Originally posted on the GBI Portal – Page 24

Does Mobile Impact Economic Growth in Developing Countries?

Photo Credit: Webdesign Depot

A recent study reported by ITU/InfoDev reveals that investment in telecoms generates growth dividend because the spread of telecommunications reduces costs of interaction, expands market boundaries, and enormously expands information flows.

The study which was funded by Vodafone and the Leverhulme Trust was a collaborative research by some renown researchers from the University of Calgary and University of Toronto in Canada, and FTI Consulting in London. Using data from 92 countries (high income and low income) between 1980 and 2003, the researchers subjected the impact of telecoms roll-out on economic growth in poorer nations to a thorough empirical scrutiny by employing the Annual Production Function (APF) and the Endogenous Technical Change (ETC) approaches.

The results of the study show that in general the advent of mobile telephony has had a positive and significant impact on economic growth in both developed and developing economies. Key among these are:

A) Developed Economies

In the OECD economies, modern fixed-line networks took a long time to develop
Access to homes and firms at the time required physical lines to be built which was a slow and expensive process
These economies by and large had fully articulated fixed-line networks by 1996
The addition of mobile networks in these economies had significant value-added benefits by complementing the existing fixed lines.

B) Less Developed Economies

Developing countries may be said to experience a low telecoms trap i.e. the lack of networks and access in many villages increases costs, and reduces opportunities because information is difficult to gather
But at the same time, the impact of mobile telephony may be twice as large in these countries compared to developed countries
In these economies, mobile phones may be substituting for fixed lines
They are playing the same crucial role that fixed telephony played in the richer economies in the 1970s and 1980s
The growth dividend of increasing mobile phone penetration in developing countries is therefore substantial and far larger because mobile phones provide, by and large, the main communications networks
Mobile telephony therefore supplants the information-gathering role of fixed-line systems.

The study concluded that telecommunications is an important prerequisite for participation in the modern economic universe. The differences in the penetration and diffusion of mobile telephony appear to explain some of the differences in growth rates between developing countries. But given the speed with which mobile telecoms have spread in developing nations, it is unlikely that large gaps in penetration will persist forever.

Visit here to access the full report.

January 4, 2012/by actualize

Universal Service Forum held in Ukraine

GBI sponsored and participated in the Intel Corporation’s 2011 USF Leader’s Forum held in Ukraine from 7-9 December. The event, which focused on strategies for improving the operations of telecommunications universal service funds, and telecommunications regulation in general, was heavily attended by government officials from throughout the Europe and Eurasia region.

The program featured welcoming remarks from the Chairman of Ukraine’s National Commission for Communications Regulation (NCCR), Mr. Petro Yatsuk, and from the Acting Director of the USAID Regional Mission for Ukraine, Moldova and Belarus, Ms. Sarah Wines. Administrators of successful universal service and access fund from throughout the region were invited to discuss their portfolio of activities, and stimulating presentations were given from representatives from Turkey, Pakistan, and Colombia.

At a press conference held during the event Mr. Yatsuk of the NCCR described the ongoing process of creating a Universal Service Fund in Ukraine. The country plans to introduce authorizing legislation in parliament next year and is currently engaged in a consultative process that will shape the proposed fund. The NCCR found the Forum especially useful in this regard.

Following the Forum, GBI is engaging with Universal Service Funds and telecommunications ministries from across the region and beyond to determine how USAID can best assist them in expanding broadband access in their country. Visit our Universal Service and Access Fund page to find out more about GBI’s work in USAF.

January 4, 2012/by actualize

Agriculture, Mobile, Originally posted on the GBI Portal

Mobile Money is Better than Cash at the Bottom of the Pyramid

Open your wallet right now. Most likely, you have a debit card, a credit card, a health insurance card, and access to the massive financial infrastructure that these three cards represent.

