Better Use of Mobile Phones to Fight Poverty – UN Study Urges Govts

United Nations Conference on Trade and Development (UNCTAD) released a report Information Economy Report 2010: Information and Communication Technologies (ICT), Enterprises and Poverty Alleviation, which urges governments to make better use of mobile phones in fight against poverty. With government support, the better, more timely information that the devices provide can boost subsistence livelihoods. The details of the press release is given below.

In more and more low-income countries, farmers, fishermen and entrepreneurs have used mobile phones and other forms of communication technology to improve their livelihoods.

Over the past few years, the penetration rate of mobile phones in the world´s least developed countries (LDCs) has surged from 2 to 25 subscriptions per 100 inhabitants. The technology involved is now simple and affordable enough to be purchased and used by the poor. They become “connected”, although often in ways that are different than in developed countries.

The Information Economy Report 2010 urges governments and other policymakers to take full advantage of these new opportunities to combat poverty. It says that this requires keeping a close eye on the innovative uses that develop spontaneously among the poor for mobile phones and other information and communication devices, and then using well-designed policies to boost and widen these trends.

How mobile phones can help reduce poverty

Poor people often lack information that is vital for the work they do. This information can include current market prices, weather reports, and new opportunities for earning income. Lack of such up-to-date knowledge adds to their vulnerability. For example, fishermen may only have time to visit one port while their catch is fresh. If the buyers at the port they select are paying a lower price than elsewhere, they must still sell there. Mobile phones can enable them to compare prices and choose the best options while still at sea. In southern India, for example, fishermen´s profits have increased by 8 per cent thanks to better market coordination. When better access to information and better chances to communicate are available to poor people, information and communication technologies (ICTs) can help them to raise their incomes significantly.

The rapid diffusion of mobile telephony is making it possible – for the first time – for poor people to have immediate access to interactive communications. The penetration rate of mobile phones is much higher than that of other ICTs such as fixed telephone subscriptions, internet use, and broadband subscriptions. Text messaging and the use of “missed calls” help to make mobile use more affordable for the poor.

Along with this greater availability, new applications and services that can be used with mobile phones are emerging in low-income countries. Mobile phones are used for voice communications and short messages (SMS), and increasingly for accessing the internet. In some developing countries, mobile phones now allow people without bank accounts to make person-to-person payments, money transfers, and pre-paid purchases. This allows for lower transaction costs, and easier, cheaper, and safer money transfers to remote locations.


Meeting entrepreneurial needs

The UNCTAD report shows that mirco-enterprises in low-income countries are rapidly adopting mobile phones as key tools for advancing their commercial activities. In Niger, grain traders are benefiting from lower transaction and information-search costs. In Ghana and India, mobile phones have become critical equipment for fishermen and fishmongers, resulting in more efficient markets and improved livelihoods. For women´s weaving micro-enterprises in Nigeria, the phones have reduced transaction costs. In addition, producers are saving time and money by eliminating travel that used to be necessary in order to locate buyers and negotiate the best prices. And in Bangladesh, a helpline has been set up offering information and advisory services to small-scale farmers with mobile phones.

In addition, new jobs have arisen catering to local demand for mobile phones and the associated applications and services. Many poor people are selling airtime or mobile money services on the streets or in shops. Such work can typically be done by people with few formal skills. In Gambia, for example, former street beggars have been offered the opportunity of working for a mobile telecom operator and have gained higher incomes and improved social status.

Poverty-reduction efforts should seize on new ICT opportunities

The Information Economy Report urges policymakers and other stakeholders to give more attention to this new set of opportunities. As stressed by United Nations Secretary-General Ban Ki-moon in the preface to the report:

“Policies matter in ensuring that improved access to ICTs leads to poverty reduction. The outcome depends on the context and on the environment in which ICTs are introduced and used. Governments have a key role to play in devising policies that respond effectively to the specific needs of the beneficiaries – needs that differ among enterprises, between rural and urban areas, and between countries.”

UNCTAD provides a series of recommendations to governments:

  • To reach the poorest groups in society, policymakers should focus more on supporting ICT adoption at lower levels of economic activity and sophistication, especially in rural areas.
  • Government efforts need to become more demand-driven – tailored to specific contexts and reflecting input from the poor. That is to say, governments should monitor how the poor are using mobile phones and other ICTs and build on what they find.
  • Further expansion of mobile coverage is important. At the end of 2008, almost half the rural populations in LDCs were still not covered by a mobile signal.
  • ICT use needs to be affordable. In the case of mobile telephony, lessons can be learned from the South Asian model, which offers the lowest costs. Competition may play a role here: a sole service provider, or a limited number of service providers, often means higher costs.
  • Governments should make better use of mobile phones when designing business support services, and should adapt these services to the capabilities and situations of poor users.
  • Development partners need to stay abreast of new ICT developments, and to pay adequate attention to the potential of ICTs in their strategies for reducing poverty.
  • Governments and development agencies should work with the private sector and civil society: projects enhancing the productive use of ICTs by small enterprises that typically employ the poor often involve multiple stakeholders acting in partnership.

In mountainous Bhutan, mobile phone use has transformed the everyday lives of dairy farmers. The phones help farmers to get information about market prices and to stay in direct contact with their customers. Farmers sell at higher prices and only ship sufficient milk to meet demand, avoiding waste and the lost income that results. Mobile phones also have led to reduced travel and waiting times, enabling farmers to organize their work more efficiently. The Government of Bhutan recognizes the business potential of mobile phones, and now offers a mobile-based information service to farmers. The combination of government liberalization and the sheer usefulness of the devices has caused Bhutan to move, in less than six years, from having no mobile phones to a penetration rate of 50 subscriptions per 100 inhabitants.

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