Solutions to Poverty in Africa Through Mobile Phones

By: Faraz Anwar

Abstract

This article examines how the introduction of mobile phones has helped to alleviate poverty and improve the lives of the people of Botswana. Economic efficiency has been improved through lower communication costs, increased labor mobility, and wider access to both banking facilities and information on market prices. Liberalization of the telecommunications market is needed to ensure that the sector remains responsive to end-user needs.

Introduction

Botswana is a semi-arid landlocked country in sub-Saharan Africa with a land area of approximately 582,000 square kilometers (225,000 square miles), about the size of France or Texas. The population is estimated to be about 1.6 million (2006), making Botswana one of the most sparsely populated countries in the world. Approximately half the inhabitants live in the towns and cities and the other half in rural areas, some at great distances from the nearest urban areas.

Until recently, communication was a vexing problem for the people scattered across this arid land. The greater part of the country falls within the vast and dry Kalahari grasslands, which extend across the borders into neighboring South Africa, Namibia and Zimbabwe, and are home to the hunter-gatherer San people, about 45,000 of whom live in Botswana.

People working in urban areas, far from the rural villages where they were born and raised, might see their families once a year during their annual vacations, after long, arduous and expensive trips home. Between such visits they previously depended on postal communication or messages carried by friends and family. Technology has come to their rescue. The mobile cellular telephone has given them everyday access to their families, as it has done for millions of people across the length and breadth of the African continent.

Explanation



With the introduction of cell phones, distances from rural areas to urban centers have effectively been reduced. Unemployed people no longer have to make unnecessary trips into town to search for employment. They can now simply contact a friend or family member who is already in town to see what jobs are available. Mobiles have therefore reduced the distances between individuals since they provide a network that friends and family can use. A simple phone call or text message keeps people in touch. Mobiles have increased the chances of finding employment and reduced the time and money costs associated with job search.

An unassuming, ubiquitous handheld device has become an indispensable part of the lives of discerning business people residing in town houses in the capital, the majority of their employees, including the lowest paid among them, as well as low-income rural dwellers carrying out subsistence farming and other activities in areas beyond the reach of fixed-line telephones.

Some aspects of poverty that reduce the quality of life of the poor are well known and easily identifiable. The poor generally have inadequate shelter, insufficient food and a lack of appropriate and dignified clothing. Many do not have heating and cooling facilities and they have limited access to transport. However, the advent of the mobile phone has revealed that one of the greatest demands of the poor is frequent communication for business purposes and with friends and family.

Data

The proliferation of cell phones throughout Botswana has been a remarkable and unexpected occurrence, particularly when one considers that a large proportion of the population is poor

The first transcontinental telegraph system was established over 140 years ago. Yet, in 1994, more than 100 years after the invention of the telephone, less than 2% of Africans had telephones. Although the spread of communication to the African continent was slow to catch on initially, the rate of growth in recent decades has been extraordinary. Indeed, during the past five years Africa has been the fastest-growing mobile market in the world (International Telecommunications Union, 2004).

The first mobile telephone call in Africa was made in Zaire (now the Democratic Republic of Congo) in 1987. Since then mobiles have spread across the region at a phenomenal rate. In 2001, Africa became the first region where the number of mobile phone subscribers exceeded those using fixed lines. Presently there are more than 52 million mobile users on the continent compared with about 25 million fixed lines (ibid.).

In 1998, the Botswana Telecommunications Authority (BTA) issued calls for tenders on two wireless network licenses. Five companies submitted bids, the winning bids coming from Mascom Wireless and Vista Cellular (now Orange). Although the industry was liberalized, the two new companies were not going to operate in an entirely free market. Two conditions were set by the BTA. Firstly, to ensure that the country was working towards universal access, and secondly, to recover infrastructure costs incurred by the Botswana Telecommunications Company (BTC).

The first condition allowed the BTA to set price limits on per-minute calling rates and required that each company fulfill an obligation to cover certain geographic areas before expanding their services.

The second condition required both companies to use existing BTC infrastructure for international calls. This continued a de facto monopoly by the BTC. All international calls made by mobile phone subscribers have to be routed through the BTC, unless the BTC is unable to provide the connection. Mascom and Orange currently pay the BTC around 90% of its retail price for delivery of outbound international calls and the BTC receives a portion of revenues on all international calls inbound to the two mobile operators.

Description

Mobiles making the lives of the people of Botswana simpler and better

Approximately one out of every four working-aged adults in Botswana is unemployed. Considering that half the populations reside in rural areas, people often need to travel vast distances to urban centers where there are typically more jobs available to increase their chances of finding employment. However, this journey is far from costless, as many of the unemployed have to pay a significant proportion of what little money they have for this journey into town. Travel money is usually borrowed from family and friends but when it turns out that the borrower is unable to find employment the loan becomes a gift. This puts an increasing strain on relationships.

The urge to stay in contact has also given rise to the practice of beeping. Beeping occurs when a person phones a number but hangs up before the call is answered in the hope that the other party will call back and shoulder the cost of the call. In response to this practice, cell phone service providers have introduced a type of generic text message that can be sent from a person's phone in order to alert the recipient that you would like them to call you. Subscribers on pre-paid packages receive a limited number of free call-me-backs per day provided that they have less than a certain level of remaining credit on their phones. The call-me-backs are particularly useful for people on pre-paid packages who find themselves stranded, in emergency situations, or just in desperate need of communication, but have run out of airtime.