The ability to store, save, use, and borrow money anywhere in almost limitless fashion, without worry about amount, theft, or even making change. Add in the freedom from a direct worry about health costs, and these three cards represent a level of financial freedom unknown to anyone in the developing world… today.

Mobile Money Revolution

Yet by tomorrow, there will be more people who have similar access to financial services, via electronic transactions on mobile phones. In fact, over the next five years there will be a mobile money revolution at the bottom of the pyramid as international financial institutions like VISA, Mastercard, and the like move in forcefully to service the next billion customers.

They see M-PESA transferring 20% of Kenya’s GDP and the money that can be made offering mobile financial services to the BoP. But its not just payments and credit, there are also opportunities in many other types of financial services.

Here are two examples with insurance, which is usually the providence of in-person sales worldwide:

In Ghana, Tigo Family Care Insurance provides life insurance for prepaid subscribers and their family members in the event of a natural death.
In Kenya, the Syngenta Foundation’s Agriculture Index Insurance Initiative uses mobile phones and weather stations to offer farmers affordable crop insurance.

Now we could go on, but listing examples of mobile money was not the focus of the Technology Salon on how mobile financial services are transforming the economics of international development. What really captured our attention was the realization that mobile phones are merely a conduit to the larger experience of electronic transactions, which include mobile money, but also the full gamut of wealth that is created, stored, and exchanged digitally.

Please join us for the next Technology Salon

Better than Cash

First let us agree that electronic payments systems (bank accounts, Electronic Funds Transfer (EFT), pre-paid cards, smart cards, mobile money) are a great benefit for everyone involved. Electronic payments systems:

Increase access to basic financial services, including savings, lending, and e-payments.
Reduce barriers to entry for fee-for-service business models
Reduce the risk of money theft and increase personal control over financial resources
Increase speed of payments both to and from consumers, businesses, and government
Improve transparency, mitigate corruption, and reduce leakages in the disbursement of government funds.

A great example of all five of these benefits is the ability to pay for municipal water and electricity services via mobile money in multiple African markets. By making payments electronically, both consumers and government have more accurate records, consumers are able to save for and manage payments, and service providers can expand services with a higher expectation of payment, and more timely payment, therefore serving more customers, more efficiently.

In their Better than Cash program, USAID’s new Mobile Solutions Office seeks to expand electronic payment system use by governments, for utilities but also government payments in everything from conditional payments (welfare, healthcare, etc) for citizens, to payroll payments for government workers, to pension payments for retirees.

The net effect of this shift to electronic payments will be much more efficient government programs. Yet the Mobile Solutions team isn’t stopping with other governments, its goal is to transform the way USAID does it’s programming as well. With language already in RFP’s to encourage implementing partners to use electronic payments in their work, USAID will be pushing a move from cash payments to electronic payments for all its beneficiaries.

Barriers to Adoption

Before we get too far around the hype cycle, there are issues that will retard the growth of mobile financial services and the larger electronic payment systems. First, policy makers may have a grasp of what works to encourage electronic payments and use mobile financial services first-hand, but they don’t often know how to steer their countries from the theoretical to the practical.

Next, at the business level monopoly mobile operators may be just as hard to convince to innovate as a highly competitive mobile phone marketplace with multiple players. Neither situation lends itself to interoperability, which is key for large-scale electronic payment systems and the mobile financial services they support.

Finally, not everyone has a mobile phone. Yes, shocking but true. So simpler systems like scratch cards and offline intermediaries will co-exist with electronic payment systems for years to come. Better that we recognize and welcome them than limit any payment system to one hardware delivery mechanism, no matter its revolutionary benefits.

You are not watching this post, click to start watching

January 4, 2012/by actualize

Agriculture, Health, Originally posted on the GBI Portal

2012: The Year to Speech-enable Your Healthcare App and Give Mobile Clinicians a Voice

With continued growth in mobile device adoption across care teams, it is more important than ever for healthcare applications to support the needs of clinicians so mobility can be obtainable, process-driven and lead to rich collaboration. And with this comes the need for better data entry methods as mobile device adoption and clinical application usage increases in the medical community (it’s estimated that 85% of clinicians will own a smartphone by the end of 2012).

