The Great Equalizer

Education then, beyond all other devices of human origin, is the great equalizer of the conditions of men, the balance-wheel of the social machinery.
Horace Mann

This blog post is about how mobile phones are enabling the majority of the world population, who are poor and live in developing countries, to take charge of their own situation  and become well informed micro entrepreneurs, using the internet and mobile communication to get information and as tools for communication and business.

clintontimesBill Clinton, Founding Chairman of Clinton’s Global Initiative and Former President of United States gave an interview for TIME Magazine issue October 1, 2012 about the transition from technology to equality as a case for optimism and ways for a better world. President Clinton says that our world is more interdependent than ever. In particular he mentioned the importance of mobile phones to the development of the emerging economies. In the interview, Clinton said:

Smart phones help restart the lives of many individuals, but they also help millions of individuals help restart the lives of others. We’ve seen how technological advances have democratized charitable giving as never before, allowing people to make a difference even if they don’t have much time or money to give.

Girl and mobile phoneMobile phones, spreading faster than any other information technology, can improve the livelihoods of the poorest people in developing countries. A good summary of the macro economic effects are in a United Nations report that was released a couple of years ago.

In developing countries, the mobile subscription rate is now close to 60% and rising rapidly, while the rate in the poorest countries is up to 25% from only 2% a few years ago. The economic benefits of mobile phones, whose use in poor countries far outstrips technologies such as the Internet or fixed-line phones, go well beyond access to information.

The immediate benefits of greater mobile penetration are self-evident. Mobile phones facilitate instant communication among large groups of people, businesses or organizations, thereby offering an immediate boost to any young industry’s infrastructure. Sophisticated mobile technology offers users entirely new ways to access information and educate themselves.

Mobile phone user AfricaMobile phones are often used in creative ways to avoid costs. The phenomenon of beeping deserves mentioning. For instance, beeping once might mean that the person is at a certain meeting point, whereas beeping twice might mean that there is a half-an-hour delay. But one beep might also be a signal for saying ‘hello’. In this fashion, using a mobile phone becomes costless.

Mobiles have spawned a wealth of micro-enterprises, offering work to people with little education and few resources. In Kenya, Nigeria, Tanzania and Mozambique, I have seen many vendors on the streets, selling airtime and refurbishing handsets. There is even a business in renting out SIM cards.

Many uneducated or unskilled workers can find work selling SIM cards or handsets or could start their own small businesses around the mobile economy. The educated few have even more opportunities. In another blog post we have presented iHub in Nairobi, where hundreds of young, well educated entrepreneurs are working with development of innovative mobile phone applications. To protect young startups, Kenya has accelerated the implementation of proper legislation for intellectual property rights.  Venture capital is provided through crowdfunding.

Mandela and mobile phoneAfrica is the fastest growing region in the world for mobile penetration, with 500 million users of five billion in total global mobile phone subscribers. In sub-Saharan Africa, more than 90% of the mobile subscribers have a pre-paid subscription. The real break-through of mobile telephony on the continent was the introduction of pre-paid services that do not require monthly payment, but make payment dependent on usage. Pre-paid subscriptions are appealing to people with lower or irregular incomes, since their use does not require a bank account, a physical address, a postal address or a minimum fixed monthly subscription fee.

In Kenya estimates show over 26 million mobile subscriptions, equating in 67% of the adult population. With increasing mobile phone use, financial services are rapidly being integrated into mobile usage. The mobile phone provides an existing and cost-effective channel for the unbanked to reach the market and the market to reach the unbanked.

m-pesa logoM-Pesa is a mobile-phone based money transfer and micro-financing service for Safaricom, the largest mobile network operator in Kenya and Tanzania. M-Pesa has more than 14 million subscribers and has proved to be a crucial service for revenue growth for the Vodafone-owned Safaricom. It is estimated that M-Pesa handles some 2 million transactions per day.

People who receive a mobile payment can convert it to cash at a local agent working in partnership with the transmitting mobile network operator. Agents are becoming increasingly numerous and include corner shops, petrol stations, chemists, mobile phone dealers and other retailers. As well as accepting a customer’s mobile payment in exchange for cash, an agent can convert cash into e-money for the customer to send to another recipient. The two main types of mobile money transaction are remittances to individuals (84%) and purchases, which include shop purchases and utility bill payments.

Beyond the economy, the enhancement of mobile communication is also shaping social development. Our societies are based on communication and any social aspect is, therefore, affected by the general availability of this specific communication tool. Facebook has become the single biggest non-e-mail client product in Africa. Over the last seven months user numbers have doubled in many countries and the smaller countries where it was barely visible, now have significant numbers of users. It is the number one or number two website in every African country. This leads to Facebook also being the foremost marketing channel for many small businesses throughout the continent.

Facebook users in Africa

Update 2012-11-10: An article in the Economist on November 10th 2012 confirms the conclusions above. According to a survey by iHub in Nairobi, almost half of those surveyed were using internet-enabled smart or “feature” phones. The scratch cards that many Kenyans use to charge their mobiles have recently begun to advertise their value in terms of data rather than talk time. Meanwhile, mobile-phone operators have been giving free access to sites such as Wikipedia to entice customers..

Africa Mobile Factbook 2012

Click on the link above to download the Africa Mobile Factbook 2012, a free publication.

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