEs, unless there is a declared interest only in formal SMEs.

Of course, suveying only formal businesses would be telling half the story since about two-third of non-resource-driven GDP generation is derived from SMEs, and a large share of that from informal ones. The establishment of the link between ICTs and profitability and labour productivity creates another set of policy imperatives for governments across the continent. ICTs are only useful if they can easily be acquired and used. The key obstacle identified by SMEs towards greater possession and use of ICTs is their cost. The high cost of ICTs in Africa has been attributed to policy choices that have limited competition, and the absence of regulatory capacity to regulate abuse of market dominance in wholesale and retail pricing (Gillwald, 2005 and Gillwald & Esselaar, 2004). This requires greater regulatory capacity, something that is missing from nearly all countries included in the survey. To illustrate this, most governments are exclusively focused on the direct contribution of ICTs towards the economy in terms of profits and staff complements of major telecommunications operators.

However, as this report makes clear, it is the indirect contribution of ICTs towards economic growth that is truly transformative: “ICTs have the largest beneficial impact in conjunction with other changes, including a new set of ICT skills/training, structural changes within business models and the economy, and institutional and regulatory adjustments” (ITU, 2006: 39). This means that ICTs have to be looked at from a perspective that considers all causes of economic growth and attempts to provide a catalytic environment that uses ICTs to generate economic growth rather than the ICT sector's specific contribution towards GDP.

In the context of the rapid growth of mobile phone penetration in developing countries, mobile telephony is currently considered to be particularly important for development. Yet, until recently, very little systematic evidence was available that shed light on the developmental impacts of mobile telecommunication.

The Information and Communication Technology for Development (ICT4D) program of the International Development Research Centre (IDRC), Canada, has played a critical role in filling some of the research gaps through its partnerships with several key actors in this area.

The objective of this paper is to evaluate the case of mobile phones as a tool in solving development problems drawing from the evidence of IDRC supported projects. IDRC has supported around 20 projects that cut across several themes such as livelihoods, poverty reduction, health, education, the environment and disasters. The projects will be analyzed by theme in order to provide a thematic overview as well as a comparative analysis of the development role of mobile phones. In exploring the evidence from completed projects as well as the foci of new projects, the paper summarizes and critically assesses the key findings and suggests possible avenues for future research.

When information is limited or costly, agents are unable to engage in optimal arbitrage. Excess price dispersion across markets can arise, and goods may not be allocated efficiently. In this setting, information technologies may improve market performance and increase welfare.

Between 1997 and 2001, mobile phone service was introduced throughout Kerala, a state in India with a large fishing industry. Using microlevel survey data, we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion, the complete elimination of waste, and near-perfect adherence to the Law of One Price. Both consumer and producer welfare increased.

The authors explore the impact of access to information on poor farmers' consumption. The analysis combines spatially coded data on mobile phone coverage with household panel data on farmers from some of the poorest areas of the Philippines.

Both the ordinary least squares and instrumental variable estimates indicate that purchasing a mobile phone has a large, positive impact on the household-level growth rate of per capita consumption. Estimates range from 11 to 17 percent, depending on the sample and the specification chosen.

The authors perform a range of reliability tests, the results of which all suggest that the instruments are valid. They also present evidence consistent with the argument that easier access to information allows farmers to strike better price deals within their existing trading relationships and to make better choices in terms of where they choose to sell their goods.

Due partly to costly information, price dispersion across markets is common in developed and
developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders and other market actors. We construct a novel theoretical model of sequential search, in which traders engage in optimal search for the maximum sales price, net transport costs. 

The model predicts that cell phones will increase traders’ reservation sales prices and the number of markets over which they search, leading to a reduction in price dispersion across markets.  To test the predictions of the theoretical model, we usea unique market and trader dataset from Niger that combines data on prices, transport costs, rainfall and grain production with cell phone access and trader behavior.  We first exploit the quasi-experimental nature of cell phone coverage to estimate the impact of the staggered introduction of information technology on market performance. 

