05:05 GMT 5th January 2011
ICTs, Enterprises and Poverty Alleviation finds that new micro-enterprises are mushrooming in developing countries, sometimes creating new livelihoods for the poor. In Kenya, for instance, there are now more than 18,000 agents for the M-Pesa mobile based transaction service.
In africa, the report was launched in the ethiopian capital addis ababa on the sidelines of the Seventh african Development Forum (see story P .42-43). Speaking during the launch, Remi Lang, Unctad’s associate economic affairs officer noted that the mobile phone is helping to bridge the digital divide.‘Mobile telephony has been growing at an exponential rate in africa, with 50 per cent penetration by the end of 2009. this attests to the mobile phone’s ability to bridge the digital divide,’ he said.
There are now more mobile phones in africa than bank accounts, while in Kenya more money transfers are made via M-Pesa than Western Union or Money Gram.‘the mobile revolution has clearly caught up in LDCs [least developed countries],’ said Lang.
Sizo Mhlanga, chief of ICt policy and development in the Un economic Commission for africa (eCa), said the eCa has been collaborating with Unctad to help countries formulate policies that mainstream science and technology. ‘eCa is currently working with the ethiopian leather industry to develop an e-commerce platform,’ said Mhlanga.
Unctad’s Information Economy Report 2010 urges policy makers in developing countries to make the ICt sector a more important component in their poverty reduction strategies. It says more benefits can be secured for the grassroots creation of smallscale enterprises if enlightened government support is added.
According to the report, in more and more low-income countries, farmers, fishermen and entrepreneurs use mobile phones and other forms of communication technology to improve their livelihoods: ‘In a number of poor countries, mobile phone use has transformed the lives of farmers. the phones help farmers to get information about market prices and to stay in direct contact with their customers.’
Noting that the technology involved is now simple and cheap enough to be used by the poor, the report urges governments and other policy makers 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 using well-designed policies to boost and widen these trends.
‘The contribution of ICTs to poverty reduction lies in their power to enable poor women and men to build livelihood assets or more secure employment opportunities. We are witnessing a new dawn in the way new technologies can make a difference, even in the most remote places’, said UN Secretary- General Ban Ki-Moon in the report’s preface. ‘The diffusion of some ICTs – especially mobile phones – has improved dramatically, including in regions where many of the world’s poor live and work. This translates into new micro-enterprises in different sectors, new services and new ways to market produce and other goods.’
The ability of mobiles to reduce poverty stems from the fact that the poor 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. But lack of such up-to-date knowledge adds to their vulnerability. For instance, fishermen may only have time to visit one fishing beach while their catch is still fresh. If the buyers pay a lower price than elsewhere, the fishermen have no option but to sell there. But with mobile phones, the fishermen are able to compare the prices and choose the best option while still at sea.
Similarly, 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 and internet use. Text messaging and the use of “missed calls” help to make mobile use more affordable for the poor.
The report notes that 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 messaging service (SMS), and increasingly for accessing the internet. In some developing countries such as Kenya, 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 and safer money transfers to remote locations.
According to the report, the micro-entrepreneurs in low-income countries are rapidly adopting mobile phones as key tools for advancing their commercial activities. In Niger, for instance, grain traders are benefiting from lower transaction and informationsearch costs. In Ghana, 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.
In addition, new jobs have arisen catering for 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. In Gambia, for instance, former street beggars have been offered the opportunity of working for a mobile telecom operator and have gained higher incomes and improved social status.
However, Unctad also stresses that ICT micro-enterprises typically operate in a volatile and risky sector, and that returns on investment are often low. Micro-enterprises must have the capacity to adapt and respond to change. The report notes that the opportunities for ICT micro-enterprises to survive and grow are greater in urban settings, where it is easier to establish essential relationships with other enterprises, both formal and informal. The scope for creating long-term jobs around such activities in rural areas appears to be more limited.
The report notes that lack of electricity is a significant barrier to ICT take-up for the poor in developing countries, particularly in rural areas. This is less of a problem for some ICTs that use batteries such as radio or mobile handsets, which can be recharged. Lack of power also raises costs since infrastructure such as wireless base stations must be powered by more expensive diesel generators. ICT access will inevitably be restricted, particularly among the poor and small and micro-enterprises in rural areas until solutions are found for providing stable and affordable electricity.
While coverage, affordability and electricity remain major concerns as barriers to ICT uptake, education and awareness are key bottlenecks, especially for using data services. Lack of skills inhibits greater use of computer and the internet, especially among the poor and in rural areas. Governments are advised to facilitate demand through developing relevant capabilities, promoting digital literacy and supporting the development of applications by the relevant stakeholders. This can help to foster the necessary expertise among the poor and in micro-enterprises to more fully utilise the potential of ICTs to reduce poverty.
The report says that in order to leverage ICTs further as a tool for poverty reduction, it is important to enhance usage and the sophistication of applications, particularly using the capabilities of high-speed wireless data networks, which are likely to have a bigger impact than fixed networks in developing countries. There are positive trends but challenges still abound, especially with regard to affordability and knowledge development. Though a growing number of people are gaining access to ICTs, particularly mobile phones, usage is sometimes constrained by high prices.
The Information Economy Report 2010 provides a raft of recommendations to governments. Among them is that in order to reach the poorest groups in society, policy makers should focus more on supporting ICT adoption at lower levels of economic activity and sophistication, especially in rural areas. The report also recommends further expansion of mobile coverage. At the end of 2008, almost half the rural populations in LDCs were still not covered by a mobile signal. Governments should also make better use of mobile phones when designing business support services, and should adapt these services to situations of poor users.
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