Invested Development: mobile phones

Showing posts with label mobile phones. Show all posts

Thursday, December 1, 2011

Poverty-Fighting Mobile Transaction Systems (Part 4): Social Capital

This is the fourth post in our series, “Leveraging Mobile Penetration at the BoP for Poverty-Fighting Mobile Transaction Systems.” Click the links below to catch up on anything you might have missed.

Social Capital - Networking and Participation

As we introduced in the first post, the key to a successful mobile technology applications to alleviate poverty is the exchange. In the case of networking and participation, an exchange is the receiving and sending of ideas and opinions and the power to organize or participate in the community.

Mobile phones create powerful social networking opportunities. Mobile applications can offer users the opportunity to leverage their networks for referrals and create opportunities for peer lending. Social networking tools, everything from SMS to Facebook, facilitate organization and participation, as we witnessed during Egypt’s Arab Spring Revolution. Leveraging mobile ubiquity to expand on social capital reaps many benefits for users in a community where communication tools are limited.

The mobile phone with its most basic feature, SMS, promotes impact by creating an exchange. NGOs and governments around the world have used SMS texts to inform and alert populations to serious alerts. For example, FrontlineSMS and Jana (both discussed in this Weekly Review) allow businesses and NGOs alike to communicate with their target market in developing countries. FrontlineSMS prompts consumers to participate and engage through a platform that allows NGOs and businesses to send group texts, asking questions and opinions to a large mobile user base. Similarly, Jana (formerly Txteagle) collects market research data with mobile phones by allowing businesses and NGOs to distribute surveys via SMS with promotional incentives.

Tying It All Together - Mobile Ubiquity and Reducing Poverty

It is clear that mobile phones provide many benefits to users at the base of the pyramid. In the United States we have access to such benefits and resources not only through mobile phones, but by many other mediums. We can network on LinkedIn, search for jobs on Monster, read reviews of local service providers on Yelp!, take surveys to get coupons, borrow from a bank, use and build credit, and transfer money in seconds on our online banking applications. While some may argue that these seem to be simply promoting consumerism, the key point to highlight once more is the exchange. To reiterate Dr. Harish Hande’s philosophy, we must allow the poor to create their own wealth by giving them the tools to do so. With a mobile phone at the fingertips of over 70% of the world and a growing community of social innovators, we can create mobile technologies for sustainable global development.

What other ways can we leverage mobile ubiquity to create poverty-fighting technology?

Thursday, November 17, 2011

Can Lagging Ethiopia Reach African Mobile Penetration Standards?

Source

Adding 55M

Ethiopia is infamously lagging behind the African standard of mobile penetration rates. Currently, mobile penetration in Africa is around 50% and climbing, but Ethiopia’s mobile penetration is around 12%. The Government of Ethiopia, who controls the telecommunications industry in the country, has set some ambitious goals for the next five years to increase mobile penetration rates. While there are many benefits that come along with a mobile phone in the hands of the poor, here at ID, we’re wondering if Ethiopia can achieve their lofty goals. We looked at a few factors to find out if lagging Ethiopia can reach African mobile penetration standards, and it looks like it is possible.

Goals

The Ministry of Finance and Economic Development detailed its five-year strategic goals in Ethiopia’s Growth and Transformational Plan (GTP). To achieve the goal of 75% penetration by 2015, 65 million Ethiopians must have mobile phone subscriptions. It is important to note, however, that Ethio Telecom, the state-led telecom, wants to reach 65 million subscribers while maintaining a government monopoly over the industry.

Considerations in Ethiopia’s Favor

Many political and circumstantial indicators point to Ethiopia’s ability to reach 65 million mobile phone subscribers. Research by the Economist Intelligence Unit indicates that the underlying political climate is stable and should prove accommodating to telecommunications expansion (2008). Additionally, the US will continue to invest in Ethiopia to enjoy strategic advantages that come from the country’s proximity to Middle East and North Africa. China, Ethiopia’s dominant foreign investor, also has strategic benefits to gain from investing in the country to promote its global image. Relatively conservative predictions of 7.5% real GDP growth imply more than enough government revenue to afford the necessary capital expenditure (Lake & Walker, 2011).

Cost of Development

In order to determine if the government’s goal is feasible from a financial standpoint, we must understand if planned government expenditure can meet the cost of development. We estimated the cost of development by multiplying Ethiopia’s goal number of new subscribers (55 million) by the average capital expenditure necessary per subscriber in Africa. Public data from five operators (MTN, Vodacom, Orascom, Zain, and Vodafone) covering 16 African countries and over USD$5 billion in capital expenditure suggests an average cost per new subscriber of USD$32 per person (rounded towards the worst-case scenario). Based on that data, going from 10 million to 65 million subscribers in five years will require USD$1.76 billion in capital expenditure over the same period.

