February 24, 2017

The Technology That’s Making a Difference in the Developing World

By Abhik K. Pramanik

The most unexpected development headline of 2016? Today, more people have access to mobile phones than to electricity or clean water— and it’s making a difference in the fight against global poverty.

In 2000, only 4 percent of people living in low- and middle-income countries had access to mobile phones. In 2015, that number rose to a whopping 94 percent. This was true even in sub-Saharan Africa, where there were 76 mobile cellular subscriptions for every 100 people, while only 68 percent of the region’s population had access to an improved water source.

While those of us in high-income countries may use our smart phones to check Facebook or play Candy Crush, mobile phones—usually as simple as Nokia devices from over a decade ago—have had dramatic economic benefits in developing countries across the world. In India, every 10 percent increase in mobile penetration has seen a 1.2 percent increase in national GDP. In rural Peru, household consumption rose by 11 percent with access to phones between 2004 and 2009, while reducing extreme poverty by 5.4 percent.

But how exactly have mobile phones made these impressive economic gains possible? The most prominent example is M-Pesa, a mobile banking platform launched in Kenya in 2007 with the aid of a one million pound grant from the UK’s Department for International Development. M-Pesa is a mobile money transfer service that allows users to pay for everyday goods and services, take out and repay loans, and send remittances to family in remote locations.

The return on investment for M-Pesa has been astronomical. In 2013, 43 percent of all of Kenya’s GDP flowed through the app. As of last November, there are 17.6 million active users in Kenya, with at least one user in 96 percent of Kenyan households. Most recently, a comprehensive study found that nearly 1 in 10 Kenyan families living in extreme poverty were able to lift their incomes above the poverty line thanks to the banking app.

Seizing on the potential of the digital revolution, USAID and other American development agencies have also invested in mobile technology. USAID’s MISTOWA (Market Information Systems and Traders Organizations in West Africa) project was created to provide remote communities with accurate agricultural statistics that could connect smallholder farmers with buyers, while ensuring that they receive fair market prices for their goods. In partnership with Esoko, a company based in Nairobi, rural farmers in 15 African countries are sent price information, weather alerts, crop advice, and tips on how to link up with buyers, all via SMS.

In Ghana, Esoko’s price alerts led to a 9 percent increase in profits for all farmers who lived in areas that used the program. Even farmers who did not receive the communications saw their profits increase as traders that bought agricultural goods couldn’t be sure which farmers actually subscribed to the text service.

USAID has also invested in lifesaving software programs for mobile use like Beacon, created by Trek Medics International in conjunction with Google and Cardinal Health, which helps bring vital 911 services to isolated regions. In areas where calling 911 isn’t an option, such as in the countryside of the Dominican Republic, residents can call their regional firehouse where a dispatcher will then send out a mass text message via Beacon to a group of volunteer, first-aid trained motorcyclists. An available volunteer will then text back, confirm they’re on their way, and transport the injured person to the closest hospital.

Operating at less than $0.19 a mile, these motorbikes are much cheaper than sending ambulances, which average $1.46 a mile, into rural areas. Currently, Trek operates in the Dominican Republic and Tanzania, though the nonprofit plans to expand its volunteer training service to Malawi, Mexico, and Guinea in the near future.

While the mobile phone revolution presents enormous opportunity, challenges to cellular access remain. Mobile phones are still extremely expensive for those living in low and middle income countries: the median mobile phone owner in Africa spends over 13 percent of their monthly income on phone calls and texting.

There is also a large gender gap among cell phone ownership among men and women, even within countries with relatively high rates of mobile ownership. For example, in Nigeria, Kenya, and Ghana— all large, rapidly growing economies— the difference in smart phone ownership between men and women is more than 12 percent. At a more fundamental level, many adults still lack the basic literacy and numeracy to adequately use phones. In Mali and Uganda, for example, roughly three-quarters of third-graders can’t read.

Technology may not solve the world’s development challenges alone, but investments by the U.S. government in mobile platforms in partnership with companies like Google, Microsoft, and Facebook have shown that they can demonstrate a real, measurable impact.

Image: TechMoran.