In an effort to support this trend, the Nuance Healthcare Development Platform, which offers secure, cloud-based, medical speech recognition services to healthcare ISVs and provider and payer organizations, was launched early last year. With this platform and its medical speech services, healthcare developers are able to voice-enable their apps using just a few lines of code.

To kick off 2012, Nuance Healthcare is challenging health care developers to give mobile clinicians a voice by speech-enabling their web-based and mobile apps using the Nuance Healthcare Development Platform—looking for the best implementation of speech recognition for the clinician on the go that enhances workflow and improves patient care.

The 2012 Mobile Clinician Voice Challenge opens Monday, January 2, 2012 at 9:00AM EST and closes Friday, February 3, 2012 at 5:00PM EST.

Watch a 60-second video describing the challenge at http://www.youtube.com/watch?v=n4aGA7bmr7M

Take the challenge today and learn more at http://www.nuancehealthcare.com/2012mobilechallenge

January 4, 2012/by actualize

Basic Education, Education, Education Partnerships, Originally posted on the GBI Portal

Using Blogs to Raise Funds for Education in Mali

Alberto Arzoz

In order to finance education for the children of Touareg tribe of Mali, Moussa, a writer sells his books through his blog, and then donates part of his profits and royalties for the funding of École des Sables residential schools.

Selected as one of the “Success Stories 2011”, by the World Summit on the Information Society (WSIS) during its 2011 stocktaking, Moussa’s case study will help transfer knowledge, experiences and models for project implementation in the strategic use of ICTs for development. It confirms how the Internet is enabling cultural exchanges and the sharing of ideas on teaching methods between the Touareg community and schools in France. Such exchanges aim to develop a winning partnership between Écoles des Sables and schools from other countries around the world.

The nomadic Touareg community is one of the oldest communities in the world, but the absence of education for Touareg children restrains the development of the region. In 2002, the Ag Assarid brothers decided to create the École des Sables to offer nomadic children access to high-quality education. École des Sables gives children an education at a residential school which is open all year around while their parents continue with their nomadic lives.

At the beginning of the school year 2010–2011, 110 pupils attended the school, of which 86 were nomadic boarders. There are three classrooms and six teachers — three women and three men remunerated by the Malian government. The school applies a teaching method that targets excellence and respects local cultures. The rate of success at elementary school is 99% and at high school is 100%.

A decade after the creation of the École des Sables in Taboye, the project was expanded to two other schools in the regions of Timbuktu and Kidal. All three schools are supported by the Ministry of National Education and local communities, demonstrating the credibility of the project. For the two new schools, classrooms have been rebuilt and a residential school and high school have been set up. The three schools are all located in northern Mali.

While ICTs are being used in several ways globally to raise awareness about education, Moussa’s story is innovative and needs the necessary support for scaling up across Mali.

January 4, 2012/by actualize

Humanitarian Assistance, Originally posted on the GBI Portal

Tweets update on Kenya-led anti-Al-Shabaab operations

Today, anyone with a Twitter account can receive updates on Kenyan military operations in Somalia aimed at reducing the threat posed by the Al-Qaeda-affiliated militant group: Al-Shabaab.

According to the Washington Post, Kenya sent troops into Somalia earlier in October in response to a series of cross-border kidnappings and grenade blasts in its capital Nairobi alleged to have been carried out by the Somali Islamist group, which controls most of southern Somalia.

Major Emmanuel Chirchir, Kenya’s military spokesman, offers updates, via Twitter, on military operations targeting Al-Shabaab. Twitter users can also ask questions, send their message of support to Kenyan troops, and offer feedback on events on the ground, via the #operationlindanchi hashtag.