Government Expenditure

Assessing the government’s ability to pay for this infrastructure requires as estimation of expected values for GDP, tax rates, percent of government spending on capital expenditure, and percent of infrastructure spending on telecommunications.

Spending Capacity

5 Year GDP x Tax Rate x CapEx % of Budget x Telecom % of CapEx

Five-Year Estimates

Total GDP: Ethiopia will generate USD$180 billion in GDP over the next five years (World Bank, 2011; Lake & Walker, 2011)
Government Revenue: Collecting 15% of total GDP yields USD$27 billion in taxes (African Economic Outlook, 2011)
Capital Expenditure: Spending two-thirds of revenue gives USD$18 billion for development (African Economic Outlook, 2011)
Telecommunications: Allocating 10% of infrastructure spending to telecommunications leads to USD$1.8 billion in expected expenditure over the next five years (Foster & Morella, 2010).

An Attainable Goal?

Based on our analysis, reaching the additional 55 million subscribers will cost USD$1.76 billion while telecommunications expenditures should reach USD$1.8 billion. Though the numbers are a bit rough, Ethiopia could theoretically have enough money to reach its goal.

Speculation that the government’s state-led development model hinders potential mobile penetration growth is justified. Nonetheless, the country reached their interim goal of 10 million subscribers in July of 2011 (Ethio Telecom, 2011) thanks to a $500 million loan from the Chinese government. Our analysis did not consider external funding but even with our conservative estimations indicate that the Ethiopian government could achieve its ambitious goal.

High penetration rates in Ethiopia will open many new opportunities for mobile transaction technologies to fight poverty, but it’s just the first step. State-run entities are often capable of building larger scale infrastructure but lag desperately behind the free market. The government can provide the infrastructure, but will need the private sector’s participation for value-added services like mobile money and information exchange. Will the government allow the private sector to participate? Time will tell.

Works Cited:

African Economic Outlook. (2011). Ethiopia Report. Issy les Moulineaux, France: OECD Development Centre. Retrived from http://www.africaneconomicoutlook.org/.

Economist Intelligence Unit. (2008). Country Profile: Ethiopia. Kent: Patersons Dartford.

Foster, V., & Morella, E. (2010). Ethiopia’s Infrastructure: A Continental Perspective. Washington, DC: The World Bank.

Lake, J., & Walker, P. (September 2011). Country Report: Ethiopia. London: Economist Intelligence Unit.

The World Bank Group. (2011, October 10). World Bank Data. Retrieved from http://data.worldbank.org/

Yamamoto, D. (2007). Ethiopia: Telecommunications Sector Update. Addis Ababa, Ethiopia: Embassy of the United States.

Tuesday, November 15, 2011

Poverty-Fighting Mobile Transaction Systems (Part 3): Information Exchange

This is the third installment in our series on mobile transaction systems and their contribution to the fight against poverty. First, we introduced this series with an overview of mobile penetration rates and the mobile phone’s power for impact. Then, last week, we highlighted the first transaction system - mobile money - and the benefits such transactions offer to users. This week, we will look at the different ways mobile phones facilitate exchanges of information and how they benefit the users.

Information Exchange

Mobile phones can provide information to the otherwise isolated citizens at the base of the pyramid. When mobile phones facilitate the exchange of information, this has perhaps the most wide-ranging impact on its users.

For Farmers

Source: http://www.grameenfoundation.org/

The ability to access information about weather and prices leads to make or break decisions for farmers. To facilitate quality access, organizations like the Grameen Foundation have developed schemes that allow poor farmers in Uganda to gain access to valuable market data. This empowers the farmers by granting them access to information about market prices, weather reports, and planting advice. Without the data and information, farmers can suffer costly losses that would be preventable with timely knowledge. A designated “community knowledge worker” (CKW) identified by Grameen collects information from farmers and uploads it to the database for other CKWs. This sort of data collection and information sharing is hugely empowering, but it’s impossible without access to a mobile phone. Other examples of organizations seeking to fill this gap are mFarm, iCow, and Esoko.

