Mobile Phones and Economic
Development in Africa
Jenny C. Aker & Isaac M. Mbiti
Presented by Meredith Millard
About the Authors
Jenny C. Aker
Isaac M. Mbiti
- Assistant Professor of
Economics at Tufts
University
- Deputy Regional Director in
West and Central Africa
(1998-2003)
- Works on development in
Africa focusing on
information and technology
in development outcomes
- Assistant Professor of
Economics at SMU
- Research in
development, labor
economics, and
demography
- Spoke at Baylor last
spring for the Global
Business Forum
“Emerging Africa”
Sub-Saharan Africa
- Contrasts to North Africa, viewed as part
of the Arab World
- estimated 800 million population
- Roughly 9% of global population
- Low levels of infrastructure investment
- 29% of roads are paved
- 25% has stable access to electricity
- 3 landlines per 100 people
- But mobile phone use is on the rise
- 10x as many mobile phones as landlines
- 60% of population has mobile phone
coverage
Sub-Saharan Africa
Angola
Burundi
DRC
Rwanda
Sao Tome
Cameroon
CAR
Chad
Equatorial Guinea
Gabon
Kenya
Tanzania
Uganda
Djibouti
Eritrea
Ethiopia
Somalia
Botswana
Comoros
Lesotho
Madagascar
Malawi
Mauritius
Mozambique
Namibia
Seychelles
South Africa
Swaziland
Zambia
Zimbabwe
Benin
Mali
Burkina Faso
Cape Verde
Cote d’Ivoire
Gambia
Ghana
Guinea
Guinea-Bissau
Liberia
Mauritania
Niger
Nigeria
Senegal
Sierra Leone
Togo
Republic of the
Congo
South Sudan (2011)
Sudan (disputed)
Previous Literature
Existing Literature
Mobile Phones and Economic Benefits
(Jensen, 2007; Aker, 2008; Aker, 2010; Klonner and Nolen, 2008)
Mobile Phone Adoption Patterns
(Ahmed, 2007; Baliamoune-Lutz, 2003; Kshetri and Chung, 2002; Donner, 2008)
Gaps in Existing Literature
Mobile phone adoption impact on macroeconomics and public goods
Methods & Research
Previously Published Research
- Previous literature
- Private firms (Safaricom, M-Pesa, etc.)
- Data Mining (GMSA, UN, World Bank, etc.)
Consequences of Mobile Phones
for Economic Development in
Africa
Five Potential Mechanism
Mechanism #1
Mobile Phones can improve access to and use of information,
reducing search costs, improving coordination among agents, and
increasing market efficiency
- Initial fixed cost of mobiles is significantly lower than equivalent transportation
and opportunity cost
- Mobile phones are more accessible than other communication alternatives in terms
of cost, geographic coverage, and ease of use (compared to television, radio,
newspapers, etc.)
- Enables an active rather than passive role in search process
- Limits waste in markets with highly-perishable commodities
Mechanism #2
Increased communication should improve firms’
productive efficiency by allowing them to better
manage their supply chains.
Mechanism #3
Mobile phones create new jobs to address demand for mobilerelated services, thereby providing income-generating
opportunities in rural and urban areas.
- Formal sector employment in the private transport and communication
sector in Kenya rose by 130% between 2003-2007 (CCK, 2008)
- Unmeasured informal sector employment
Mechanism #4
Mobile phones can facilitate communication among
social networks in response to shocks, thereby reducing
households’ exposure to risk
- Natural disasters, political events, and violent conflicts
Mechanism #5
Mobile phone-based applications and
development projects (m-development)
have the potential to facilitate the delivery
of financial, agricultural, health, and
educational services
- M-Banking: M-Pesa (begun in 2007)
- $3.7 billion USD transferred by 2010
- Health practitioners
- Election campaigns & monitoring
- “Crowdsourcing” – increased transparency
- Literacy Promotion – texting curriculum
Conclusions
- Empirical evidence shows that mobile phones have the
potential to benefit consumer and producer welfare and
broaden economic development
- The challenge is to ensure complementary access to
public goods and the development of appropriate policies to
evaluate and propagate the benefits of mobile phones
throughout the continent
Criticisms
- Endogeneity problems between mobile phones and economic growth (concerns may
be addressed by using landline availability as a instrument for current mobile use)
- Lack of credible research on proliferation of mobile use because some owners have
several SIM cards and phones while other phones are used between several users
Areas of Future Research
- What is the macroeconomic effect of widespread mobile phone usage?
- As a transformative development tool, what policies can increase mobile usage?
- How can we obtain more reliable access data?
Comments & Questions