Rural ICT Solutions for “Feed the
Future”
Eric White
INTEGRA LLC
15 December 2010
What is “Feed the Future”?
“The US Global Hunger
and Food Security
Initiative”
So…
“ICT for Feed the Future”
becomes…
“ICT for Food
Security”
What do we mean by “Food Security”?
Availability
Access
Utilization
Stability
RURAL ECONOMIC GROWTH
Food
Security
Agricultural
Development
Rural
Economic
Growth
The importance of ICT infrastructure
to Economic Growth
Controlling for all else,
access to voice and
broadband is associated
with big increase in GDP
(10% to 1%)
How ICT causes growth in rural areas
Income = f(productivity, human capital, investment)
• Lowers search costs and transaction costs, making
labor more productive.
• Increases the rate of social learning (better workers =
increased human capital)
• Reduces risk (increasing investment)
How ICT increases rural productivity
Lowers
Search Costs
1. Voice, the killer app
2. Market information
systems
How ICT increases rural productivity
Lowers
Search Costs
1. Voice, the killer app
2. Market information
systems
Lowers
Transaction Costs
1. Warehouse receipt
systems
2. Commodity
Exchange
How ICT improves rural human capital
Increases
Social Learning
Farm Extension Services
•
•
Disease Identification
(Grameen AppLab
“Community Knowledge
Worker” Program)
Google SMS: Farmer’s
Friend
How ICT increases investment in rural areas
Reduces Risk
ICT can reduce the risk faced by farm households, thereby
increasing their ability to make investments.
Risk levels move inversely with income
Secure Money Transfers/SavingsSafaricom M-PESA
Knowledge instead of
guessing
Weather- Reuters Market Light
Busting myths about ICT Infrastructure
In the 21st century,
ICT is Myth
just as#1important as
any
infrastructure.
Telecoms
areother
morepiece
thanof
poor
people need.
Priority should be put on
And,
for Ruralroads,
Economic
Growth,
irrigation,
electricity,
sanitation,
etc.
perhaps more so!
Busting myths about ICT Infrastructure
The fastest growth rate in
mobile adoption
Myth #2
is in the developing world.
Poor people can’t afford ICTs,
don’t want them,
BOP has shown a huge willingness
and don’t think that they need them.
to pay for ICT as a share of total income
Willingness of Poor to Pay for ICT
“In richer economies, households
spend on average 1.5-2% of their
income on communications. In
emerging markets, it’s not unusual
for this number to reach as high as
8-10%”
-Pyramid Research
To the astonishment of the industry,
people living on a few dollars a day
have proven avid mobile phone
users”
-Business Week, Sep. 2007
ICT – The best way to leverage private
sector funds for infrastructure
• Lowest capital cost of any infrastructure, coupled with
highest customer willingness-to-pay, means that the
private sector is willing to play.
15
Investment Commitments to Private Sector Infra Projects in SSA by Sector
12
9
6
3
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Energy
Telecoms
Transport
Water and sewerage
Source: World Bank Private Participation in Infrastructure Database, in billions of 2008 US$
14
Private ICT investment is overwhelmingly
in Mobile Infrastructure
Investment commitments to telecom projects with private participation
in Sub-Saharan Africa, by segment, 1990–2008
12
2008 US$ billions
10
8
6
4
2
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Mobile access
Multiservice providers
Fixed access and long distance
Fixed access
Long distance
15
Source: World Bank and PPIAF, PPI Project Database.
The “Gap” Model of Telecoms Access
True Access Gap
OPEX*Users>ARPU
Smart Subsidy ARPU*Users > OPEX
ARPU*Users < (OPEX+CAPEX)
Zone
Market efficiency gap
ARPU*Users > (OPEX+CAPEX)
Current network
reach & access
Geographical Reach
Covering the “Smart Subsidy” zone
Most countries already have a mechanism in place to
institute a state-managed subsidy.
In most countries, these Universal
Service and Access Funds
(USAFs) do not function well
On average only disperse 13%
of the amount they take in.
Multiple reasons for this, not just
corruption
Getting to Universal Service
• To reach households beyond the Sustainability
Frontier we must FUNDAMENTALY ALTER the
economics of the situation.
• Since we can’t instantaneously raise ability to pay,
our only choice is to lower costs. How?
• The private sector is in the early stages of
experimenting with a new technology and a new
architecture that has the potential to reach everyone.
Low Cost Base Stations
Sat.
Receiver/
Router
Satellite Service
Provider Uplink
Sub.
Management
Femtocell
Sat.
Receiver/
Router
Femtocell
Sub.
Management
Internet
Backbone
Sat.
Receiver/
Router
Sub.
Management
Femtocell
Base Station Specifications
• Low-cost base stations require a
capital expenditure of <$20,000 as
opposed to $100,000 for standard cell
sites
• They are solar powered and
completely stand-alone
• Operational costs approach 0.
Standard cell sites cost $2000/month
in generators alone
• Profitable at an ARPU of around $3,
which is within the “willingness-to-pay”
of many rural poor.
• Signal range of up to 10 miles = >1
base station per village.
Issues and scope for USAID
Technical Assistance
• Reaching the Market Efficiency Gap – standard
legal/regulatory/competitiveness issues. Room for
Technical Assistance in these areas.
• Reaching the Sustainability Frontier with Smart
Subsidies
– USFs, on average only distribute 13% of money taken in
• Achieving universal service
– Working with technology companies to help demonstrate the
business model and to link them to Universal Service Funds
USAID contracting vehicles
ready for this work
Global Broadband and Innovations (GBI)
• Meets the market efficiency gap
– Provides Legal/Regulatory/Competitiveness TA
• Runs a Program on Universal Service Fund
Administration, with a specific focus on Africa
– Partnering with Intel
• Connectivity on the Rural Edge (CORE) program
– Works with Micro-Femto companies, network
operators, and USFs to achieve universal access.
• Altobridge (Ireland)
• VNL (India)
• iDirect and Ubiquisys (USA)
Summary
1.
2.
3.
4.
ICT causes rural economic growth through better access
to information
Rural Economic Growth means more (and more reliable)
agricultural output. This is Food Security
To expand rural connectivity we need to engage in
legal/regulatory/competitiveness work, provide Technical
Assistance to Universal Service Funds, and push for the
adoption of new, low-cost technologies.
The GBI program provides an avenue within USAID to
engage in each of these activities
Points of Contact
Joe Duncan
GBI Program Manager, USAID
jduncan@usaid.gov
Eric White
Managing Associate, INTEGRA LLC
ewhite@integrallc.com