For Job Seekers

Source: http://www.assuredlabor.com/

There are transaction systems that have revolutionized the job and talent searches in the developing world. As more corporations are moving into emerging markets, they need to source and hire talent. Mobile transaction platforms like Assured Labor (branded as Empleo Listo, think of Monster on SMS), allow companies to access potential employees on existing channels – mobile phones. On the other side, users can search for job openings on their phones. This enables users to find local jobs and avoid emigration where possible. This platform is especially advantageous for those who do not have access to traditional Internet on a PC, where most jobs are posted.

The mobile phone creates opportunities in markets that are beyond the reach of a traditional laptop. You’ll find farmers and job seekers in all populations, but continued innovation in mobile technology can further extend the benefits of information exchange on a mobile phone.

Check back next week for examples of networking, participation, and social capital exchanges made possible on mobile phones.

Monday, October 24, 2011

Poverty-Fighting Mobile Transaction Systems (Part 1): Leveraging Mobile Ubiquity at the BoP

The ID team spends a lot of time discussing and studying the mobile technology industry. The driving force behind our focus on mobile technology in emerging markets has been the explosive growth of mobile phone penetration rates and the potential for mobile transaction systems to reduce poverty.

Our most popular post on this blog is “Mobile Phones at the Base of the Pyramid: Accessibility and Affordability” published in June 2010. In that post, we outlined why mobile phones matter, citing examples of connectivity and mobile access increasing income at the bottom of the pyramid. Since then, we’ve narrowed down our focus even more. Every day we learn about new mobile transaction systems and applications that change the way people at the base of the pyramid live and work.

Over the past few years we have learned that the key to mobile transaction systems is the exchange. As Dr. Harish Hande, founder of SELCO-India and the winner of the 2011 Ramon Magsaysay Award said in his keynote speech at ForSe2011, the poor must be “asset creators”. It’s not just about selling to the BoP, it’s about letting them sell to us as well. This means that when we drive products, information, thoughts, and opinions to the BoP, we should allow the flow to be reciprocated. Everything that flows “down” must flow back “up” for a sustainable cycle. This includes money, information, and social capital.

In that 2010 post, we also looked at the demonstrated market growth for mobile phones. We consistently monitor the penetration rates of mobile phones in emerging markets. The World Bank Database is a reliable resource, currently offering data through 2009. Based on that data, we projected the penetration rates for 2010 and 2011(using a conservative diminishing returns formula for the falling year-on-year growth averages). The chart below shows the number of mobile phone subscribers per 100 people in Latin America & the Caribbean, India, and Sub-Saharan Africa. We compared these three emerging market regions with the United States, the European Union, and the world as a whole.

Mobile Subscriptions per 100 Inhabitants

Even at slowing growth rates and our conservative estimates, we can see that access to mobile technology in the developing world has increased tremendously over the past decade. Now, social entrepreneurs are leveraging these high penetration rates to create businesses and wealth that enable sustainable development. Muhammad Yunus, Nobel Peace Prize winner and founder of Grameen Bank, famously said: ”When you get a mobile phone it is almost like having a card to get out of poverty in a couple of years.” There are a variety of tools, applications, and services that mobile technology provides to empower the BoP and, here at ID, we strive to understand each of them.

Over the next few weeks, we will post the different examples of mobile transaction systems and the ways they empower the world’s poorest citizens by creating exchanges. Up first on the agenda is Mobile Money Transactions, check back next week for the first examples.

Update:
Part 2 - Mobile Money
Part 3 - Information
Part 4 - Social Capital

Friday, September 9, 2011

Weekly Review September 5 – 9

Image Source: Samsung

There’s never a shortage of news surrounding mobile technology. This week we read about new applications and smartphones, mobile money launching in Liberia and Zimbabwe, and the changes in the relationships between banks and telcos because of the growing popularity in mobile payments globally.

“Samsung launches Galaxy S II in Kenya” by Stewart Chabwinja via IT News Africa

There has been speculation that smartphones, which are coming down in price, will penetrate the African market and slowly replace “dumb phones.” Samsung Electronics has launched the Galaxy S II, an Android-powered smartphone in Kenya. It is expected that smartphones will drive Internet penetration in Kenya. Kenyans value their phones because of the many value-added services that leading mobile operators provide, most notably M-PESA and all of the other applications surrounding the mobile money transaction system.