Botswana has the second highest rate of HIV/ Aids infection in the world with 37.3% of the adult population infected. As a result, life expectancy in Botswana has plummeted to a mere 38 years. To a large extent one of the main reasons for the continued burden of the disease is the stigma attached to HIV. A number of support groups have been set up in order to overcome and assist those living with HIV/Aids. BONEPWA+ is one such organization. The organization currently has 104 support groups. The majority of support group members are women and BONEPWA+ usually contacts them via cell phone in order to schedule a meeting.

The organization either sends out block messages to inform the organization's members of the forthcoming meeting or they contact them directly via a phone call. The support groups draw members from great distances and some of the group members do not possess personal landlines or have regular access to landlines. According to Mr. Prachandra Man Schrestha, 'Cellular telephones have definitely made the organizational aspect much easier.' Botswana's two service providers have assisted BONEPWA+ by occasionally providing free text messages to enable the organization to inform members of upcoming events.

Rural farmers benefit from access to communication:

Farmers, previously isolated by the long trips they had to make to reach markets, services and supplies, on foot or donkey-drawn carts, are now able to keep in touch with loved ones, schedule appointments and deliveries, request help for medical emergencies and access news. Indeed, farmers in rural areas are among the groups receiving the greatest economic benefit through mobile phones, largely because there was previously no access to telecommunication. With access to information about markets in villages and larger cities, farmers are able to increase productivity and expand their businesses.

Mobiles bringing banking to the previously unbanked:

The fierce competition amongst the foreign-owned banks in Botswana has provided its people with one of Africa's most advanced banking systems. In their efforts to improve their services Botswana's banks have used the ever-present power of cell phones to extend their services. Mobile banking has brought the safety and security of banks to places located far from the halls and walls of the traditional commercial bank providing previously unbanked populations the conveniences of modern-day banking.

The service allows anyone who has a mobile phone to access modern-day banking facilities such as balance enquiries, statement requests, transfer of funds, payments to third parties and, of course, the ability to purchase pre-paid airtime. With instant notification of activities in your bank account people are better equipped to monitor changes in their accounts. Banks also provide people with mortgage quotes based on information given by the potential client. Cell phones have the potential to make the traditional bank branch obsolete. The ability to use mobile technology for banking requirements effectively removes the need for people to carry large sums of cash that could be at risk of theft.

Expansion of the market for ring tones is one of the unexpected benefits that have resulted from the rapid spread of mobiles. This has enabled local musicians to profit from and promote their work. The ring tone business is big worldwide and this is no different in Botswana.

Policy recommendations:

Like most good ideas for alleviating poverty, the expansion and effectiveness of mobile telephony in Botswana depends to a large extent on the policies adopted by the government. Although Botswana's telecommunications policy supports full liberalization, the BTC continues to have a de facto monopoly on certain segments of the market. These include all international calls and it remains the single provider of fixed telephony.

Findings

The number of mobile subscribers jumped from zero in 1998, to 250,000 in 2001, to 823,070 as of March 2006, reaching roughly half of the population.

Consumers who do not own phones or subscribe to services have also benefited. Before1998, only about 2,000 public phones were provided by the BTC (about one for every 880 people). A government mandate to provide public phones in rural areas brought phones too many remote areas, but customers reported that these were often vandalized or not working for long periods of time.

The number of fixed-line public payphones has continued to decline from a high of 2,964 in 2002 to 1,600 in 2005. The figures suggest that the number of access points for the public has decreased by a massive 46% over the last three years. However, while the number of public fixed-line payphones has been decreasing, the number of informal mobile payphone operators has been increasing.

The mobile public payphone network can be found in almost every rural village where mobile coverage is available. Many people invested in these, hooked up a handset, and started a business providing public payphone services. This has changed the lives of these micro-business owners, and also brought an affordable phone service to every area of the country.

The introduction of cell phones in remote rural villages where there was previously no immediate access to outside contacts has also provided people with more options in times of emergency. An emergency number for all vital services exists on both networks. The services typically allow for access to medical, home and road assistance seven days a week, 24 hours a day, anywhere in Botswana.

In July 2005 it was estimated that approximately four-fifths of Botswana's population did not have access to electricity. However, enterprising village entrepreneurs have utilized the opportunity created by the lack of electricity to fill the resultant niche in the market for the recharging of cell phone batteries. These entrepreneurs have overcome the problem by utilizing the novel idea of offering to recharge mobile phone batteries for a small fee using their automobile batteries to do the charging. When the car battery runs low the owner simply returns the battery to the automobile and drives around the village until it is recharged - then it's back to business as usual.

Among the many groups that have benefited from mobile phones, women are perhaps the largest. Because mobile phones allow small businesses to flourish, women have been able to start their own businesses and gain a measure of independence.

Recommendations

The people of Botswana are amongst the many Africans that have gained from the spread of mobiles throughout the continent. A number of benefits have resulted, including increased communication with family and friends, increased efficiency of business communication, reduced costs involved with job searches, having more options during emergency situations, enabling farmers to check prices in different markets before selling produce, providing nurses in remote areas with options to contact doctors, and increased access to banking facilities. The Botswana case has been particularly intriguing since the country has a relatively small market and there are significant numbers of people living in poverty.

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