“The strategy remains to reduce Al-Shabaab effectiveness and restore the Transitional Federal Government (TFG) authority,” Maj Chirchir said on his official Twitter account.

Kenyan Defense Forces (KDF) “engaged Al-Shabaab in their camp in the Busar area, exchanged fire and 12 Al Shabaab players [were] killed”, he added.

Earlier in the month, the KDF sank a boat killing 18 Al-Shabaab fighters and footage of the operation is available on YouTube.

“The boat was challenged to stop for identification but continued to approach the Kenya Navy at high speed -fired at”, Maj. Chirchir tweeted.

Maj. Chirchir has also used Twitter to ask people with relatives and friends of civilians located in Al-Shabaab controlled towns of to warn them of imminent KDF attacks on the militant group. Since Al-Shabaab has resorted to using donkeys to transport their weapons, Maj. Chirchir warned that any large concentration and movement of loaded donkeys will be considered as Al-Shabaab activity.

Decades of civil conflict allows war lords, pirate gangs, and militant groups to control parts of the country and challenge the authority of the internationally-backed Transitional Federal Government (TFG). Kenyan troops add to Ugandan and Burundian contingencies already present. With the abduction of aid workers, killings of civilians in Uganda and Kenya, Al-Shabab is fast becoming a regional security issue.

January 4, 2012/by actualize

Connectivity, Originally posted on the GBI Portal

South Africa, Kenya, Nigeria dominated 2011 ICT news share; Central African Republic, Chad, Guinea-Bissau, Western Sahara, Comoros did not

Of the 77 news updates posted on this site last year, nearly all (84%) contained a story from South Africa. The majority also included a story from Kenya and Nigeria. Nearly every other post featured tech news from Ghana and Zimbabwe. One in three had a link to a story from Rwanda and Uganda. No surprises here, considering South Africa is an established tech leader and East Africa is known to be the most innovative region on the continent. Nigeria has a large population and an abundance of online media outlets, as do Ghana and Zimbabwe. Most nations, however, lack the online means to share their successes with the world.

We attempt to present information in well-rounded manner with limited bias. Unfortunately, none of our news roundups contained a dedicated story featuring the nations of Central African Republic, Chad, Guinea-Bissau, Western Sahara, or the island of Comoros.

To counter the lack of media attention on these areas, we made an effort to research the Internet scene in Centrafrique and spread word of a cyber cafe project for Chad.
We also mentioned how Sonatel’s market share is growing in Guinea-Bissau and how Comoros saw bandwidth increase 1,000% after connecting to a submarine cable in 2010.

How diverse were the African ICT news articles we found in 2011? The following table gives a breakdown of how often a country was tagged in OA News posts.

Nation	% of OA News Posts w/ Mention
South Africa	84%
Kenya	68%
Nigeria	64%
Ghana	48%
Zimbabwe	44%
Rwanda	36%
Uganda	31%
Egypt	23%
Zambia	23%
Cameroon	21%
Ethiopia	16%
Malawi	13%
Namibia	13%
Sierra Leone	13%
Tanzania	13%
Tunisia	13%
Morocco	12%
Sudan	12%
Angola	10%
Botswana	10%
Liberia	10%
Senegal	10%
Algeria	9%
Cote D’Ivoire	9%
Libya	9%
Mozambique	9%
Swaziland	9%
Burundi	8%
Gambia	8%
Somalia	8%
Mali	6%
Mauritius	6%
Cape Verde	5%
Congo	5%
Dem. Rep. of Congo	5%
Seychelles	5%
Togo	5%
Benin	3%
Burkina Faso	3%
Djibouti	3%
Equatorial Guinea	3%
Eritrea	3%
Gabon	3%
Lesotho	3%
Niger	3%
Guinea	1%
Madagascar	1%
Mauritania	1%
Mayotte	1%
Reunion	1%
Sao Tome And Principe	1%
Central African Republic	0%
Chad	0%
Comoros	0%
Guinea-Bissau	0%
Western Sahara	0%

Also worth noting is that 2011 marked the first time visitors came to oAfrica.com from Central African Republic, Gabon, and Somalia. However, no visitors from Equatorial Guinea, Western Sahara, Chad, Comoros, or Mayotte made their way to the site. Hopefully such trends will change in 2012 as Internet access increases in these nations and as this site’s content ranks higher on search engines.

