Far More Than a Telephone
Well over one-half of the population in developing countries has access to a mobile phone according to GSMA, the global mobile telecom trade organization. Despite having just one (simple) function – enabling the wireless transmission of information – mobile telecommunication is transforming the nature of development more thoroughly and more quickly than any other technology.
The most widespread transformation, with the exception of using mobile phones for verbal communication – that is what they were designed for, right? – is the rise of mobile payments. Take a look at the above map. Green countries already offer mobile payment services, and yellow countries have plans to deploy in the near future. Let’s review some of the latest numbers. In Kenya, the leader of mobile payments, roughly 25% of GNP moves through mobile banking services. Around the world, 246 mobile payment services are operating in 88 emerging markets, which marks a substantial increase from 2012 when 179 services were operating in 75 markets as GSMA reported last year. Although annual growth has slowed slightly to 22%, when the report was written 70% of providers had plans to increase investments in 2014. There are more than 203 million subscribers to mobile payment services, of which 60 million are regular users. Finally, more than 17 million people use these services who have no account and no mobile phone. This is made possible by sharing accounts among family and entrepreneurs who offer mobile payment services using their own accounts on behalf of others. Mobile payments will soon be ubiquitous in developing countries.
Mobile payments will soon be ubiquitous in developing countries
And it’s not just mobile payments that’s changing the world. Mobile based innovations are being developed and delivered that expand microinsurance, microcredit, healthcare, agriculture, and utility services.
By the end of 2013, 123 providers were offering microinsurance using mobile phones. Although several hurdles must be overcome before microinsurance becomes widely successful, mobile telecom provides a highly efficient means of registering new customers, managing policies, collecting premiums, and processing claims without investing heavily in massive networks of local agents. Facing data gaps that prevent many microinsurance providers from accurately calculating certain types of risk, mobile phones will no doubt become key instruments of data collection for the industry.
Mobile based microcredit solutions are just getting started, but there is vast potential. A key driver of the success of mobile microcredit may turn out to be the credit and income history that is established through mobile payment services which can establish creditworthiness.
Mobile phones are being used to transform healthcare. Patients can get doctor consultations and schedule appointments over the phone, verify new births, and receive automated reminders via SMS to take medication. Drug supply chains depend on mobile telecom to monitor stocks in real time and ensure supplies do not run out, and data are being collected to track disease outbreaks.
Smallholder farms are increasing their income thanks to mobile phones. Farmers are eliminating information asymmetry by using their mobile phones to access seed quality and price information before negotiating with vendors and crop commodity prices after harvest. Mobile weather forecasts help farmers plant at the right time and more effectively manage their crops, and hotlines provide advice and techniques to boost yields.
And of course, commercial solutions have been developed that harness mobile payments to deliver water and electricity in markets where it was previously impossible. While mobile based, pay-as-you-go water services are still in the early stages, small scale lighting and charging solutions have already been widely adopted.
Mobile telecom means deeper financial inclusion, greater security, and better lives for the most vulnerable people. The most important contribution of mobile telecom in developing countries is to cut transaction costs so that vital services can be delivered in the poorest and most inaccessible parts of the world. The humble mobile phone is just one of many factors that lead to a region’s development, but it just might be causing a transformation from largely fruitless donation based development efforts to high impact, rapidly scaled solutions driven by sustainable commercial models.
Image source: GSMA, 2013. Mobile Financial Services for the Unbanked.