Africa’s Wakeup Call

Cellphones and Development

by MATTHEW ESCANO for The Toronto Globalist

Today, Africa is being revolutionized by what many in most privileged countries consider an everyday item: mobile phones. While Blackberries may not be the standard for many, access to a mobile phone has reaped huge benefits for African citizens economically, politically, and socially.

A BBC report states that the mobile phone found its way into Africa by an increasing demand for services from the wealthy, allowing the first mobile networks in developing countries to lay their foundations despite high network costs. When mobile phones were first used, people would talk first and pay later, a practice requiring them to be in good credit standing – a status exclusively for the wealthy. The development of prepaid phone bills allowed basically anyone the ability to have access to a phone for the first time. Though the cost of handsets were high to begin with, ordinary people were able to use microfinance to purchase a phone or at least a means to save enough money for one.

For example, an Economist article highlights Mary Wokhwale from eastern Uganda as having made a living out of just one mobile phone. Using a microfinance loan, she decided to buy a basic handset and an antenna for her rooftop to ensure a reliable signal. While some use their microfinance loans to purchase a cow from which they can repay and gain profit from selling its milk, she chose to become a “village operator” and sell phone calls to other villagers, for whom making and receiving phone calls is of vital importance. To these villagers, and other people in developing countries, cell phones provide them with access to telecommunications for the very first time. Because of this high demand, she was able to pay back her loan and buy another phone, and from there open a music and video shop which she uses to finance her children’s education. Now that companies have realized the potential market in Africa for mobile technology, prices have dropped for as little as $15-$20 for a cell phone. Top-up vouchers with credit balances as low as $0.50 can be bought from small shops and street corners in many places across Africa.

This case is not restricted to Uganda alone, or much less Africa. In Bangladesh, the Economist found this practice is also widely used across the rural areas, where “telephone ladies” and “village operators” have set up shops in many villages. The Grameen Foundation, a non-profit organization set up by Muhammad Yunus, the founder of Grameen bank, has further spread this practice to Rwanda, Cameroon, and Indonesia as well. Even in Afghanistan, women are able to pay off their microloans in about eight months and afterwards can earn up to $100 a month.

What’s more, the advent of this mobile revolution has created new ways for people to manage their money. While a BBC report estimated at least one billion people around the world who lack access to a bank or a bank account, that same billion are now more than likely to own a mobile phone. Africa boasts one of the fastest-growing mobile phone markets in the world, with South Africa having eight mobile phones for every one fixed landline. Ten years ago in Kenya, there were about 15 000 handsets in use, but nowadays that number has blossomed to over 15 million. With this rapidly growing market in cell phones, companies such as M-PESA in Kenya have pioneered the idea of mobile banking – the practice of storing money on one’s cell phone.

To set up an account is relatively simple. A video on BBC describes how users must first register with M-PESA, and provide a phone and ID card as well as some cash to deposit into your account. This money can now be used to pay from things like beer and samosas to livestock, such as cattle. Many people in Kenya prefer mobile banking rather than actual banks as it is a much more efficient way to move money. People no longer have to worry about thieves stealing their hard-earned cash from their homes or stores, and taxi-drivers can rest easier knowing that they have less cash to carry around. Sending relatives money is now as simple as the push of a button; one can even pay school fees through the phone. M-PESA now has nearly 7 million users in a country of 38 million people, and the numbers of users are growing fast.  With the market in Kenya mostly consolidated, M-PESA now has its sights on neighboring Tanzania and even Afghanistan. A similar company operates in South Africa under the name of Wizzit. Nearly half a million South Africans also use their mobile phones as a bank. Wizzit, like M-PESA, is also targeting over half of the adult population without bank accounts to sign up for their services – they hired over 2000 unemployed citizens (called “Wizzkids”), trained them, and used them to boost business, which proved to be a big success as eight out of ten Wizzit customers were introduced to banking for the first time.

However, though Kenya, South Africa, and much of North America have close to 100% mobile coverage, the same BBC report states that countries such as Rwanda, Burundi, Eritrea and the Central African Republic have less than 30% coverage. As with many developing countries, low incomes, combined with illiteracy and poor infrastructure make it hard for the sale and use of cellular devices. Though telecom experts have claimed African markets too risky for mobile phone companies, some companies such as MSI Cellular have already begun to penetrate places like Sierra Leone, wracked by civil war and poverty. The establishment of their company in Freetown coincided with a rebel invasion, and after the smoke cleared, British peacekeepers and displaced families were desperate for mobile phones and reliable information. Sierra Leone was MCI’s fastest network to reach profitability because of this, and the customers were happy to pay up front in cash.

These “risky African markets” are exactly the places which need mobile coverage the most, as cases have shown the presence of cell phones to aid in fighting corruption and increasing government accountability. In terms of politics, mobile phones are helping people monitor elections, as was shown on the news in Nigeria earlier last year. Voters were able to text complaints to a computer where they could be cross-checked by monitors such as the European Union. In Egypt, people are able to capture cell phone video clips of torture perpetrated by those in authority. These are posted up on websites run by NGO’s such as Witness, whose website “Hub” (http://hub.witness.org/) catalogues anything from pictures to verbal reports and videos depicting cruelty in action. In the face of growing evidence, governments would be much keener on curbing their violent practices. Places such as the Philippines have long used cell phones as a way to organize social movements. Africa is no different.

Though it is not easy to believe that something as simple as a mobile phone has the power to change the face of African society on such a wide scale, this power is very real and is definitely working in Africa and other parts of the developing world. The international community is not merely standing on the sidelines either. The Bill and Melinda Gates Foundation plans to put $12.5 million into a program to extend services to the poor, and companies with a firm foothold in their home markets are always looking to expand. What the international community can do to boost development is to step up their peacekeeping efforts, especially in places like Somalia, so that more of Africa becomes safe enough for cell phone companies to invest in. Once new companies are in place, hopefully the same pattern will emerge where people can begin to gain microfinance loans to afford their own phones and spread the use of this beneficial technology to those who need it the most. The developing world, especially in Africa, has much to gain from something as simple as the ability to communicate with a mobile phone; this is something those in the developed world should think twice about before taking their own phones for granted.

Matthew is a fifth year student at the University of Toronto, studying Political Science & Anthropology