“12 Apps to Pitch at AppCircus in Nairobi” via Afrinnovator

iHub and Akirachix are bringing AppCircus to Nairobi, Kenya where 12 groups will pitch their apps in front of an international jury of industry experts. AppCircus is “a unique global traveling showcase of the most creative and innovative apps presented by their creators during some of the most influential international events in mobile/web.” The best apps will be nominated for the Mobile Premier Awards 2012, to be held during the Mobile World Congress in Barcelona. A list of the apps that are presenting is available at the end of the article. Some highlights include CrowdPesa, an app that locates M-PESA agents or ATMs in the local area, and 3GInnovators, an app that compares prices, ratings, and offers on products and services.

“Liberia: Management of Lonestar Cell MTN, Ecobank – launched” via All Africa

The Central Bank of Liberia has given approval to Lonestar Cell MTN and Ecobank-Liberia to partner and provide a mobile money product in the Liberian market. The product platform is going by the simple title of “Mobile Money.” Lonestar Cell MTN is the largest mobile services provider and the first telco in Liberia. Mobile phone penetration is around 45% in Liberia, while fixed line penetration is less than 1%, due to unrepaired telephone lines damaged during wartime (stats via PPIAF). In addition, “only 10% of Liberians have bank accounts.” This, coupled with growing mobile penetration, presents an ideal market opportunity for mobile money.

“Econet to deploy mobile payment system in Zimbabwe” via The Paypers

Econet Wireless, the largest telco in Zimbabwe, announced this week that it will be launching its mobile money service this month. The m-wallet is currently being piloted and will be live by the end of the month. In 2009, according to World Bank data, Zimbawe’s mobile penetration was around 3 million subscribers, or 25% of the population. In 2011, The Paypers reports that Econet’s customer base has grown to around 5 million since 2009. The market is experiencing explosive growth. Econet is capitalizing on the window of opportunity and leveraging its 73% market share. Its new mobile wallet can be used for purchases or transfers worth USD $20 or less.

“Dreams of mobile payments lead telco to try banking” by Ryan Kim via Gigaom

In the never-ending effort to understand the complex world that is mobile payments, we often compare mobile payments in the developing world to banking in the developed world. The relationships between telcos and banks are reaching new, unprecedented stages. Already seen in Asia and Africa, telcos are acting like banks. In Canada, “mobile carrier Rogers has filed to become a bank under Canada’s federal Bank Act.” By doing this, Rogers will have the chance to earn a percentage of the revenue from payments transferred over a mobile phone. The mobile payments industry is expected “to become a $670 billion market by 2015,” (notably driven by developing countries, where mobile payments will double by 2015). Although there are vast differences in banks between the developed and developing world, it seems that the gap may begin to close, as users tend to rely on their phones more often.

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Friday, August 19, 2011

Weekly Review August 15-19

In response to the slow but steady increases in smartphone adoption and data usage in Africa, developers are releasing mobile applications to increase interoperability in the mobile money industry. This week, we read about new mobile apps appearing in emerging markets that increase access to financial services. We also read about mobile Internet access throughout Africa that allows for the adoption of such services. Africa is leveraging mobile technology for social change.

“Kenya: Tech Firm Pulls Down Cost of E-Commerce with New App“ by Paul Vafula via All Africa
Craft Silicon has released a new mobile application, Elma, to facilitate mobile commerce transactions in Kenya. The application runs on 3G-enabled mobile phones and facilitates transactions among users and service providers who have installed the application. For a subscription fee of Sh80/month, users can “transfer money, pay bills, buy airtime, buy stocks, and check commodity prices.” Elma is claiming to be a solution for interoperability amongst mobile money service providers, no matter which Mobile Network Operators (MNO) hosts the service. By facilitating interoperability, more users in emerging markets can take advantage of mobile money transfer services.

“Application to wean mobile money off SIM card” by Patrick Githinji via Mobile Money Africa
Currently, mobile money users are tied to their MNO and can only make transfers to other users hosted by the same provider. Now, Orange Kenya allows money transfers by way of Java and WAP applications, unattached to SIM cards. Although this means that consumers won’t have to belong to a particular telecom, it will drive demand for such services. Interoperability leads to increased transaction frequency and increased adoption. According to the Orange CEO, the new Java and WAP applications will allow users to transfer money with their mobile device to “anywhere in the world.” Along with the start of 3G services in Kenya and a rise in smartphone adoption (see below), the demand for applications downloaded from or hosted on the Internet is growing. In addition to Orange’s new application and Craft Silicon’s Elma, Google is expected to allow mobile payments on the Android operation system later this year.

