Mobiles Boost Economic Growth: The Use of Mobiles Is Not Only Growing Faster in Africa Than Anywhere Else in the World, It Is Having a Disproportionate Impact on Economic Growth. Neil Ford Wonders If the Private Sector Approach to Telecommunications Can Be Replicated in Other Sectors of the Economy

By Ford, Neil | African Business, May 2005 | Go to article overview

Mobiles Boost Economic Growth: The Use of Mobiles Is Not Only Growing Faster in Africa Than Anywhere Else in the World, It Is Having a Disproportionate Impact on Economic Growth. Neil Ford Wonders If the Private Sector Approach to Telecommunications Can Be Replicated in Other Sectors of the Economy


Ford, Neil, African Business


A recent report by UK telecoms giant Vodafone Group has revealed strong links between access to mobile technology and economic growth in Africa.

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It has long been suspected that the use of mobile phones could boost growth by improving both 'business to business' and 'business to consumer' communications on the continent but this is the first time that such assumptions have been quantified in such depth.

The report was produced by consultants for the Centre for Economic Policy Research (CEPR) and was unveiled in London at a meeting jointly hosted by CEPR, Vodafone and the UK government's Department for International Development (DfID).

The main conclusion to come out of the research was that African states with higher mobile use experienced higher rates of economic growth.

It could be argued that those countries with greater per capita income would be expected to have more opportunity to both grow their economies and fund mobile phone use. However, many African small businesses rely solely on mobile phones for their telecommunications needs and it seems that many ventures would not be viable with mobile technology.

Table 1 (opposite) lists the many other benefits identified in the report. Mobiles have probably had a more striking impact on economic growth in Africa than in industrialised countries because many African traders graduated from no phone access to mobile access, whereas people in much of the rest of the world already had access to available fixed line services.

One of the report's most surprising findings was that the use of mobiles is growing faster in Africa than anywhere else in the world. This may be the result of the lack of room for growth in markets elsewhere in the world, while only 6% of Africans own their own mobiles.

However, it is also an indication that more Africans are now able to pay for mobile services than previously, whether because of higher incomes or lower mobile charges. The Nigerian mobile market, for instance, is doubling in size every 12 months.

The deputy chief executive of Vodafone Group plc, Julian Horn-Smith, commented: "Communication is core to the way in which markets function and how humans interact. In countries where infrastructure such as roads, fixed telecommunications and the postal system do not work as well as they should, mobile communications is making a substantial contribution to development.

"This report has shown that business models for mobile communications that are based on accessibility play an important role in developing economies. We believe that this information should become part of the debate on Africa's future."

The chief executive of the CEPR, Stephen Yeo, said that the report "provides the first empirical evidence of a link between social and economic development and the establishment of mobile phone networks".

However, the report seems to focus largely on research in South Africa, Egypt and Tanzania, three successful and growing economies. It would be interesting to examine the impact of mobile access on economic growth in countries with stagnating or declining economies.

Private sector success

Prior to the mobile revolution, fixed line telephone networks in most African countries were restricted to the main cities--the vast majority of the population had no access to a phone and waiting times to have a fixed phone line installed could exceed 10 years.

When mobile technology became more readily available, most governments on the continent opted to allow private sector operators to compete with the state phone company. This not only passed the bill for installing mobile infrastructure to the private sector but governments were even able to charge licensing fees to private operators.

Services improved markedly in those markets where private companies began to compete with each other. …

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