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Is mobile technology over-hyped?

Gabriel Demombynes's picture

At an event at the New America Foundation in DC  and in a recent article in Slate, Sascha Meinrath and Jamie Zimmerman argue that mobile technology in general and mobile money in particular have been overhyped as game-changing tools for the poor.

They claim that mobile technology “creates a greater economic divide” and that Kenya’s M-PESA mobile money system is “leaving a substantial portion of the nation’s poor in even more dire straits.”

Tavneet Suri and Billy Jack and separately Kevin Donovan have already beaten me to the counterpunch with cogent rebuttals. Here’s my own two cents:

The idea that mobile technology “leaves the poor further and further behind” in Kenya has a surface plausibility but is not supported by either casual observation or rigorous evidence. Mobile phones are so pervasive here that it would be a struggle to find someone without one. Everyone from a woman selling sukuma at the market in Nakuru to the furniture makers on Ngong Road to security guards at the Nakumatt superstore has at least one phone.

This is clear in the latest hot-off-the-presses data from the very recent Kenya Afrobarometer survey. Part of my new working paper with Aaron Thegeya is based on this data. Some headline figures:

  • A stunning 93% of Kenyan adults use mobile phones. This includes the 80% who own their own phones, 10% who use phones owned by others in their households, and 3% who use phones owned by people outside their households.
  • 81% of Kenyan adults speak on the phone at least once a day. 61% send or receive a text message at least once a day.
  • The average Kenyan household owns 2.4 mobile phones.
  • Gender and urban vs. rural gaps in mobile phone use overall are negligible. Women and rural residents are, however, slightly less likely to own their own phones and more likely to use someone else’s phone.
  • Mobile money usage is even more prevalent than previously recognized: 73% of Kenyan adults use mobile money, and 23% use mobile money at least once a day.

It’s true that in its initial stages, mobile technology reached only the wealthy. In 1999, just 1 in 1000 Kenyans had a mobile phone, and those few were not the poor. Likewise, after the M-PESA mobile money system was launched in 2007, the first customers were better off Kenyans. But as Jack and Suri show in their own response and as I showed in work with colleagues in the December 2010 Kenyan Economic Update, mobile money use has quickly spread to the poor.

In short, the broad reach of mobile phones and mobile money usage in Kenya is not in doubt. I have more to say about the effects of mobile technology and mobile savings in particular, but I will save those thoughts for future posts.

Comments

Submitted by Martin on
its true that mobile technology is being over-hyped. Despite the numerous benefits that the technology have offered to the poor, who could not access commercial banks, the recent move by the Safaricom, the market leader, to review their mobile money transaction, have left users more poorer than ever.

Submitted by Kaye on
If you do not reside for considerable lengths of time in Africa, the tendency is to underestimate mobile technology. Take for example the issue of electricity which in many parts of Africa can be a problem when conducting bank transfers or ATM withdrawals - "hanging" in Nigeria for example. A mobile phone with battery life has no such limitation, little sums can be transferred and there are no bank charges. It is a lifeline for many and introduces those excluded to financial services. In a nutshell, mobile technology in Africa is a "killer application" like email

Despite over-hyped the poor farmers in Nigeria acknowleged that the relevance of mobile phone to the poor cannot be over emphasised among which is making them current about market situation instantly.

Submitted by geekmate on
Great post. In my own opinion, mobile technology is not over hyped in general, it is under utilized. I feel that there is a lot more that we can do with mobile phones than MPesa and mobile money transfer that can reach out to the poor and change their lives that we are not doing. Information access could be a good start now that we are moving into a knowledge based economy, games could be another, for social development and learning (remember 2.4 mobiles per household), they forgot to mention number of children with phones and use the trend to predict future reach. There is a lot more that can be done with mobile technology in my opinion that we are not doing and might not be done if we keep singing the same song and hanging around the same idea.. Cheers,

Submitted by Joris on
Hi Gabriel, Seems to me that we'll have to wait for your future posts about the "effects" to have something more meaningful to say on this topic. Appears that it is hard to argue that the penetration of mobile phone usages, and even m-Money usage, has been overhyped. The Meinrath and Zimmerman arguments are interesting, but in part are reminiscent of the microfinance discussion, how high is too high for fees? And are the poor making rational decisions when using m-Pesa? They probably are (that is not to say that they'd prefer to pay lower fees like all of us), or so I would think. As long as the current stage of mobile technological solutions proves to be a step toward even more efficient solutions, it will be hard to argue that mobile technology is not playing a big role in improving the lives of the poor (is that the same as fighting poverty?). That might be different from "mobile phones saving the poor", but not sure anyone seriously thought one technology would ever do that.