“Smartphones will drive Africa’s Internet uptake” by Savious Kwinika via IT News Africa
Smartphones and feature phones are required to facilitate the increasing adoption of mobile applications like Elma. While the most popular phone in Africa is the Nokia “dumb phone,” smartphones are becoming more affordable. Half of the African population owns a mobile phone. Twelve million Africans have data plans and this number is expected to grow to 265 million by 2015. Research in Motion, the maker of BlackBerry, reports growth in data usage amongst its customers. Although Internet penetration is currently low in Africa, leveraging mobile ubiquity to promote mobile Internet will “have a huge impact on productivity and efficiency in Africa” for individuals and businesses alike. Furthermore, more smartphones means more applications, opening the door for interoperable mobile money transfer services and financial inclusion.

“8ta slashes data prices – again” via IT News Africa
In addition to increased demand for applications, smartphones, and mobile Internet, data prices are falling in Africa. South Africa’s 8ta is offering a 3GB pre-paid data bundle for about $21USD. There’s no contract, so users can top up whenever they need to. 8ta also offers a 10GB post-paid data package.

“Dual SIM mobile phones ideal for Africa” via IT News Africa
Many Africans own two mobile phones to take advantage of the offerings of two different MNOs. In response, Samsung offers dual SIM phones and predicts that they will gain 15% of the market share with this offering. The dual SIM phone allows users to switch between SIM cards easily to take advantage of the network depending on where they are and whom they want to call. This type of phone gives users the opportunity to maximize their airtime on the network that suits them best in different scenarios. In the case of mobile money, it would allow users to make transfers with the mobile service provider or two different operators. This, however, does not allow for universal interoperability like Internet-enabled mobile applications.

Friday, July 15, 2011

Weekly Review July 11-15

At ID, we often discuss the benefits of mobile phones for those at the Base-of-the-Pyramid. Access to mobile phones is proven to increase financial inclusion and accessibility to basic goods and service. This Weekly Review examines the benefits of mobile phones specifically for migrant workers.

“Editorial: Access to financial services” via The Jakarta Post

Forty million Indonesians do not have access to formal financial services. This lack of financial inclusion stunts growth and development in the region. The government is working to create solutions for its people. Mobile money services have been successful elsewhere, and would be welcomed by the estimated 70% of the population with mobile phones. If the government were to “expand the regulatory framework for service providers to use mobile and electronic banking… banks and non-banks [could] provide a wider range of services through low-cost mobile banking solutions such as short message service (SMS).” Importantly, the article notes, this would enable Indonesian migrant workers to send money home easily and safely. In fact, this idea has been proven successful for Filipino migrant workers, who sent “remittances worth millions of US dollars home every month.”

“Indonesia To Give Migrant Workers Free Mobile Phones” by Steven Millward via Penn Olson, The Asian Tech Catalog

Last year, 4,000 Indonesians worked temporarily in South Korea. So far this year, 3,000 Indonesians have migrated to South Korea to work temporarily. As a result of the rising numbers, the Indonesian government and the National Agency for the Placement and Protection of Indonesian Migrant Workers announced a plan to provide 8,000 to 10,000 mobile phones each year to migrant workers. This deal is “in cooperation with the local manufacturer PT Nurkumala Abadi, a subsidiary of South Korea-based LG.” The goal of the plan is to encourage migrant workers to communicate consistently with their families and related government authorities at home to enhance their safety and comfort while working abroad. The government hopes this plan will prevent tragedies like the recent beheading of an Indonesian maid working in Saudi Arabia.

“Creation Investments Social Ventures Fund 1 leads a $5.5 million USD investment into Eko India Financial Services Private Limited” Press Release by Patrick Fisher via Creation Investments

Creation Investment Social Ventures Fund will invest $5.5 million in Eko India Financial Services, a “mobile banking technology provider in India.” Eko India provides financial services India’s unbanked, particularly to accommodate migrant workers. To date, Eko India “has served 912,455 customers through its 1,300 customer service outlets and employs 100 people.” Creation Investments CEO Patrick Fisher states: “We believe that Eko has best-in-class technology which gives easy, secure, inexpensive and convenient last-mile connectivity to the unbanked, migrant workers and the poor.”

“Staying in text” by Tammy Grubb via Chapel Hill News

For Hispanic migrant workers and immigrants living in the United States, learning English can be an overwhelming obstacle to communication. To ease the transition for Hispanics in the US, there is a new SMS messaging service called ReK2 (pronounced reh-CAH-dos). ReK2 helps users learn English by sending daily vocabulary. ReK2 also “sends out weather reports and lets users post and read classified ads” to find work. More than 450 users in North Carolina and Virginia use the service.

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