Jenny Aker on mobile phones and economic development in Africa

Jenny Aker an Assistant Professor in the Economics Department and Fletcher School of Law and Diplomacy, Tufts University, provided an overview of the welfare impacts of mobile technologies and how current research is testing our assumptions about the benefits of mobile phones for individuals in developing countries.

Mobile phones are used by some of the poorest people in the world; even at the country ranked 160 in the UN's Human Development Index, levels of adoption of mobile phones are at 50%. There are few systematic studies looking at why people adopt mobile technology, but those that exist suggest there are correlations with higher income levels, trading professions and an urban location. Mobile phone coverage across Africa is now extensive. Research shows that roll out by mobile phone companies is determined by factors including the size of population, the costs associated with terrain, quality of road access and the operating environment (whether there exists a competitive liberalized market).

Identifying the positive impact of mobiles can be difficult because they have so many uses, making assessment of costs and benefits problematic. Mobiles are also only pseudo private goods since they are often shared and benefits extend beyond the owner.  Despite these difficulties, a number of researchers have demonstrated the impact of mobile phones in the developing world. Robert Jensen's paper found that the introduction of mobiles into the fishing industry in Kerala, India resulted in reduced price discrepancies and significant welfare benefits in the form of increased profits for fishermen and reduced waste. Similarly, Jenny's own study of grain markets in Niger found that the use of mobile phones reduced price discrepancy and enhanced welfare through increased trader profits and reduced average consumer prices.

As well as these externalities from the IT sector, we are also seeing deliberate attempts to harness the potential of mobile phones, from private sector services (e.g. the provision of mobile money transfers such as M-Pesa) to non-profit development projects using mobiles in diverse contexts including health, governance and market information. Jenny is currently working on a project that will examine how mobiles can improve literacy in Niger. A pilot of Project ABC over the next three years will assess how access to mobile phones can complement traditional literacy lessons by giving people the chance to practice their literacy skills via SMS. Early results suggest significantly higher performance in literacy testing by groups using mobile phones.

If mobiles have genuine welfare impacts then ensuring access becomes a key policy concern. Jenny highlighted the importance of continuing liberalization of telecoms markets in Africa, maintaining fair and transparent legislation and reconsidering ICT taxes (in some countries mobiles are taxed as a luxury good). But while mobiles can enhance the delivery of and access to resources and information, we should be wary of viewing them as a development panacea since they cannot replace basic infrastructure investments such as power and roads.