Mobile Phonesand

Markets in Africa

where economics meets sociology

Mira Slavova 26 Aug 2009

IFPRI, Washington, DC

Herbert A. Simon, 1995, Organizations and Markets, Journal of Public Administration Research and Theory: J-PART, Vol. 5, No. 3 (July), pp. 273-294

Suppose that it (the visitor- avoid the question of its sex) approaches the Earth from space,

equipped with a telescope that reveals social structures.

The firms reveal themselves as solid green areas with faint interior contours

marking out divisions and departments.

Market transactions show as red lines connecting firms, forming a network

in the spaces between them.

Within firms the approaching visitor also sees pale blue lines, the lines of authority connecting

bosses with various levels of workers.

Approaching either the US, urban China or the EC, most of the space below would be within the green areas.

Almost all of the inhabitants would be employees, hence inside the firm boundaries.

A message sent back home, would speak of "large green areas inter-connected by red lines."

It would not likely speak of "a network of red lines connecting green spots.“

If the vehicle hovered over Africa, rural portions of China or India, the green areas would be much smaller.

There would be large spaces inhabited by the little black dots thatwe know as families, villages and communities.

The red lines would be fainter and sparser, because the black dots would be close to self-sufficiency,

and only partially immersed in markets.

Mobiles in Africa

Mobile Phone Adoption

• Pay-and-go business model

• Basic end-to-end functionality • Voice• Signalling: SMS, USSD (flashing)• Data: GPRS

Details• Who uses mobile

phones? – 64% developing countries– 36% developed countries

• Expenditure– Inelastic– Falling ARPUs

• Rural-Urban divide

Impact of Mobiles

• Blurring of livelihoods and lives (Donner, 2009) – Non-instrumental use: Lives– Instrumental use: Livelihoods

• Extending markets

• Strengthening households, families, communities, cooperatives, (informal) organisations

Quantitative and Qualitative Impact on Markets

• Reduced price dispersion:– Grains in Niger (Aker, 2008):

• Far away markets• Markets with lower road quality

– Fishing in Kerala, India (Jensen, 2007):

• Waste

• Welfare improvements– larger effects as more markets

have coverage (Aker, 2008)– Increased fishermen profits and

consumer welfare (Jensen, 2007)

• Increased participation– Perishable farm produce, Uganda

(Muto, 2008)

• Unclear qualitative micro impact– productivity gains are scarce and

hard to measure (Chowdhury, 2006)

• Urban micro entrepreneurs in Kigali, Rwanda, (Donner, 2005):

– two thirds of calls were with friends and family rather than to customers or suppliers

• Impact assessment compendium (Heeks and Molla, 2008)

Significant Instances

• Extending agribusiness value chains– TradeNet/ Esoko

• Extending rural distribution chains– Collaboration@Rural

• Lowering search transaction costs – Trade at Hand

• Creating rural job opportunities in the service sector – txtEagle

• Improving access to financial services– M-Pesa– Zap– WIZZIT

Mobile Web

• Computer adoption

– Personal computers

– World Wide Web

– The Cloud

• Analogy

• MW4D working group, W3C

• Mobile Web in its widest sense:

– interacting with Web content on mobile phones

Data Service Mobile Applications

• Mobile device connects to computer server

• Network coverage: GPRS, Wi-Fi, WiMax

• MNO independence

• Operating system– Device-specific (iPhone OS,

Symbian OS, Windows Mobile, Linux, Android, etc)

– Java Micro Edition; portable with device-specific libraries

• Configuration • Training • Cost of use

• Grameenphone: CellBazaar

• AppLab: Google Trader

• Esoko: Market Live

Trade at Hand, Liberia• Civil war• Poor physical infrastructure

• Inefficiencies in food supply chain

• Adverse impact on women

• Agriculture-led income generation

• Expand production and regional trade

• Mobile link between market women and producers

Trade at Hand, Liberia

• Network coverage:– GPRS – LoneStar (largest MNO,

80% of ppl covered)

• MNO independence

• Operating system– Java Micro Edition

• Devices– 50 Nokia 1680

Configuration – Enabling GPRS – Installing application

• Training – 100 trainees, 13 local

trainers

• Cost of use – post offer- 2¢ – receive 10 leads- 4¢– SMS (160 chars)- 5¢

Research Challenges

• Impact– Quantifying impact on micro level– Qualitative impact on (informal) market institutions

• Innovation and adoption

• Service delivery and sustainability– Inclusive business models – Sustainability of content-driven technologies

Technology Development/ Innovation Challenges

• Infrastructure

• Literacy

• Computer literacy

• Usability

• Adoption– Designing technology: HCI

• technology re-design

Policy Challenges

• Public innovation– ICT4D– E-/m-government– Encouraging PPPs

• Regulation– Taxes – Excessive licensing– Lack of competition in the mobile

sector– Transparency of pricing,

consumer protection– Infrastructure sharing; passive –

e.g. poles, equipment rooms, and passage rights; active - network elements such as base stations

– International law: roaming, cross-border mobile phone use

• Financial regulation• Fraud

– Verifying identity

Hello Africa!

• Aker, J. 2008. Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger. Job Market Paper. UC, Berkley.

• Chabossou et al. 2009. Mobile Telephony Access and Usage in Africa. South African Journal of Information and Communication, Issue No. 9.

• Chowdhury, Shyamal K. 2006. Investments in ICT—Capital and economic performance of small and medium scale enterprises in east Africa. Journal of International Development 18(4):533–552.

• Donner, J. 2005. The mobile behaviors of Kigali’s micro entrepreneurs: Whom they call ... And why. In A sense of place: The global and the local in mobile communication, ed. K. Ny´ıri, pp. 293–301. Vienna: Passagen Verlag.

• Donner, J. 2009. Blurring Livelihoods and Lives: The Social Uses of Mobile Phones and Socioeconomic Development

• Fafchamps, M. 2004. Market Institutions and Sub-Saharan Africa: Theory and Evidence. MIT Press, 464 pp.

• Heeks, R. and A. Molla. 2008. Compendium on Impact Assessment of ICT-for-Development Projects• ITU. 2009a. Measuring the Information Society: the ICT Development Index• ITU. 2009b. Information Society Statistical Profiles: Africa• Jensen, R. 2007. The Digital Provide: information (technology), market performance, and welfare in the

South Indian fisheries sector, Quarterly Journal of Economics, Issue 3 (August), 879-924• Muto. 2008.The impact of mobile phone coverage expansion on market participation: panel data

evidence from Uganda. Working Paper,• Nelson, M. 2009. The Cloud, the Crowd, and Public Policy. Issues in Science and Technology Online.

http://www.issues.org/25.4/nelson.html• Simon, H. 1995. Organizations and Markets, Journal of Public Administration Research and Theory: J-

PART, Vol. 5, No. 3 (July), pp. 273-294 • W3C. 2009. Workshop Report: The Role of Mobile Technologies in Fostering Social and Economic

Development • W3C. 20 Aug 2009 Draft. MW4D Roadmap Document. http://www.w3.org/2008/MW4D/wiki/roadmapv2• Williamson, O. 1975. Markets and Hierarchies: Analysis of Antitrust Implications. Free Press, New York,

NY.