The results provide evidence that cell phones reduce grain price dispersion across markets by a minimum of 6.4 percent and reduce intra-annual price variation by 10 percent.  Cell phones have a greater impact on price dispersion for market pairs that are farther away, and for those with lower road quality. This effect becomes larger as a higher percentage of markets have cell phone coverage.  We provide empirical evidence in support of specific mechanisms that partially explain the impact of cell phones on market performance. 

Robustness checks suggest that the results are not driven by selection on unobservables, nor are they solely a result of general equilibrium effects.  Calculations of the four-firm concentration index suggest that the grain market structure is competitive, so the observed reductions in price dispersion are not due to greater market collusion.  The primary mechanism by which cell phones affect market-level outcomes appears to be a reduction in search costs, as grain traders operating in markets with cell phone coverage search over a greater number of markets and sell in more markets.  The results suggest that cell phones improved consumer and trader welfare in Niger, perhaps averting an even worse outcome during the 2005 food crisis.

With globalization, small rural producers must compete in a competitive economic market. Due to their small size and limited financial capacity, they face significant challenges in doing so. We discuss the design and evaluation of two mobile phone based tools to help small producers achieve economies of scale and a quality premium.

These tools were developed using CAM, a camera-based mobile phone application framework specifically designed for the rural developing world. CAM DPS (Delivery Processing System) efficiently captures transactions between producers and cooperatives, in order to monitor remote inventory levels, and document the price paid to the producer. CAM RANDI (Representation AND Inspection tool) allows local inspectors to digitally capture the condition of farm parcels, using a combination of paper, text, audio and images. Using this data, rural producer cooperatives can improve their efficiency and monitoring, and ensure conformance with quality and certification standards. A preliminary evaluation suggests that these applications are accessible to target users and will serve a significant need.

Informational challenges—absence, uncertainty, asymmetry—shape the working of markets and commerce in many developing countries. For developing country micro-enterprises, which form the bulk of all enterprises worldwide, these challenges shape the characteristics of their supply chains. They reduce the chances that business and trade will emerge. They keep supply chains localized and intermediated. They make trade within those supply chains slow, costly, and risky.

Mobile telephony may provide an opportunity to address the informational challenges and, hence, to alter the characteristics of trade within micro-enterprise supply chains. However, mobile telephony has only recently penetrated.

This paper, therefore, presents one of the first case studies of the impact of mobile telephony on the numerically-dominant form of enterprise, based around a case study of the cloth-weaving sector in Nigeria. It finds that there are ways in which costs and risks are being reduced and time is saved, often by substitution of journeys.

But it also finds a continuing need for journeys and physical meetings due to issues of trust, design, intensity, physical inspection and exchange, and interaction complexity. As a result, there are few signs of the de-localization or disintermediation predicted by some commentators. An economizing effect of mobile phones on supply chain processes may therefore co-exist with the entrenchment of supply chain structures and a growing “competitive divide” between those with and without access to mobile telephony.

This paper focuses on how this intermingling of lives and livelihoods, as mediated by the mobile phone, figures into the micro-processes of economic development. It neither broadly elaborates the core contributions of mobile phone use to economic development (synchronizing prices, expanding markets, reducing transport costs, etc.), nor suggests that one kind of mobile use is more important than another. Instead, it argues simply for a perspective on work and on livelihoods that is broad enough to account for (and perhaps even take advantage of) the social processes surrounding these activities. Analysts, policymakers, and technologists interested in the application of Mobiles for Development (M4D) should not ignore the way mobiles blur livelihoods and lives; the developmental and nondevelopmental uses of the mobile are not in competition, nor are they always distinguishable. Instead, the uses of mobiles for developmental and non-developmental purposes are often interrelated and sometimes mutually reinforcing. The social functions of the mobile (in matters of connection and self-expression) are helping drive its widespread adoption, and these same functions inform the very behaviors that make the mobile a tool for economic development.