Visitors to oAfrica.com, by African country, 2011. {Google Analytics}

January 4, 2012/by actualize

Agriculture, Extension Service, Farmer to Farmer, Food Security, Mobile, Originally posted on the GBI Portal

Reflections on mAg. Services: Content Sourcing, Quality Assurance & Dissemination

Photo Credit: IITA

NB: This is my personal analysis of contributions to question five from the forum. This post is the fifth in series of six, analyzing each of the six forum questions that were discussed.

With my interest in this area, I began the discussion with a post which pointed out the need to source content from farmers themselves – that is farmers’ local knowledge and innovations (FLK/I). A number of subsequent posts agreed with the fact that local knowledge is critical, and any effort to spread this knowledge and prevent its dearth by recording it through technology is also essential.

Question 5: What are the methods for sourcing appropriate content to be delivered to farmers, what standards should be followed when disseminating information to farmers, and who is best placed to manage quality assurance?

Most often when it comes to services for farmers, we immediately jump into ways of providing technical/scientific content. So I may say my post did change the tone of discussion of the question, at least at the beginning. Below are some of the ways that FLK/I could be sourced from farmers as primary content and then improved through other scientific methods for use by these farmers.

Sourcing Methods of Farmers Local Knowledge and Innovations (FLKI)

Use of face-to-face meeting with farmers to help identify FLK/I and then “validate” it together with them
Use of mobile vans with the necessary recording equipments to source content from farmers
Use of radio in combination with mobile phones to source FLK/I from farmers. Specifically, radio “Phone-In” program in most parts of Africa could be an excellent method
Farmers could be trained with basic documenting tools so that while they are engaged in their local farming activities, they can also be recording these activities for researchers to use later in their research to improve these innovations.

Other examples of the use of ICTs to facilitate peer-to-peer knowledge sharing among farmers and possibly for sourcing content for farmers were also pointed out by other discussants as Awaaz.De, Digital Green, and Video Viewing Club (VVC).

Another promising application that was mentioned later during the discussion is NEXT2 – a geosocial network app that automatically connects subscribers around location and by common topics of interest or concern. I believe the potential of this app is great for those interested in utilizing farmers local knowledge and innovations. While the app may primarily help strengthen the existing social capital among farmers through knowledge sharing, it could also be used to strengthen the link between farmers and their officers with close geographic proximity.

Customized/Localized Content for Farmers

A related point made by another contributor emphasized localized content instead of global scientific knowledge, which may not be appropriate for all contexts. The post asked for a process to build a database of customized content that is relevant to a group of farmers instead of defining apriori what is needed. The contributor called for a system where farmers can both receive support when they need it, and provide supports to others when it is in their area of expertise. Also with the use of technology such as efficient search interface, ‘farmers’ will be able to take advantage of previously answered questions when it becomes necessary.

In fact this point agrees with one of the components of the mFarmer Initiative that aims at providing bespoke, digital agriculture content via an online database. Making this database a dynamic resource with up-to-date content will be very useful for agricultural development.

