Crowning His Poorest

Mobile Trends 2020 Africa

Mobile Trends 2020 Africa

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A Perfect Storm of Partners?

Could this combination of partners create the perfect storm of opportunity to connect the rural poor to the global economy?

• villageTell
• VNL - Microtelecom: solar powered base stations (cost <$15k, reaching 2,000 people each)
• FrontlineSMS:Credit
• God Provides - Film Learning Experience from Crown Financial Ministries
• FrontlineSMS:Medic
• Ushahidi - Crowdsourcing Crisis Information
• Splash-Cash - Sierra Leone’s first mobile payment system
• TradeWeb - Legacy Interface Technologies

NextBillion.net- Ben Lyon on FrontlineSMS:Credit 

villageTell Sierra Leone

Cell Phones Battle Poverty (Video)

A 4 minute video by Nicholas P. Sullivan, author of You Can Hear Me Now - How Microloans and Cell Phones Are Connecting the World's Poor to Global Economy.

Iqbal Quadir at TED/Oxford, UK July 2005 (below) 16:37

Village Phone Nigeria - MTN/IFC - Oct 2007 (below) 8:04

Cell Phone As Wallet

"Grameen Bank has an impact on the poor, GrameenPhone on the entire economy"

- Muhammad Yunus, founder, Grameen Bank

What exactly are people in developing nations doing with cell phones, especially those at the Base of the Pyramid (BOP)? Yes, they're talking and texting each other, but why, and to what end? And how is that changing entire economies? What you are about to learn stretches far beyond our Western paradigm of cell phone use and productivity.

It is mind-boggling to learn that people living in poverty without electricity, modern transportation, or even (land line) phones, suddenly connect to the global banking grid, moving from an informal cash culture to a formal debit and credit culture, sending and receiving money and payments from inside and outside their own countries, doubling or tripling their incomes and "graduating" from poverty, all because they now have access to a cell phone! Prepaid cell phones loaded with minutes have become digital wallets, with minutes redeemable as cash at the local store used to then purchase basic needs like food and fuel for lamps!

"Connectivity is Productivity" - Iqbal Quadir, co-founder GrameenPhone, and the "Village Phone Program"

Cell phones are causing a social and economic impact much more dramatic and disruptive than ever expected. GDP's have risen while poverty levels are decreasing. Studies indicate that adding 10 phones per 100 people adds 0.6% to the GPD of a developing country. Extrapolating from the UN figures on poverty reduction (1% of GPD growth results in 2% poverty reduction) that 0.6% growth would cut poverty by roughly 1.2%. Given 4 billion people in poverty, that means that with every 10 new phones per 100 people, 48 million "graduate" from poverty!

Mobile banking in developing countries is just the beginning of an expected avalanche of services and applications that collectively will constitute mobile commerce (m-commerce). After voice communications (and texting, in some cultures), connection to financial services is the first big "killer app" for cell phones, initially manifested in 3 ways:

1. Storing money in the phone and using it as a  virtual ATM
2. Sending and receiving remittances, with superior delivery and reduced transaction cost
3. Retail purchasing and bill paying, both at preselected outlets

In Bangladesh alone, through GrameenPhone, there are 10 million subscribers reaching 100 million people through 250,000 village phone ladies! The first village phone lady, Laily Begum bought a cell phone from GrameenPhone with a microloan from Grameen Bank, leased phone time to other villagers, in essence becoming a village pay phone. With the profits, Laily repaid the phone loan while doubling her annual income to over $750, twice the average income in her village! Today, Laily and her husband own five shops and a restaurant, and together earn $2,500 per year. Because of its success in Bangladesh, this Village Phone Program model has rapidly spread around the world to countries like the Philippines, Rwanda, and Uganda, to name a few.**

In Zimbabwe, Strive Masiyiwa, a devout Christian, owns Econet Wireless, the 5th largest telecom company in Africa with revenues over $300 million per year. Strive would be an excellent partner for Crown to explore how to deliver relevant marketplace solutions to the BOP.

Finally, remittances are huge in developing countries outpacing investments and foreign aid at the rate of $300 billion per year! Expatriates or emigres are using cell phones to transmit payment (remittance flow map) to relatives. Once received, relatives can purchase basic needs at their local stores with their phone credits.

**All data and stories from this post are excerpts from  Nicholas Sullivan's book You Can Hear Me Now: How Micro loans and Cell Phones Are Connecting the World's Poor to the Global Economy

Cell Phone As Cow: A New Paradigm

From The Financial Express (India, Bangladesh) article "When A Cell Phone Is like A Cow" - You Can Hear Me Now shows how connectivity increases  GDP in poor countries and eradicates poverty.

In Bangladesh, a rural village lady would sell milk from a cow she bought with a microloan from Grameen Bank (winner of the 2006 Nobel Peace Prize), and use the profits to repay the loan. Iqbal Quadir, co-founder of GrameenPhone, asked Grameen Bank founder, Muhammad Yunus, "why cannot a cellular phone be like a cow?" Ultimately, GrameenPhone was born, and boasts 10 million subscribers reaching 100 million people through 250,000 village phone ladies! More...

"Grameen Bank has an impact on the poor, GrameenPhone on the entire economy"- Muhammad Yunus

 

The "Unbanked" Revolution (in Remittances)

"One of the key messages in You Can Hear Me Now is that cell phones are not only providing untold rural income opportunities that didn’t exist before, but also providing access to financial services for the “unbanked.” This mobile banking revolution is also greasing the skids for remittances from overseas relatives, which now total in the range of $300 billion per year, most of that going to people without bank accounts. In many countries, remittances outpace foreign investment and foreign aid combined." More...

Why Fishermen (in Kerala, India) Like Cell Phones

From Nicholas Sullivan's blog:

"An upcoming paper by Harvard’s Robert Jensen (The Digital Provide: Information (Technology), Market Performance and Welfare in the South Indian Fisheries Sector, to be published in the Quarterly Journal of Economics in August) looks at the impact of cell phones at the micro level — that is, how have cell phones affected the economic gains of fishermen in Kerala, India."

Sullivan continues... 

"Before phones, fishermen late to their local market would find it oversupplied and have to dump some or all of their catch for lack of buyers. Once phones were introduced, they could shop amongst other markets along the coast, and bring their supply to meet the demand. Over time, this reduced waste and smoothed prices, leading to the Law of One Price. Fishermen’s profits increased by 8%, and consumer prices have dropped by 4%. Yes, a win-win — except, of course, for the middle man, who has had to reduce payouts to reflect an efficient market."

Significant Unmet Needs

According to World Resources Institutes's latest publication "The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid", 3 of the most significant unmet needs are:

1. Banking
2. Access to modern financial services
3. Owning a phone

Additionally, most in the BOP lack good access to markets to sell their labor, handicrafts, or crops and have no choice but to sell to local employers or to middlemen who exploit them.

Can Crown integrate marketplace solutions that include some, or all of these significant unmet needs?

Phones Before Food? The GrameenPhone Story

“People will often prioritize connectivity above nourishment.” - From Nicholas P. Sullivan's book "You Can Hear Me Now - How MicroLoans and Cell Phones Are Connecting the World's Poor to the Global Economy"