In a continent with limited infrastructure, phones serve as income boosters, a teaching tool and wallets, according to speakers during a session at the Africa 2.0 forum.
The predominance of pre-paid phones in Africa means that “air time is exactly equivalent to cash,” said Nathan Eagle, CEO of Txt Eagle, a company he started in 2008 that aims to help mobile-phone users in developing nations earn income with their handsets.
With Africans spending 10% of their yearly income on air time, Eagle said the question becomes: “How can we think of the phone as a mechanism to compensate people?”
For Txt Eagle, this means compensating users for providing the company with data. While working on a health-care project that called for nurses in rural Kenyan hospitals to send a text message on blood supply information to a central database, Eagle discovered that paying the nurses for their messages and giving them air time credit directly affected their participation.
Not covering the cost of a text message was “essentially asking them to take a pay cut,” he realised when participation plummeted after one month.
Txt Eagle’s data on its approximately 2.1 billion users will also help companies advertise their products to developing markets, a critical space for corporations since mature markets will not yield additional buyers, Eagle said. “Right now this is the way to engage them,” he said. “For many of them, it is the only way. There is a fundamental lack of data in emerging markets.”
The effects of mobile communications’ high cost was also witnessed by Jenny Aker, an assistant professor of development economics at Tufts University whose work includes studying how Niger farmers used mobile phones to obtain information on what markets paid for crops.
“Mobile phones are reducing communication costs, allowing people to get access to information,” she said. In Niger, sending text messages is cheaper than making a phone call, she said. But with a national illiteracy rate of 80%, the country’s farmers were unable to utilise the more cost-effective communication method.
“The question was, could we harness a simple phone as an educational tool?” she said. Aker and her team developed a literacy class centered around mobile phones and included lessons on how to use handsets as well as how to convey basic written information. After eight months, the farmers achieved elementary-school education levels in reading and writing, Aker said.
Basing the class on mobile phones “allowed the adults to learn more quickly and learn skills for use outside the class,” she said. “In addition to obtaining information, mobile phones can help business owners improve inventory and foster jobs,” Aker said.”Rural shop keepers can call suppliers and order goods instead of waiting for them to approach the store. The use of pre-paid phones has spawned side businesses vital to keeping the devices working, such as phone charging services and air time vendors.
Mobile carriers have also realised that handsets can fulfill many roles. In 2007 Safaricom, which offers phone service in Kenya, launched the M-Pesa mobile banking service for people to pay back microloans.
The service was expanded and now it’s mainly used for transferring money, said Waceke Mbugua, M-Pesa marketing manager. Currently 90% of all transactions on the service are for sending and receiving money, she said.
Safaricom discovered that “if you can reduce time and make it easy, people will use it,” she said.
The payment services M-Pesa offers were further expanded and people can now use their phones to buy air time, pay bills and buy items at the grocery store, said Mbugua. M-Pesa service offers are set to grow again, but Safaricom needs third-party help first.
“The key growth area is partnerships,” said Mbugua. “Partners can help add more services like bill paying.”
Smartphone adoption will further the concept of a multi-faceted mobile device, said Eagle. However, he noted that the mobile application craze will most likely pass over Africa.
“You need to have a lot of money to partner with a mobile provider,” he said, adding that carriers aren’t interested in working with developers. Greater business and user opportunities lie in mobile cloud computing, he said.
“You’ll see growth in the mobile Web, applications that run on a browser,” as African cloud computing services “are going to explode.”