Conventional Approaches to Content Sourcing

While others agreed that knowledge from farmers is important to remember, they believe that the bulk of content farmers need to improve their farming techniques is from known sources such as public and private extension services, R&D units (both private and public), and universities. The problem with the content from these sources is that they are in diverse formats that needed to be managed for farmers to be able to use. Below is a summary of traditional methods of sourcing content for farmers:

Printed literature and website information that are authentic and are available in public domain
For information not available in the public domain, special tie-up with appropriate organizations to enable content enrichment and broadening of the knowledge base
Feedback and success stories from the customers

Feedback on Content Versus User-Generated Content

Another important contribution from the experts pointed out the difference between feedback from farmers and content being generated by farmers. Feedback is useful to increase the relevance of the service, content itself, content sourcing methods and understanding of the on-the-ground needs by the research units. On the user-generated content, it may be appropriate for a service provider to take this approach, but it should be noted that the quality of the advice given by one user to another, inevitably affects the perceived quality of the service itself.

Who is Best Placed for Quality Assurance?

Intermediaries? The first concern of how quality assurance should be structured for user-generated model so that it increases the value and doesn’t become a bottle-neck for the scaling up was raised. Even though there was no direct response to this concern, the structured architecture of M-Kilimo and IKSL platforms where their systems have frontline staff, supported by subject matter experts/specialist and again independent evaluators were cited as good examples for content validation.

But at the same time, a concern was raised with the competency of these intermediaries such as knowledge workers, call center operators, and helpline that are critical part of the value chain. Most often, they have access to a vast repository of content and in majority of cases, take the final decision on what content to push to the farmer. Experts are usually one step removed from this process.

This has been my argument after my 2009 study in Ghana where I stated that the mere emergence of intermediaries cannot solve the knowledge barrier challenges that we currently have. We need strategies that ensure that their activities are coordinated (See my four component-strategy to do this).

Research Institutes? It was also pointed out that sourcing, aggregating, managing and assuring quality content for mobile agricultural services is complex. The role of national agricultural research institutes and universities is vital in this process to validate and adapt the content to the local context of the users.

International Organizations? The case of TECA’s partnership with organizations such as the Grameen foundation to use TECA’s information for their farmer helplines and community workers was also shared. It noted that a lot of highly relevant knowledge about successful agricultural practices and technologies for small producers comes from projects but when the project ends, the lessons learnt are often not documented in a way that could be useful for extensionists, local NGOs and farmer cooperatives in the project area and beyond.

Below is quick breakdown from a discussant on quality assurance of content for farmers:

In-house content personnel for developing content plan and protocol
Experts who will be vetting the content for messages
In-house content personnel for carrying out regular internal audit
Obtaining feedback from farmers through participatory appraisal to improve the services
Periodic audits conducted by external agencies

Standards to Follow while Disseminating Information to Farmers

Protocol of information dissemination is required to be developed for each category of information.
Requirement in respect of the following should be well defined in these protocols of information dissemination such as source, adequacy, accuracy, relevance (location specific), clarity, and sensitivity to the socio-cultural aspects

In summary, as we explore mobile agricultural information services, it is expedient for us to combine these services with human actions. There may be situations where experts will need to visit farmers field to be able to do the right diagnosis to the problem. Those from the field will agree that not all problems can be solved through phone calls or SMS. Sometimes, the experts need to see the infestation, disease, etc. on the ground to be able to recommend a solution. We need the mobile services but at the same time we should be able to determine when to use it, especially when we are concern with quality of content to the users.

NB: The last in the series (6th) is “Reflections on mAg Services: Mistakes and Pitfalls of MNOs/NGOs” (Available on 01/05/2012)

The first, second, third and fourth posts are:

1. “Reflections on mAg. Services: Partnerships Between MNOs and APs”

2. “Reflections on mAg. Services: Barriers to Scale“

3. “Reflections on mAg Services: Is there a Business Case for Serving Farmers?“

4. “Reflections on mAg Services: Financial Sustainability”

January 3, 2012/by actualize

Connectivity, Originally posted on the GBI Portal

Even with LTE on the horizon, 2G will still be the norm for 2012

2011 was an exciting year for the arrival of new technologies in Africa. Good news, indeed, since the excitement’s trickle-down effect can encourage innovation and, in turn, improve quality of life. Still, the arrival of LTE means the mobile technology gap is widening as 2G continues to be the most commonly used mobile technology in Africa.