Cell phones are quickly transforming markets in low-income countries. The effect is particularly dramatic in rural areas of sub-Saharan Africa, where cell phones often represent the fi rst development in telecommunications infrastructure. The twelve million residents of Niger, a landlocked country in West Africa, had 20,000 landlines—an estimated 2 landlines per 1,000 people—when mobile phones were fi rst introduced in 2001. Now Niger has almost 400,000 cell phone subscribers. Although the country still has the lowest rate of cell phone adoption in sub-Saharan Africa, cell phone coverage has had important implications for grain markets and hence welfare in the country.

Use of information and communication technologies for international development is moving
to its next phase. This will require new technologies, new approaches to innovation, new
intellectual integration, and, above all, a new view of the world’s poor. The phase change from information and communication
technologies for international
development (ICT4D) 1.0 to ICT4D 2.0 presents
opportunities for informatics professionals
and offers new markets for ICT vendors.
It also brings new challenges to our established methods
of working and emphasizes the need for new expertise
and new worldviews. Harnessing digital technologies in
the service of some of our world’s most severe problems
requires understanding these changes. Before proceeding,
though, we must ask why we should give priority to
ICT application for the poor in developing countries.

When information is limited or costly, agents are unable to engage in optimal
arbitrage. Excess price dispersion across markets can arise, and goods may not be
allocated efficiently. In this setting, information technologies may improve market
performance and increase welfare. Between 1997 and 2001, mobile phone service
was introduced throughout Kerala, a state in India with a large fishing industry.
Using microlevel survey data, we show that the adoption of mobile phones by
fishermen and wholesalers was associated with a dramatic reduction in price
dispersion, the complete elimination of waste, and near-perfect adherence to the
Law of One Price. Both consumer and producer welfare increased.

The positive implications of landline telecoms infrastructure and, more recently, of mobile communications on
economic growth in the developed world have long been acknowledged, with numerous studies analysing the
issue. Now that most of the developed world has reached high penetration levels of mobile phones, both current
growth patterns and future projections suggest that virtually all of the mobile industry’s new customers in the
coming years will come from developing countries. In fact, as of 2007, there were more mobile customers in
developing countries than in the entire developed world (ITU).
What impact are mobile phones having on developing countries and are user experiences and overall impacts
unique or similar to those of developed countries? While it might seem intuitive to just extrapolate from the results
of earlier studies in developed countries, the developing world is in fact leap-frogging the developed world when
it comes to mobile communication and its many uses. The implications of this technology on daily life in
developing countries appear to be more far-reaching than they were in the earlier developed country rollouts. For
example, studies have demonstrated that mobile technology is driving improvements in social links, the creation
of social capital, improved market information flows and productivity, as well as increases in GDP and Foreign
Direct Investment.
This report surveys recent research and highlights the top studies in this area based on content, relevance,
originality and credibility. While it is not an exhaustive and scientifically developed list, it illustrates the work that
we feel is most important at the moment and highlights key conclusions on the impact of mobile technology in
developing countries.
Further, while the existing research is valuable in understanding the impacts, the literature is still limited in its
coverage and scope. We therefore recommend additional research to expand evidence and knowledge, particularly
with respect to basic economic studies, prospective applications and the needs of users around financial services.
We also call on stakeholders such as mobile operators, governments, industry groups, foundations and
development organisations to play their part in improving information sharing, increasing research and driving
developments in these countries.
Finally, we provide information on additional research on impacts and policy issues, as well.

What do you need to facilitate investment in mobile telecommunications?

Mobile telecommunications has become the silver bullet du jour of international
development. And, beyond the hype and alongside some exacerbation of inequities, it
can be seen delivering both social and economic development outcomes (Heeks &
Jagun 2007). Yet at least half the world's population lack access to this development
tool (Kelly 2007).