Holiday in Ghana - the Impact of Cellular in Developing Countries
I was recently on holiday in Ghana.
I won’t bore you with all the details although I would highly recommend it. People are really friendly, there are some utterly beautiful beaches (the closest I’ve ever been to tropical paradise) and while the animals are maybe not as spectacular as in East Africa, it is undeniably wonderful to be on a walking safari and stroll next to elephants, with crocodiles -- not to mention the baboon that stole my son’s lunch from his table! There is also the harrowing history of slavery and “the triangle trade” (slaves from Africa to the Americas; cotton & sugar from there to UK; then trade goods and cloth to Africa to buy more slaves, and repeat). However, I don’t think Fufu is going to be a food that I seek out in future.
But in the telecoms context it was just staggering.
I had heard of just how incredibly significant mobile phones have been to the progress and economies of developing countries.
According to the OECD, adding an extra ten mobile phones per 100 people in a typical developing country boosts growth in GDP per person by 0.8 percentage points. That is just staggering.
There are now about 5 billion cellphone users in the world, and the number continues to grow rapidly. About 70% of those are in developing countries – and nearly all the growth is from those markets. In many countries they have never seen let alone used a fixed line phone, and the characteristics of these “new” internet users will be vastly different from the first billion users.
In the developing world there is now estimated to be eight times as many mobile phones as fixed lines (and in some countries the ratio is more than 25 to one), three times as many mobile phones as personal computers, and nearly twice as many mobile phones as TV sets. As a result, they connect to the internet principally via wireless networks rather than computers (or if they do use a computer, it is via a cell modem or 3G dongle)
The way people use phones is important. Yes, talking to family (or texting) is always good (especially when people have to work a long way from home) but the cellphone is enabling whole new applications, or fixing major gaps in infrastructure or market failures.
A simple example is calling ahead to see if something is in stock before making a long journey. But a more powerful example: imagine you are a farmer who has a choice of two village markets each a day’s walk. In the past you had to chance which one to go to, and once there your negotiating power is weak because the buyers know you are desperate to sell rather than face the long walk back. Now it is possible to call ahead, negotiate, and get a better price in advance through having the choice. The Economist mentions this has effectively doubled some farmers income’s – no trivial thing when you may go from $2 a day to $4 and may now be able to pay for school for children for the first time.
Another example is mobile money: sending money via cellphones. This might be an official service through a bank or as simple as sending ‘money’ as cellphone minutes: buying a pre-paid scratch card and instead of using it yourself, texting the code to the person who receives that much value.
One of the most famous examples is Kenya's M-PESA which really is changing the way Kenyans manage their money, by letting them borrow, save and pay for services more easily, according to Tavneet Suri, an assistant professor at the MIT Sloan School of Management. Since its introduction in 2007, the researchers found, 48 percent of Kenyan households have at least one M-PESA user in them – about twice the number who have bank accounts. "In these sorts of economies, there's not much of a bank presence, but money transfers are still important," notes Suri. "People do them all the time.”
In Ghana, the most astonishing thing is the ubiquity of cellphone advertising. It is EVERYWHERE.I don’t think I have ever been anywhere with quite so much branding, of any sort. Certainly I have never seen so much cellphone advertising. Every billboard by the roadside. Sponsored highway information signs. Every umbrella. Signs on shops. And then… whole villages. Every house painted in branded colors: MTN custard yellow, Vodafone red for house after house, wall after wall, street after street all logo’d, for hundreds of yards of street side walled branding. Astonishing.
In other places I’ve been probably the most common brand is Coca-Cola. To give an idea of the swamping of other ads I had a competition with my kids (you need ways to fill time on a 6 hour drive on savagely pot-holed roads!) of a prize each time you saw an advert that was for anything other than a cellphone. A typical set of billboards might run “Voda, Voda, MTN, TIGO, Voda, Voda, MTN, MTN – DAD! I saw an ad for a Bank!! Voda, Voda, Tigo, Tigo…” and repeat for five minutes until “DAD!”
Coverage was pretty good. I could get strong GSM signals in most places, although data service was much rarer. In the main cities there is 3.5G (and adverts there for HSDPA and dongles), and that is widely used as the only way to connect to the internet. (On reflection, I’m not sure I met anyone who had a fixed phone line?).
In some remote villages there was no water, no sewage, no electricity network – but lots of people had phones. Some new, many old and sometimes in poor condition (shattered screens or held together with duck tape). In one village of mud huts someone proudly showed me his iPhone. First generation but even so… A common thing is for a local business to rent time on cellphones for people who can’t afford their own: buying minutes wholesale and selling retail. This is commonly funded by micro-credit like Grameen. I met one lady who did this and had diversified slightly. As more people in the village had phones, but there was no electricity she had added a second product line: as well as minutes of airtime to people who didn’t have a phone, she sold electricity to charge the phones of those who were rich enough to buy a handset but couldn’t afford a generator.
Every five miles or so was a huge tower, with microwave links - copper is hardly practical, but even if you were foolish enough to lay it then some enterprising person would dig it up. And, of course, they need to be self-powered as well. Incidentally, last week there was a conference on green basestations – a major theme was reducing power consumption of basestations and apart from obvious OPEX drivers, one of the motivations is to get a GSM macro that can be solar powered, to remove need for generator and valuable diesel.
I’d thoroughly recommend Ghana for a vacation.
And I’m thinking of all the business opportunities that “connecting the next several billion” present.
An article by OECD: http://www.oecdobserver.org/news/fullstory.php/aid/2664/The_next_several_billion.html
The Economist Special Report on Telecoms in Emerging Markets: http://www.economist.com/specialreports/displayStory.cfm?story_id=E1_TQQRPRJG
An MIT article on “10 ways cellphones help: http://legatum.mit.edu/content-207
Article on M-Pesa: http://web.mit.edu/newsoffice/2010/mobile-money-0223.html