Despite the hope that six African markets could have LTE service by the end of 2012, most will not. In fact, as of mid-2011, 21 African nations lacked 3G coverage (mostly Central Africa and parts of West Africa). Many of these nations will have 3G service in urban areas before the year is out, but 3G is still not in sight for Guinea-Bissau, Guinea, Central African Republic, Eritrea, Somalia, to name a few.

Even nations with 3G service boast relatively few Internet users. A recent national survey in Nigeria found that more than 95% of Nigerians have no Internet access and no region could boast more than 17% of its population with access.

Smartphones still cost at least $50 and service charges put 3G out of reach for most, even if the service is technically available. LTE, therefore, will be out of reach for 99.9% of Africans (maybe 98% in South Africa). Although new technology carries certain benefits, it’s detrimental to become obsessed with the latest craze. Instead, most regions would benefits from focusing on enhancing 2G service – now considered the bread-and-butter of the telecommunications world. 2G requires less investment, devices and service plans are cheaper for consumers, and governments already allow for the spectrum. The most beneficial mobile services – health, payments, and text messaging – can run just fine on 2G bandwidth. Most importantly, 2G is far more useful than nothing at all.

January 3, 2012/by actualize

Agriculture, Agriculture Markets, Extension Service, Food Security, Mobile, Originally posted on the GBI Portal

Reflections on mAg. Services: Financial Sustainability

Photo Credit: Book Blog

NB: This is my personal analysis of contributions to question four from the forum. This post is the fourth in series of six, analyzing each of the six forum questions that were discussed.

The fourth question for the forum was about financial sustainability. With a thorough discussion on partnership models in question 1, the focus of this section was therefore on financial sustainability of such partnerships. Also with the business case laid out nicely in the previous discussion, partners have no choice than to look into the future of such partnerships through sustainable approaches.

Ensuring financial sustainability requires looking at the sources of revenue for the service. In this context, I believe the main source of revenue is from the users – the rural poor agricultural farmers supplemented by other users. So thinking of a long-term sustainability will call for actions beyond the roll-out funding to ensure that services being provided meet the needs of the users to continue paying for them.

Question 4: How can a partnership model between a Mobile Network Operator (MNO) and Agricultural Partner (AP) increase the financial sustainability of the service?

As stated above, the question assumes that without a partnership (i.e. either MNO or AP alone) delivering agricultural service to rural farmers should have some financial sustainability. So a partnership between MNO and AP should increase this financial sustainability due to the unique value proposition that each brings into the partnership.

Background

A nice background to financial sustainability of services to rural people was presented by one of the experts. It brought out the fact that in most developing countries, the bottom of the pyramid offers an excellent opportunity to the Mobile Network Operators (MNOs) for increasing the rural penetration and achieving a large customer base. At the same time, the targeted segment is price-sensitive, making it necessary to develop affordable products or schemes.

With specific example from India, the contributor stated that falling mobile tariff over the last decade has been a major enabler for increased rural penetration providing increased business volume to the MNOs and an enabling environment to the APs for extending the advisory services to the rural base. Another contributor recalled that, in Africa between 50% to 80% of the workforce depends on agriculture and in most cases it also represents its GDP. So considering the transaction that goes on in the agricultural industry, it will worth it for MNOs to take a look at this industry, when investing in mobile agricultural services.

Financial Sustainability through AP-MNO Partnerships

Discussants pointed out that a partnership between MNO and AP can increase the financial sustainability of mobile agricultural services to rural farmers because of the complementary value propositions that each partner brings into the partnership.

