Baley!*

The impact of the mobile phone in Afghanistan

With the seemingly endless bad news coming out of Afghanistan, I would like to break the cycle and write about a success story that is the start of something good. This post is about the humble mobile telephone.

The Afghan telephone market has doubled in size every year since 2002. Now, half of Afghan households have access to at least one telephone. Much of this has happened due to the vision and commitment of the Government, private investors, and the donor community—with the World Bank playing a key role.

Now, there is a huge opportunity to make the mobile phone a platform through which people can access information, markets, and finance.

The networks

In 2002, the total number of telephones across Afghanistan numbered 50,000, with most of them being in Kabul. Citizens who wanted to make international calls had to cross the border into say Iran or Pakistan to reach the rest of the world. With the fall of the Taliban-regime in late 2002, however, the situation changed quickly. As 2009 ends, the number of mobile phone subscriptions across the country has crossed 11 million, with almost 99 percent of these provided by the four private mobile telephone networks. The fifth network, run by state-owned Afghan Telecom, is focusing on wireline and regional connectivity.

The four private mobile telephone networks include important international companies (South Africa’s MTN and UAE’s Etisalat) and networks with well-respected backers (Roshan, whose backers include the Aga Khan Fund for Economic Development, Monaco Telecom International, and Nordic TeliaSonera; and AWCC, founded by well-known Afghan philanthropist Ehsan Bayat). Together, these firms have invested well over US$1 billion in their networks and services.

The impact

The impact of the mobile phone is immediately visible in the ride from the airport to our offices. Alongside a large portrait of President Hamid Karzai smilingly welcoming passengers to Afghanistan are two large signs reminding people that even in Afghanistan they can use their mobile telephones. And on the way in to the city from the airport, similar signage welcomes visitors to Kabul while informing them of the various tariff plans on offer—and that their beloved BlackBerry will work in Afghanistan! 

Even more interesting is what one sees on many street corners in Kabul: Afghan men and boys stand, mobile recharge cards dangling in one hand, bundles of currency waiting for foreign exchange in the other. One local’s estimate put the currency with each of these curbside “bankers” as equal to about US$500; but surprisingly in a country known for its violence, they are rarely robbed.

The recharge cards on sale are of small denominations—50 to 200 Afs, or about US$1 to 5. This underscores two phenomena seen often in the developing world: that people are willing to spend often but spend little at a time, and that mobile telephone companies recognize the value of small-denomination transactions. The ability of mobile telephone companies to do many small transactions cheaply phenomenon indirectly led to the birth of mobile telephone based money transfers. Plus, the important point that often goes unrecognized—the unorganized recharge business exists because of the ability of these street-side sellers to buy and resell small denomination cards; like their customers they too cannot afford large investments or credit lines.

In this way, the mobile telephone companies have created over 60,000 jobs directly or indirectly. Young, educated Afghans find their way into the call centers and technical operations, while the mass of uneducated, under-educated, and often under-employed Afghans can supplement their incomes selling or re-selling the services of the mobile networks. 

Indeed, anecdotal evidence suggests that this recognition of telecommunications as a business is spreading into rural Afghanistan as well. The CEO of Afghan Telecom, the state-owned telephone company noted that demand for their Village Communications Network systems (VCNs) outstrips supply. These US$2000-a-piece systems allow satellite-based voice and even data connectivity. Rural entrepreneurs are willing to put up this seemingly hefty investment (the nominal GDP per-capita is about US$450) to start providing telephone services in their villages or towns.

Now, deepening impact

Yet, while the impact of mobile phone based voice telephony cannot be underestimated, it is only the first step in transformation of Afghan social and economic life. The next step, and where the World Bank and other agencies are now focusing, is to build on presence of this widespread network to provide public services to citizens. 

These services can include simple voice-based information services such as health or agriculture hotlines. It might also allow the provision of SMS-based money transfer services—something Roshan is already piloting—that might one day serve both the domestic and international remittances markets and include salary and utility payments. 

Creating and deploying these mobile telephone-based services has its easy and challenging parts. It is easy because there is no need to reinvent the wheel. In the case of mobile money transfer, for instance, there are a number of models to follow from countries as diverse as South Korea, the Philippines, India, Kenya, and the Democratic Republic of Congo. Other services, such as Reuters Market Light an agricultural information service, have seen success in markets like India.

However, the challenges of dealing in a complex market like Afghanistan require smart thinking. For example, many mobile money transfer services are text message-based; in a country with relatively low literacy, there is potential for fraud. Hence, it might be necessary to move to a voice-based service. Similar concerns apply to information services, especially since the dominant language of text-based mobile messaging is English. Mobile networks are implementing local language capabilities (SMS in Dari or Pashto, which use the Arabic script). But there is a need for wider use of Arabic-capable mobile handsets.

One significant challenge in Afghanistan when it comes to mobile applications is that the information technology industry as a whole is incipient. This is because of the problems of technical education in a time of civil war and sustained conflict: high quality education is difficult to support, and highly trained Afghans often left the country to seek better opportunities elsewhere. There has been progress since 2002, and young Afghans are able to access good education programs. Yet, with the skills gap recognized as a problem even in countries such as India, Egypt, and Nigeria, it is clear that much needs to be done to develop a highly skilled workforce for the Afghan IT industry.

Another important challenge is in content development. For users to truly find value in mobile applications there needs to be a wealth of relevant local content that they can access and use. The crop patterns and climatic and geographic conditions in Herat plains differ significantly from that in the Panjsher valley. Farmers in both should have access to specific information that suits their planting patterns, weather, and geographic realities. Providing them information useful to a farmer in the plains of Punjab or the Midwestern U.S. will likely be less useful. 

The key is to develop local content. Programs by the Government, its ministries and agencies, and some community level programs (such as community radio) can serve as a starting point to create sustainable and regular sources of content. Furthermore, a mechanism to market and educate potential users on these services is also essential: even if all the supply-side issues are resolved, without consumer awareness, demand might never pick up.

My hope is that Afghanistan can create a web of partnerships that include public, private, and international agencies and civil society. These partnerships can use the provision of mobile applications and content as a way to jumpstart the IT industry, content development, and create jobs for skilled Afghans. And with citizens getting better access to information, finance, and markets, it will be the next wave of development enabled by the telecommunications sector. 

* Baley--"yes" in Dari, and used as "hello" on the telephone. I have heard a wide range of people saying this when they get calls on their mobile telephones--ministers, government staff, businessmen, World Bank staff, and booksellers.