The power of mobility

Imagine a magical device that could boost entrepreneurship and economic activity, provide an alternative to bad roads and unreliable postal services, widen farmers’ access to markets, and allow swift and secure transfers of money. Now stop imagining: the device in question is the mobile phone. Not surprisingly, people in the developing world are clamouring for them, and subscriber growth is booming. The fastest growth rates are to be found in Africa, albeit from a low base. Already, 80 per cent of the world’s population lives within range of a mobile network; but only about 25 per cent have a mobile phone.

The primary obstacle to wider adoption is the cost of handsets. In the rich world, these typically cost around $200 (though most pay less than this thanks to subsidies from network operators), or less than 1 per cent of the average income per person. In the developing world, in contrast, a $50 handset would account for 14 per cent of the annual income of someone earning $1 a day. So the first step in promoting the adoption of mobile phones, say operators in developing countries, is to reduce the cost of the handsets. Several such schemes are under way…

Industry observers believe cheaper handsets could expand the market by as many as 150m new subscribers a year. As well as boosting economic development in poor countries, this will help to close the “digital divide” between the communications-rich and communications-poor. Governments, you would have thought, would be doing everything in their power to promote the spread of mobile phones…

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Mobile phones have created more entrepreneurs in Africa in the past five years than anything else, says the boss of one pan-African operator. Promoting their spread requires no aid payments or charity handouts: handset-makers, acting in their own interest, are ready to produce low-cost phones for what they now regard as a promising new market. Mobile operators across the developing world would love to sign up millions of new customers. But if developing countries are to realise the full social and economic benefits of mobile phones, governments must ensure that their policies help, rather than hinder, the wider adoption of this miraculous technology.

Excerpted from a leader in the July 7 issue of ‘The Economist’