Economics

Phone Power to the People

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There are, roughly speaking, three broad approaches to Third World development. There are those who would preserve poverty by keeping development itself at a minimum. There are those who would modernize poverty by imposing coercive, centralized systems on indigenous societies. And there are those who want to make more tools available to Third World people themselves, to accept or reject as they see fit, to discover their own uses for the technologies, to adapt them to their own evolving ways of life.

One potential tool for autonomy, resting at the intersection between high tech and the human scale, is the cell phone. Sara Crobett writes in The New York Times:

Something that's mostly a convenience booster for those of us with a full complement of technology at our disposal—land-lines, Internet connections, TVs, cars—can be a life-saver to someone with fewer ways to access information. A "just in time" moment afforded by a cellphone looks a lot different to a mother in Uganda who needs to carry a child with malaria three hours to visit the nearest doctor but who would like to know first whether that doctor is even in town. It looks different, too, to the rural Ugandan doctor who, faced with an emergency, is able to request information via text message from a hospital in Kampala.

[Anthropologist] Jan Chipchase and his user-research colleagues at Nokia can rattle off example upon example of the cellphone's ability to increase people's productivity and well-being, mostly because of the simple fact that they can be reached. There's the live-in housekeeper in China who was more or less an indentured servant until she got a cellphone so that new customers could call and book her services. Or the porter who spent his days hanging around outside of department stores and construction sites hoping to be hired to carry other people's loads but now, with a cellphone, can go only where the jobs are. Having a call-back number, Chipchase likes to say, is having a fixed identity point, which, inside of populations that are constantly on the move—displaced by war, floods, drought or faltering economies—can be immensely valuable both as a means of keeping in touch with home communities and as a business tool. Over several years, his research team has spoken to rickshaw drivers, prostitutes, shopkeepers, day laborers and farmers, and all of them say more or less the same thing: their income gets a big boost when they have access to a cellphone.

It may sound like corporate jingoism, but this sort of economic promise has also caught the eye of development specialists and business scholars around the world. Robert Jensen, an economics professor at Harvard University, tracked fishermen off the coast of Kerala in southern India, finding that when they invested in cellphones and started using them to call around to prospective buyers before they'd even got their catch to shore, their profits went up by an average of 8 percent while consumer prices in the local marketplace went down by 4 percent. A 2005 London Business School study extrapolated the effect even further, concluding that for every additional 10 mobile phones per 100 people, a country's G.D.P. rises 0.5 percent.

One unexpected outcome: a burgeoning alternative banking system.

It's also the precursor to a potentially widespread formalized system of mobile banking. Already companies like Wizzit, in South Africa, and GCash, in the Philippines, have started programs that allow customers to use their phones to store cash credits transferred from another phone or purchased through a post office, phone-kiosk operator or other licensed operator. With their phones, they can then make purchases and payments or withdraw cash as needed. [Al] Hammond of the World Resources Institute predicts that mobile banking will bring huge numbers of previously excluded people into the formal economy quickly, simply because the latent demand for such services is so great, especially among the rural poor.