There is little doubt that the way we communicate with each other has been fundamentally changed by the use of mobile technology. Nowhere is this more apparent than in the developing world where cheaper implementation costs has enabled mobile technology to ‘leap-frog’ that of fixed lines.
In places where there is little or no infrastructure mobiles now provide a gateway to societies and economies which were previously beyond the reach of most individuals. Vodafone’s first report, Africa: the impact of mobile phones, published in 2005, considered the economic value of this and endeavoured to provide an analysis of the innovative and entrepreneurial ways in which technology has been extended beyond the model of individual ownership.
Since then the potential for mobile phones has moved forward, as has the debate. The use of mobile technology for additional services, including banking and microfinance solutions, is being heralded as the next step in the evolution of mobile. In order to understand the impact that this will have, we have worked with the Consultative Group to Assist the Poor, the World Resources Institute and Forum for the Future to review and understand the products offerings currently available and consider their potential in the market place.
Vodafone expects that giving people access to banking services will have a significant impact on economic growth, particularly in poorer communities. These advantages are supported by our research looking at low-income customers who used their phones for banking and showing that a high majority found the service more affordable than banks, easy to use and secure. Customers also trusted mobile phone companies to deliver financial services to them. This and the fact that accessing even the most basic of financial service can help to increase household incomes, build assets, and allow people to become less vulnerable to crises, shows that ‘m-banking’ has great potential.
Mobiles provide benefit to both financial institutions and consumers. The ubiquity of mobile phones enables financial institutions to reach markets which previously have been uneconomic to service. For customers, carrying out transactions via mobile provides a secure and convenient service via a trusted channel.
Vodafone’s own product MPESA, developed in partnership with the UK Department for International Development, will be launched shortly nationwide in Kenya. It is a micro-payment solution that allows customers to deposit and transfer money, take out loans and make transactions through mobile phones. Customers are able to deposit or withdraw cash from authorised agents, typically a small store owner that has enough cash on hand to complete the transactions. Customers are also able to make person-to-person money transfers, purchase airtime for re-sale or personal use, and receive account statements.
Interestingly the use of mobile for economic transactions is not limited to cash transfers. The work carried out by Forum for the Future in Egypt highlighted the way that airtime is used as a virtual credit base by close to half of Vodafone’s customer base in this region. The transfer of airtime allows very low-income customers increased accessibility, purely by enabling them to use airtime credit as a virtual currency. A side benefit of this is that an informal industry has grown up around the product as micro-entrepreneurs re-sell airtime.
There are many other operators and entrepreneurs taking mobile to developing markets, and it is important to try to draw lessons from all our experiences. It is significant that businesses are succeeding when we look at the social needs of potential customers and tailor products and services to meet this need. There is potential to have a dramatic and positive effect on people’s lives by applying a business model.
Talk to Vodafone
Economic Empowerment through Mobile is the third in the series of Vodafone‘s CR Dialogues. These Dialogues explore key issues we face in our relationship with society. We would like to debate what works and what doesn’t and to be prepared to be challenged so we welcome your comments on this issue and invite your responses. Please send your comments, opinions or ideas to: firstname.lastname@example.org
Dr Charlotte Grezo is Trustee of the Vodafone Group Foundation and Vodafone Group’s Director of Corporate Responsibility. Grezo joined Vodafone in January 2001 from BP, where she was Director
of Global Environmental Issues.