by Sebastian Voll
University of Jena
When we talk about the Millenium Development Goals, we mostly think of the major issue: To halve poverty and hunger by 2015. However, what is often forgotten in the public debate is a single issue under target No. 8 relating the creation of opportunities in collaboration with the private sector, so that developing countries can enjoy the benefits of new technologies, especially the information and communication technologies (ICTs).
Naturally, the potential for state driven investments into ICT infrastructure varies between rich and poor countries. This leads directly to the concern, that the access to ICTs and therefore their growth potential might be limited to the developed countries and countries in transition. Less and Least Developed Countries would be disconnected from the rest of the world – the “digital divide” could become real.
On the other hand, ICTs hold large potential for economic development, not only for more developed countries with new forms of services in media and entertainment and other high-income services, but especially for economies in development. Here ICTs have a huge potential to bridge spatially divided goods markets, or bring the possibility of financial market transactions towards the poor.
Case studies of the influence of mobile communication on the income of poor households show promising effects of ICT’s on development: Without usage of mobiles, 5-10% of the fishers in south Indian district of Kerala where not able to sell their daily catch. Nowadays they are able to select the market place in advance rather than picking one harbour randomly. As a consequence of better matches between supply and demand, prices haven fallen and average incomes for fishers risen[1].
Similar developments could be observed in some African countries: The power of intermediates in the supply chain between rural weavers and urban sellers can be reduced, information about prices and specific demand can be better distributed[2] . Additionally, timely information about market opportunities lowers overall business risk and helps to extent micro-businesses to new customers and regions, creating new incomes and jobs[3] .
Furthermore, the possibility of mobile banking via cell phones improves access for the poor to financial services like microinsurances or microfinance, to pay the electricity bill or have a secure way to save the own earnings. Another important application here are workers remittances from family members in metropolitan to rural areas. By lowering the costs for provision of these financial services for banks, M-banking brings the barter-trade onto the surface, allowing the state to tax certain activities. This could improve the development of state financing away from discriminatory duties and fees towards a modern tax system[4] .
To bring the potential benefits of mobile phone services into effect for developing countries, massive investments into the infrastructure are necessary. Therefore, deregulation of utilities seems to be necessary to crowd in private funds and improve the efficiency of the telecommunications sector. Nevertheless, mobile services have to be affordable for the poor, which can only be achieved by competition between different services providers. An appropriate competition policy and utilities regulation by national authorities is strongly required.
References:
[1] Jensen, R. (2007) The Digital Provide: (Information) Technology, Market Performance, and Welfare in South Indian Fisheries Sector. The Quarterly Journal of Economics, Vol. 72, pp.879-924.
[2] Jagun, A.; Heeks, R.; Whalley, J. (2007) The Impact of Mobile Telephony on Microentreprise: A Nigerian Case Study. Information Technologies and International Development, Vol. 4, pp. 47-65.
[3] Donner, J. (2006) The Use of Mobile Phones by Microentrepreneurs in Kigali, Rwanda. Information Technologies and International Development, Vol. 3, pp. 3-19.
[4] Donner, J.; Tellez, C.A. (2008) Mobile Banking and economic development: Linking adoption, impact and use. Asian Journal of Communication, Vol. 18, pp. 318-322.