GLOBAL INCLUSION: Mobile phones drive growth in developing economies

Mobile phone

If you’re reading this, you probably don’t even think twice about your mobile phone anymore. You probably felt like it was the coolest thing the first time you got a cellular phone, and then when your first smartphone came along? Game changer. But by now, you may not even give it a second thought; taking for granted its ease of access and endless opportunities the device opened up for you. Suddenly, with the tap of your finger, you could play games, listen to music, connect with friends all around the globe, watch movies, route your road trip, and even fund your daily coffee addiction. Heck, you’re probably even reading this article on your mobile device.

So if you think about it, it may come as no surprise that mobile phones are the fastest spreading technology in history, changing the world rapidly and profoundly. In our lives, they’re indispensable devices that let us stay in touch and navigate the world around us. But to individuals living in the developing world, mobile phones open up a whole new economy and are responsible for driving growth in these regions.

Mobile technology and the developing world

In developing economies (think countries like Bangladesh, Kenya, Ecuador, rural China, Afghanistan, Nigeria, Angola, Democratic Republic of Congo, Pakistan), mobile technology is leapfrogging past fixed landlines. With mobile, there’s no need to build a vast, countrywide fixed-line infrastructure, which in itself is a benefit that’s immediately realized.

Global Mobile Phone UsageThe financial challenge for these developing nations comes in the cost of the mobile device handsets, the use of the phones and accompanying services. The solution will not be a blanket one, as each country has their own set of challenges (economic and environmental) and needs when it comes to mobile technology. Some areas also bring barriers in the form of traditional gender and class roles. One thing is comprehensive across all nations, and that is the positive impact mobile technology has on the economy of the country. A 2009 study found that every 10 percent increase in mobile penetration represented an increase of 1.2 percent in GDP. In order for it to be effective, however, the best mobile solution must be accessible, relevant and affordable.

According to the book, Business Models for Sustainable Telecoms Growth in Developing Economies by Kaul, Ali, et al, “Governments must work with the mobile phone companies to reduce the cost of the phones themselves (cost of using and owning). [For example,] when India reduced their handset import duty in the last five years, mobile penetration went from 5 to 15 percent.” This is a vital point because the majority of mobile phone users in these regions are considered “microconsumers,” or individuals who live on less than $20/day – often far less (microconsumers represent approximately four billion people).

International Trade Forum Magazine explained the importance of mobile technology to developing economies, explaining, “People in emerging markets are using mobile technology in more powerful ways than those in the developed world. Increased access to mobile technology in [these markets] is having a profound impact on every business sector.”

How mobile technology transforms lives

Financial inclusion – Access to banking through services like mobile wallets. With this comes the ability to send money, pay bills and save money for those who otherwise were “unbankable.” This is seen as a “poverty killer,” according to Nick Hughes, inventor of the mobile money system, M-Pesa. “If you get the proposition right, the scale-up is massive.” According to the consulting firm Bankable Frontier Associates, more than 75 percent of Ecuadorians have a cell phone but only 35 percent have a bank account, about average for developing nations. To open a conventional bank account in Ecuador, you need several hundred dollars and proof of address—two things many Ecuadorians don’t have. To sign up for a YellowPepper mobile account, all that’s needed is an ID, a $5 deposit and a cell phone.

Access to information – Farmers and fishermen can have real time access to market information and prices to better plan their crop or catch sales.

Increasing literacy rate by teaching people how to read.

Social inclusion – Providing people with a digital identity and giving them access to email.

Increasing efficiencies in the ordering of goods and raw materials used in production.

Access to agriculture and business advice.

Access to employment and education services.

Access to customers.

The ability to receive medical diagnoses via mobile phone.

In developing economies, people are willing to spend a significant part of their income to have access to mobile technology because it represents an important lifeline to progress. It brings information, access to a more reliable income, medical help, a path to financial stability and even safety. With things like mobile wallets, merchants in Equador no longer need to make a slow, risky journey by donkey to deposit their earnings in a traditional bank. Communication is faster and more reliable. In emerging markets, mobile airtime has become a form of currency, being bought, sold and traded for goods and services, just like traditional money.

Mobile technology is more than a luxury in the emerging countries that now represent half of the world’s economy. It’s a lifeline to a world that many of us take for granted. And because of their unique needs, the way these countries are using mobile technology has them leapfrogging past developed nations in many ways. Perhaps it’s time we learn from their advances.

What are your thoughts on mobile technology in emerging economies? Do you envision developed nations adopting any of the solutions embraced by emerging economies? Let us know your thoughts in the comments.

by Angie Salisbury
image: Woman using her Mobile Phone via Shutterstock
Posted by × December 31, 2015 at 2:02 PM

Leave a Reply

Your email address will not be published. Required fields are marked *