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  • When you read an article about mobile phones in Africa today, you can’t help but notice the claims – that « mobile phones revolutionalize people’s lives Now, while GSM stands for Global Systems for Mobile Communcations, Schmitt found another meeting: God Sends Mobiles.» A 10 percent increase in mobile penetration boosts GDP by 1.2 percent.Even the cell phone companies themselves have promised to « make life better ». But is this true?
  • The introduction of telecommunications infrastructure – and primarily mobile phones – can have important impacts upon market performance and welfare in developing countries. In general, there are two primary mechanisms through which mobile phones could have a positive economic impact:As a positive externality of the mobile phone industry – ie, investment in the IT sector has spillover effects on other economic sectors.Via specific services provided by cell phone companies in Africa, or development projects using cell phones in an attempt to improve the development outcomes of the poor.An externality is a cost or benefit arising from an activity, which does not accrue to the person or organization carrying out the activity. The well-being of a consumer or production capability of a firm are directly affected by actions of other consumers or firms, rather than indirectly through prices.Also known as spillover effects
  • That’s the theory. Now, we know that theory is fine, but what about reality? An emerging body of literature suggests that this theory is indeed happening. I wanted to highlight some of the economic literature in this area – not exhaustive – in both Asia and Africa. This is mainly in two categories – first, those in agro-food markets; and second, those in labor markets. Fisheries in India (Jensen 2007)Grain markets in Niger (Aker 2008)Farmer participation in Uganda (Muto 2009)Internet kiosks and soybean prices in India (Goyal 2009)Labor markets in South Africa (Klonner and Nolen 2009Also, Donner, J. 2005. The Use of Mobile Phones by Microentrepreneurs in Kigali, Rwanda: Changes to Social and Business NetworksInformation Technology and International Development, Winter 2005, Volume 3, Number 2“Mobiles are enabling people to invest in and draw on social capital”Goodman, J. 2005.Linking Mobile Phone Ownership and Use to Social Capital in Rural South Africa and TanzaniaFeatured in Vodafone Policy Paper Series, Number 2, March 2005.
  • Comparing cell phone and non-cell phone regions in India, Jensen finds that cell phone coverage is associated with a strong reductionin price dispersion across markets, as these graphs show. If we look at the second graph, we see that prices across fish markets in the region vary widely before the introduction of cell phones. Once cell phones are introduced, as is seen by the red line, dispersion across these markets goes down – they are harmonized.
  • But what does this mean for welfare – the well-being of the poor? Here the theoretical predictions are ambiguous. While improvements in efficiency

Rutgers Rutgers Presentation Transcript

  • ~4.5 Billion
    Mobile Subs
    in 2009
  • Source: TomiAhonen Almanac
  • The cell phone is the single most transformative technology for development.Jeffrey Sachs
  • The Hype Cycle
    Source: Gartner Group
  • 1. Pioneer
    2. Breakout
    3. Consolidation
    4. Maturity
    Phases of Markets
  • A global volunteer network of NGOs, activists, technologists, academics, media
    A community of practice for knowledge and skill sharing
    An onlinemDirectory of apps, case studies, research, how-to materials
    An innovation channel
  • The Use of Mobiles
    Disasters and Relief
    Early warnings
    Urgent alerts
    Refugee coordination
    Supply chain management
    Environmental Monitoring
    GPRS individual and crowd data
    Constituency engagement
    Legislative advocacy
    Getting Out the Vote
    Information dissemination
    Political campaigns/candidates/parties
    Economic Development/Livelihoods
    Micro loan management
    Market data/information
    Small enterprises (SMEs)
    Disease surveillance and mapping
    Patient management
    Public health education (HIV, TB, STDs)
    Supply chain management (drugs, food)
    Election monitoring
    Human rights monitoring
    Corruption monitoring
    Budget tracking/participatory budgeting
    Media and (Citizen) Reporting
    Incidence/news mapping
    Incident photo/video footage
    News dissemination in restricted environments
  • Functionality
    Mobile Web
    Mobile Applications
    Data Collection
    Supply Chain
    Medical records/Imaging etc
    Location-based apps and services
    Photos and Video/Life-stream
  • 1. It’s all very exciting2. Are we there? If not, what do we need?…with a dose of realism
  • It’s all really exciting…
    Computing is not at the margins anymore, (though people still are.)
    Communications is now in the hands of people who have not had it before
    Innovation is happening everywhere
  • “God Sends Mobiles”(Schmitt 2002)
    "The cell phone is the single most transformative technology for development” (Jeffrey Sachs)
    “A 10% increase in mobile penetration boosts annual GDP by 1.2%” (Deloitte 2007)
    “Making lives better”
  • Mobiles…A Wonderful World?
    (Positive) Externalities
    Cell Phone Services and Development Projects
  • Empirical Research on the Impact of Mobile Phones
    Fisheries in India (Abraham 2007, Jensen 2007)
    Grain markets in Niger (Aker 2008)
    Farmer participation in Uganda (Muto 2009)
    Internet kiosks and soybean prices in India (Goyal 2009)
    Labor markets in South Africa (Klonner and Nolen 2009)
  • Mobile Phones and Fish Price Dispersion (Jensen 2007)
  • Cell Phones and Welfare
    Welfare improves with market efficiency, but how welfare is distributed among consumers, producers and traders is ambiguous
    Increase in fisherman’s profits and a reduction in waste (Jensen 2007)
    Traders’ profits increase (higher prices) and consumer prices decrease (Aker 2008)
    Increase in monthly wholesale price of soybeans (Goyal 2008)
  • 2. Are we there? If not, what do we need?
  • The Mobile Eco System
    Source: Rudy de Waele
  • Key Issues
    Incredibly promising and exciting
    Commercial, competitive, very fluid field
    Privacy and security
    Fragmented platforms
    Many pilots, no scale
    Impact unclear. Much trial and error
    Focus on apps but not on an enabling environment
    Lack of open platforms and applications
  • Key Issues
    Significant capacity issues (NGOs and Gov)
    Lack of capable intermediaries
    Little knowledge of what works in what setting
    Data alone may be largely useless unless it provides the right information delivered through the right channel in the right form at the right time.
  • Towards a framework
    Additive versus transformative
    Contextual and user-focused
    Sustainable (unsolved)
    Driven by demand
    Build it and they will come does usually not work
    Localized but shareable
    Built on open standards?
    Built on existing knowledge
    • Applicable channel?
    • In what context?
    • Successes?
    • Failures?
    • Critical success factors?
  • Needed
    Targeted (and outsourced) R&D
    ICT innovation marketplaces
    Venture funds and PPPs
    Strong intermediaries
    IT, mobile, data, information visualization, etc
    User adoption studies and contextual research
    Nokia and Microsoft
    Better topographies (and case studies)