Submitted by Esther on
I have a number of African friends - I reside in Australia and they seem to have long lists of mobile numbers for all their friends and family in Africa - all are from West Africa. I have the impression every one uses mobiles but I have assumed they are prepaid. It would seem that they use them as much as we do

Submitted by Judith Puyat Magnaye on
Interesting perspective re Kenya although the claim is not yet backed up by evidence. I don't agree that mobile technology “creates a greater economic divide” per se, because a lot would depend on finding effective ways for utlizing it for a common good e.g. in community organizing, job creation, sustainable livelihoods, etc. In the case of the Philippines mobile technology was used for mobilization. In the EDSA2 People Power revolution of 2001 mobile phone text messaging was used extensively as compared to the first EDSA 1986 People Power revolution when radio was used, particularly Radio Veritas. In addition to mobile phone text messaging, Facebook (which can be accessed thorugh mobile phones for those who have no access to a computer or cyber cafe) was used to mobilize help/resources during the 2009 Typhoon Ondoy for real time, real life crisis management (e.g. volunteers, boats, helicopters, food, prayers, etc. needed). The same social media was used to denounce the Maguindanao Massacre of Oct 2009 and to create pressure on the government to ensure justice and peace. More recently, social entrepreneurs use mobile technology for e-trading in sustainable livelihoods/job creation projects with full support from the private sector e.g. mobile companies and banks in line with their corporate giving, in terms of providing IT inputs and ensuring text messaging costs at affordable levels (i.e. one Philippine Peso per text message) - which at the same time could increase their respective business market share.

Submitted by Judith Puyat Magnaye on
This is a good example of using mobile technology/e-trading in the Philippines in line with the achievement of the MDGs. Title: Scaling up: “Go big or go home” in fighting poverty NOVEMBER 2011 • Judith Puyat-Magnaye, UNDP New York. Read the story at http://content.undp.org/go/newsroom/updates/capacity-development/2011/november/scaling-up-go-big-or-go-home-in-fighting-poverty.en

Submitted by Jayne Musumba on
Thank you Gabriel for your insights on mobile technology with the specific example of M-Pesa. In reacting to comments that triggered this blog, I think it’s too early to tell the impact it has especially the economic value. Certainly, mobile technology has changed the way we live, work, and play. In the context of this blog, it’s giving opportunities to people to overcome poverty than experienced before, from accessing banking services to information related to crops to markets, etc. There are great tools developed in the region to solve region’s problems that have been successful and currently applied both within and outside Africa. For example, with Kenya’s success of M-Pesa came Haiti Mobile Money Initiative (http://bit.ly/xblSQO). Another example is Ushahidi (http://ushahidi.com/), a tool for crowdsourcing crisis information. Ushahidi Haiti (http://haiti.ushahidi.com/) and Ushahidi Japan (http://www.sinsai.info/) used in the 2010 and 2011 earthquakes of Haiti and Japan respectively. In 2011, Ushahidi Liberia (http://www.liberia2011.ushahidi.com/) was used in monitoring the national election. Additionally, Ushahidi comes to Kyrgyzstan (http://bit.ly/wEgQe7). Following similar platform came Huduma (http://huduma.info/), a tool that enables citizens to amplify their voices in the demand for services directly to authorities and service providers. With these great examples, I think our discussion should shift to issues related to scalability and accessibility of these solutions. My colleague, Judith has already initiated that discussion. How can these tools be replicated and scaled up to address some of the concerns raised in this discussion not to further marginalize the poor and disadvantaged? Where are the lessons learned on the policies needed and strategies employed to ensure successful implementation of such applications? As seen from the examples above, the exchange of information and knowledge around these applications is already happening. However, there’s greater need for better facilitation of the knowledge exchange and implementation at the national, regional and global levels to ensure the right information and knowledge is accessible to the small-scale farmers, healthcare providers, educators, humanitarian workers, etc. For more examples on how mobile technology is improving people’s lives in Africa, please see the following articles: Toure, Hamadoun. How Mobile Broadband Can Transform Africa. CNN. Web. 27 February, 2012. http://bit.ly/FQtu7F Adewunmi, Femi. 12 Ways How Mobile Technology Can Boost African Agriculture. How We Made it in Africa. Web. 16 November, 2011. http://bit.ly/FQtwfJ Fox, Killian. Africa’s Mobile Economic Revolution. The Observer. Web. 23 July, 2011. http://bit.ly/z6VaDB Ferenstein, Greg. How Mobile Technology is a Game Changer for Developing Africa. Mashable. Web. 19 July, 2010. http://on.mash.to/FUL4Fr Definitely, I will be watching this space for more discussion on scalability and accessibility.

Submitted by mmnjug on
This March, MPesa the world leading Mobile Money transper platform clocks 5yrs. It has been a tumultuous time full of awards, complaints, breaking new thresholds, threats of sabotage and most of all acceptability. For mobile money to be successful, it must be left to run outside the realms of banking platforms and regulations. This is what made MPesa great in Kenya...... because it first solved a problem before any regulations were set to it. Curiously, banks were against it, but today, they have no choice but to join the bandwagon. Many factors come into play when a Mobile Money transfer system is concerned....because in Kenya, all the Telcos have such a system, but not as successful as MPesa...! Either way, Mobile Monet is here to stay, it can only get better. Here is a post on what next for MPesa: http://bit.ly/AdUKOS iRest.

