The Ring, Ring Heard ‘Round the World

A joint post by Elizabeth Eckard and Laura Esposito

Cellphone store in Accra, Ghana | Source: Shaul Schwarz/Reportage for the New York Times

Mobile phones, heralded as a developed country luxury, have changed their (ring)tone.

Mobile phone sales have dominated in recent years: according to the UN, more than 5 billion people have cellular subscriptions worldwide, with 57% of people in developing nations subscribing. More important than the sales, however, are the variety of ways that consumers are benefiting from mobile technology. With entertainment “apps” abounding, those in developing countries have more practical uses for their phone apps. For example, mobile banking (m-banking) has integrated more people into their country’s economies and created new opportunities for disaster-relief cash transfers. Moreover, rural populations are profiting from less time spent traveling to and from markets and urban centers.

In an event at the Center for Global Development, Zap It to Me: Impacts of a Mobile Phone-Based Cash Transfer Program in Niger, Jenny Aker discussed her recent paper on the effects of a mobile cash transfer compared to both a manual cash transfer and a cash transfer where a phone is provided and Zap-enabled. The paper illustrates that the mobile cash transfer, provided to combat the drought in Niger, reduced travel time and costs. In addition, mobile transfers reduce labor costs associated with distributing the transfer and prevent recipients from losing income as a result of picking up their money.

Mobile Phone Subscriptions in Developed and Developing Countries | Source: The Economist

Mobile technology has received so much praise in recent years because it affects many different aspects of life. Examples of mobile phone technology range from public health to weather forecasts to information on market prices. A cell phone used as a heart rate monitor connects patients to doctors hundreds of miles away, allowing them to receive regular check-ups they may not have previously had access to. Weather forecasts help farmers determine which crops to plant and when to harvest, making good use of scarce resources and land. Market price information keeps vendors attuned to fluctuations in the market, letting them choose the best time to sell their goods for the highest return. Another service by mPedigree, an advocacy group in Ghana, recently developed a mobile service that allows users in Ghana and Nigeria to determine whether drugs are counterfeit or not. The service allows users to enter a code printed on drug packages into the system and receive confirmation on the legitimacy of the drug. The “Zap It to Me” paper even recorded the possibility that mobile transfers could lead to cultural shifts in household decision-making power and encourage female empowerment.

Mobile phone technology will be especially conducive to generate quick relief programs and information after natural disasters. Some scholars already regard mobile technology as a fast response mechanism that promotes “risk-sharing,” which allows people to easily transfer money in case of crisis or in the form of remittances. The 2011 Index of Global Philanthropy and Remittances presents a new program in Kenya called Kilimo Salama, which allows small-scale farmers to use mobile phones and weather stations to receive crop insurance. This is particularly useful for areas where it is uncertain how severe environmental incidents, such as rainfall and drought, will impact harvests.

Mobile phone subscriptions compared to bank deposit accounts | Source: International Telecommunication Union, Consultative Group to Assist the Poor, The Economist

While most responses to mobile technology have been overwhelmingly positive, barriers still exist. Despite potential system/technological failures, using mobile phones for a variety of needs places stress on already weak financial and technological infrastructure in developing countries. Critiques of mobile technology point to the fixed costs of purchasing mobile phones, the possibility of developing virtual currencies without fiat money reserves, and learning barriers (such as literacy rates) that must be overcome in order to use the mobile phone. Currently, m-banking appeals to the “unbanked” population because they do not need to have formal bank accounts to have mobile accounts. While this allows more people to play a role in their economy, it also might be a deterrent for transitioning into the formal banking sector.

There have been several attempts to amend these limitations. Nokia has introduced a mobile bike charger targeted toward developing countries with unreliable power access. The product is rather expensive, costing $18, and would only be useful to those who can already afford to own a bicycle. Perhaps markets or individuals within villages can rent the charger, along with a bicycle, for short periods of time. Another organization called Scientific Innovations without Borders, has developed a series of short, how-to cartoons which provide useful health and farming messages to farmers. The program would help bypass the literacy problem and allow farmers who may not be able to read to use mobile technology. Of course, these amendments are small and have their own limitations, but they are a step in the right direction. Increasing mobile access in developing countries would have a wholly positive impact on development and reducing the limitations in even the smallest way may open the door for others to experience these benefits.

Mobile Money Transfer | Source: AFP, The Economist

Investment in mobile phones also has the potential for job creation and economic growth through leapfrogging technology. With mobile phones covering so many functions, the need of a government to spend money on landlines is relatively unnecessary. However, as Aker points out in a joint paper, “even if mobile phones can enhance access to resources and information, they cannot replace investments in public goods such as roads, power and water.  In fact, they are less effective without them.”

Studies on mobile phone use in developing countries are still rather new, with several opportunities for expansion. Providing mobile phones may not be a single path to development, but will surely complement other infrastructure and development initiatives by providing fast and affordable information. Soon, the question ‘round the world just might be: so, can you hear me now?


2 thoughts on “The Ring, Ring Heard ‘Round the World

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