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USAID Summer Seminar 1: M4D, How Mobile Phones are Transforming Global Development

July 8, 2010

As a part of its Knowledge Management Program, USAID hosts a series of summer seminars. The first seminar, which discussed how mobile phones were revolutionizing development, was moderated by Maura O’Neill, the USAID Chief Innovation Officer, and panelists included Tom Kalil, the deputy director for policy at the White House Office of Science and Technology Policy (OSTP), Eduardo Jezierski, the VP of engineering at InSTEDD and former Microsoft employee and Ted Okada, the director of US Global Strategic Accounts at Microsoft.

Maura O’Neill opened the discussion by acknowledging the prevalence and potential of mobile phones—4.4 billion as of 2009—as well as challenges to M4D, including access to phones, illiteracy and fickle power supplies. She recounted a gathering of bankers, telecom companies, m-money pioneers and the American Red Cross in Haiti, who had convened in order to talk over the USAID-Gates Foundation partnership for mobile banking. The meeting did not go smoothly: the central bankers wanted to maintain the status quo, the commercial bankers were determined to not relinquish service charges from remittances and the companies were ruffled by the presence of competitors. Despite the hurdles facing M4D, O’Neill believes that it is a “transformational technology” that will pull an Optimus Prime on development outcomes.

Tom Kalil underlined the US’s intention to increase the salience of technology in development policy, a key point of the White House’s most recent New Approach to Advancing Development. Due to the negligible marginal cost of making a certain service available to an additional user, technology’s potential for scale-up is all but limitless. He highlighted four focal points: developing country IT policy and regulatory framework (How are mobile phones taxed? Is competition encouraged?), identifying sectors where M4D can make a large impact, incubating developing country entrepreneurs and techies (e.g., MIT students teach courses in order to create the first generation of developing country tech-preneurs) and positive externalities for the US due to reverse innovation (the US has a sizable unbanked population).

Eduardo Jezierski stressed the importance of local innovation in shaping sustainable development policy and identified three specific problems it could mitigate. First, despite the fact that technology is easily scalable, most development projects remain pilots, serving a relatively small cloister of beneficiaries. Second, unanswered questions abound when it comes to the details of development initiatives, e.g., Who pays for cell phone credits, the man or the woman? In order to remedy this problem, Jezierski suggests empowering local staff, who are best prepared to retrieve such information. Third, local mobile phone providers can help untie the Gordian knot that is aid. He maintains that this principle of local ownership will improve mobile health, which is his focus at InSTEDD.

Ted Okada discussed Microsoft’s commitment to bridging the digital divide and its outlook on M4D. He mentioned that Microsoft was particularly committed to training more girls in science and technology, à la Hillary Clinton’s pithy remark: “Give a man a fish and he’ll eat for a day, but teach a man to fish and he’ll eat for a lifetime. Well, if you teach a woman how to fish, she’ll feed the whole village.” According to Okada, the Grameen Phone initiative is one successful example, but unfortunately it is peerless in its prestige.  In addition, he claimed that in Africa, cloud computing takes place primarily via mobile networks—a trend to which the private sector is responding. Second, the rapid commoditization of mobile products is a straightforward and compelling incentive for the private sector. Vodafone, for example, manufactured a handset that costs a mere $15. As handset costs decrease, the mobile industry is gaining more customers.  He also explained the latent capabilities of USSD—internal SMS technology, e.g., Verizon customers dial #225 for balance inquiries—for value-added services, such as real-time updates during crises or health advice, e.g., dial #333 for the location of the nearest free and confidential AIDS testing center. He pointed to Nathan Eagle’s research as the exemplar of cutting-edge M4D. Eagle founded txteagle, which allows anyone with a mobile phone to earn small amounts of mobile money (e.g., M-pesa) by completing simple tasks for companies via SMS.  Lastly, he reiterated Kalil’s point on regulatory conditions and voiced his concerns about privacy, data and outsourcing.

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