The African Union summit in Addis Ababa this week focused on the power of information and communication technology (ICT) for development. Indeed, few inventions have had as profound an impact as the mobile phone, not just socially but economically too. But leaders must draw the right lessons from success – and from Ethiopia’s failure.
Ethiopia is a case study in how government can stifle innovation, with the state-owned Ethiopia Telecommunications Corporation preventing any private competition. Only 1.5 percent of the population has a mobile subscription and even fewer have land-lines. Not surprisingly, Internet access remains expensive and unreliable: a 2Mbps broadband internet service will cost around $8,000 to install and over $3,000 a month to service – 45 years’ average salary (all from the latest, 2007, figures).
That is a scandal. Outside Ethiopia, much of Africa has seen a mobile phone revolution over the last decade – Botswana now boasts more mobile phone subscriptions per capita than China. Where countries dropped government control, mobile phones spread rapidly.
A study by international consultancy Deloitte and the mobile operators’ GSM Association said “a 10 percent increase in mobile penetration leads to a 1.2 percent increase in GDP. But this exciting figure does not even include the profound impact that communicating cheaply has had on the lives of poor people.
Kenyans used to depend upon the government monopoly, Telkom Kenya: less than 1 percent of the population had access to a Telkom Kenya landline in 2002 and 3.7 percent had mobiles. In 1999, the government auctioned mobile licenses and private investors spent heavily on mobile phone infrastructure: now 30 percent of the population has a subscription and over 95 percent has signal coverage. Life without mobiles would be unthinkable for the Kenyan market traders, farmers and transporters contacting suppliers, haggling over prices or doing their electronic banking.
Mama Kim Atieno in Nairobi has halved the travel and transport costs of getting supplies for her small “food joint called the Executive Canteen. She no longer spends KSh.3,000 a week on travel to the market and KSh.5,500 on transporting the goods: she arranges it all by cell phone for just KSh.4,000, including airtime, she told our colleague June Arunga for her 2007 report The Cell Phone Revolution in Kenya.
A little freedom goes a long way, bringing explosive growth in mobile networks in Egypt, Botswana, Nigeria and Uganda, whether the providers are multinationals or home-grown start-ups. Today, almost 70 percent of Africans live within network range and, thanks to competitive handset manufacturers and traders, many can get cheap phones.
Competition has transformed a luxury into a cheap and reliable necessity that improves and even saves lives across the continent every day.
Mobile phones helped alleviate food shortages in Niger in 2005 because farmers could leapfrog corrupt government middlemen and communicate market prices, as much as 20 percent cheaper in certain areas, directly to retailers and consumers.
A new scheme in six West African countries lets consumers verify by SMS whether the medicines they buy are authentic or potentially-fatal counterfeits – a big deal in a region where recent studies estimate 30 percent of medicines are fraudulent.
Despite a landline monopoly, Egypt has allowed rapid mobile-phone growth, with three operators serving some 58 percent of the population, plus mobile banking – although it still levies a 15 percent tax on mobile services.
The bitter irony is that the dazzling new technology on display at the African Union Summit in Addis Ababa has the potential to unleash hugely beneficial growth, yet in drought- and occasionally famine-stricken Ethiopia, these will be out of reach for all but a tiny minority because of government interference.
The rapid growth of mobile phones in poor countries illustrates how businesses in bad economic environments can provide an affordable service – but only if they are allowed to. The World Bank’s Ease of Doing Business Index puts 24 African countries in the bottom 30 (although Egypt is just below halfway, at 106th).
A recent United Nations International Telecommunication Union (ITU) study demonstrates that when business conditions are improved there is significantly greater investment in telecoms, with all its benefits. Last year, investment in ICT in Africa totaled over $8 billion – 13 percent of total foreign investment. Private investment could total more than $70 billion by 2012, Hamadoun Toure, Secretary-General of the ITU, told Reuters this week.
After years of obstruction, Rwanda has recently allowed rapid mobile growth: its President Paul Kagame told the AU meeting, “government and business leaders must “work even harder to replicate the success of mobile cellular technologies in order to harness the potential of broadband technologies that are essential in participating in global business.
But governments must, above all, allow the freedom for ICT, mobiles in particular and all businesses in general to flourish.
Alec van Gelderis a Project Director andTimothy Coxa Research Fellow at International Policy Network, an independent economic-development think-tank in London.