Submitted by Ian on
As with any new technology, the potential benefits of mobile phones, and mobiles 4 development in particular are probably somewhat overhyped (all new technologies undergo the so called "Gartner hype cycle" http://www.gartner.com/technology/research/methodologies/hype-cycle.jsp ) That doesn't mean that they are not significant though. It's worth noting that the introduction of new tools is not an undadulterated good. Mobile phones give a possibility to do things not previously possible - these can be both good (helping transfer money, real-time data collection and response, connecting to protest an odious regime) or bad (flash mobs and riots) and depend on the underlying human intent. Over time the most effective and viable uses of mobile phones that respond to people's needs will emerge - but that takes time. Another aspect of new technologies is that while in the short term they can exacerbate inequalities between the haves and the have nots, in the longer term they can also be more democratizing (think of the printing press, which created a new opportunitiy for publishing, but left the illiterate further marginalized - but in the longer run gave society a greater emphasis on education and literacy). So while the potential benefits of mobile phones are probably overhyped due to our undue faith in what technology can do for us, they can have a significant benefit - even if its not as much as we currently expect - and that even if they increase some inequalities in the shorter term (which isn't fully clear in this case) in the long run they are likely to have a more democratizing effect. The other important aspect to consider is that people are now building increasingly powerful mobile tools whether we like it or not - so the question for us is more whether we seek to influence how they are developed and adopted in order to try to maximize their potential for development (and perhaps for our own organizations), or whether we stand back and let the market take its own course.

Submitted by Gabriel on
I'm travelling and had not looked at the comments on this post the last few days. Thanks to all for the many excellent insights. I will respond when I have a chance early tomorrow.

Submitted by Kingsley Ezenekwe on
I read your post and the article that triggered it and believe that the issues raised by the initial article are not properly addressed here. It is possible that they have been addressed by the other rebuttals which you referred to. I have not had time to read them, so pardon me if these have been addressed. The thrust of the initial article is that lack of access and cost of use is leaving the poorest out of the benefit of mobile technology and thus makes a case for low-cost mobile connectivity. Yes, the mobile subscription rate in most parts of Africa is on the rise but most of the owners of the lines do not make as much calls as they would want due to the high tarrifs. The current tarrif is a massive improvement on what it used to be but can it still get better? Are the current rates low enough for everyone that needs to use the service? If the tarrif is reduced, will the reduction drive enough growth in subscriber base to make the move economical? Apart from the political will to address the reduction in tarrif, the lack of infrastructure is another issue that substantially contribute to the high cost of usage of mobile technology. Telecommunication companies in Nigeria depend on diesel-powered generators to power their cell sites. This adds a layer of cost which is passed onto the final user of these services. How can ICT4D projects assist in driving down costs by addressing these issues?

Submitted by Gabriel on
Again, thanks to everyone for all the great comments. Rather than address them one-by-one, I'd like to mention a few points beyond what I wrote in the original post. Some commenters have mentioned that tariffs are high in some countries and that this is a barrier to access for the poor. In those countries, the problem is typically monopoly power of a single mobile provider that charges far above marginal costs for its calls. This is textbook microeconomics. The solution, then, is for citizens to demand that their governments open up the mobile market to competition. In Kenya, which has vigorous competition between 4 providers, calls cost just a few U.S. cents per minute, and SMSs cost about a penny. These rates are affordable even for the poor. I think it's clear from the fact that 93% of Kenyan adults use phones--versus about 3% in 1999--that mobile technology has changed the lives of Kenyans, including a very large number of the poor. Has it *improved* the lives of the poor? You don't need a complex evaluation to answer in the affirmative, because the technology has passed the market test. The cell phone usage rates in Kenya are not the product of efforts by the World Bank, the UN, or an NGO based in New York. Rather, they are the result of the private sector responding to the demand of Kenyan consumers. Kenyans are choosing to spend part of their money to use this technology, and this tells us that mobile phones must be making them better off. I'll write more in a future post about the evidence on some of the specific ways in which mobile technology is changing people's lives. The original article I linked to presents the view that more effort is needed to ensure that the poor benefit from mobile technology and that political intervention is needed in this regard. I think this is mistaken. While I am not one to argue that markets solve every problem, the rise of mobile technology is a genuine case of the genius of the market providing a solution to improve lives, without top-down planning. As many commenters noted, there are many efforts underway to create innovative uses of mobile technology to benefit the broader populations developing countries. Many of these are likely to not succeed, but there's nothing wrong with that--an explosion of innovation harnessing the energy of entrepreneurs and activists alike will generate some well-intentioned failures and other uses that change people's lives. That's how innovation works.

Submitted by NEEMA ASPEDITO on
I think poor people gain a little. Our Ministry of Economic and Finance have to be open to us about the costs and benefits as we can't borrow through phone banking like M-Pesa.tell us the effects

Submitted by Hassan on
Seems the discuussion is almost a year old now, but just a short response to the last post "May b by Neema Aspedito" the m-money products now have enabled borrowing on the phone with the best case still being M-Pesa owned M-Shwari which has posted enormous rates of savings and borrowing in the first 2-3 months of its existence. All without top-down interventions, just the private sector responding to needs and who knows what next!! For the poorest segments of the population, many humanitarian NGOs undertaking cash transfer programming now rely on M-pesa to make the monthly cash transfers to thousands of household beneficiaries mainly in urban slums and the ASALs.

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