While MNOs are in the business of collecting small amounts of revenue from millions of customers and also have the business systems to support this, the APs have the value added service that the users need for generating this revenue.
The MNOs are also skilled at marketing and getting feedback from customers but again, for these services to meet the demands of the users, APs are the right partners to develop the necessary rapport with the farmers.
The MNOs have many business skills, systems and discipline that complement the know-how that APs bring to a partnership.
The MNOs also have a strong profit incentive to keep focused on what is financially sustainable.
MNO-AP partnership could allow the MNO to understand and learn from the AP how farmers conduct their business and over a period of time, they can build products that will help farmers enhance their yield and in turn increase the profitability of the partnership.

From a different perspective, another contributor classified the strategy of ensuring financial sustainability of MNO-AP partnerships into 3 main dimensions. These are:

1) Short term: In the short term, the MNO may have to pass on part of the benefit of acquiring a new customer as an investment for their future annuity that can accrue from customer loyalty. They may also have to share a part of the future revenue based on the increase in average revenue per user (ARPU), and incentivize the service through the talk time sales to the users. This arrangement provides the initial impetus for extending a high quality advisory service to the users.

2. Medium term: In the medium term, there is the possibility of monetizing the services by the MNO. There are existing models, which are subscription based in which a farmer who is getting value for money would be willing to pay for the services.

3. Long term: In the long term, it requires continuous engagement with the customers which may provide an opportunity to extend other value added services related to financial including education, livelihood, health, etc. In each of these, the subscribers can be provided services through mobile phones on subscription basis or usage basis.

Presented from the MNOs’ side, another discussant also looked at how MNOs are able to benefit indirectly as a result of MNO-AP partnership. These are:

Increase in Average Revenue Per User (ARPU) of existing user base. The ARPU of the regular rural user versus ARPU of rural users of Agri VAS on the same network, multiply the difference by the number of Agri VAS subscribers.
Increase in market share. Increase in number of rural customers attributed to Agri VAS is a source of additional ARPU every month. ARPU from new Agri VAS customers could be equal to regular rural ARPU.
Increase in loyalty and decreased churn. Churn rate in a regular sample versus churn rate in a sample of Agri VAS users. This % difference multiplied by number of Agri VAS multiplied by rural ARPU is the saved revenue of MNO due to decreased churn.
Reduction in acquisition cost. The acquisition cost per customer of a MNO multiplied by number of new network subscribers attributed to Agri VAS is the saved acquisition costs for the MNO.

It is also observed that, MNO-AP partnership could increase the credibility of the whole venture thereby enabling them to explore other sources of revenue generation such as through m-governance services (which are being actively promoted by governments) and m-commerce activities.

Multiple MNOs in a given Partnership

The issue of multiple MNOs partnering with APs came up again in relation to the financial sustainability of the partnership. The questioner was interested in the trade-offs from taking a multi-MNO approach versus an exclusive approach in countries where there are two or more MNOs sharing the market more or less equally. In other words, would the strengths of having one exclusive MNO as a partner be so diminished by a multi-MNO approach, that a multi-MNO approach would rarely be seen as a likely path to financial sustainability?

There were mix responses to this concern including the fact that MNOs, especially in countries where market share is relatively balanced, will all try to develop their own proprietary mobile agricultural platforms with similar content and business models, which will result in a race to the bottom. Some others believe that multi-MNO approach is possible but:

a) Agriculture partners need to retain ownership of the data, thereby allowing them to use it on multiple platforms but, add value to each MNO by supporting them with the development of differentiation strategies.

b) Agriculture partners can work exclusively with an MNO but, as part of that effort, work with the telecom company to establish a fair and transparent pricing model to enable out-of-network users to access the information.

Apart from these ideas, there was no specific examples of multi-MNO partnerships from the forum. But another interesting view from India was that, because there is already a substantial struggle to ‘sell’ agricultural content, the issue of exclusivity is debatable. However if the agricultural content is customized and filtered enough (customized as per local needs) placing the same in a shopping cart is relatively easy.

So how can a partnership between MNO and AP increase financial sustainability of such association? Each partner has some unique skills and abilities that they use in their business as shared above to financially sustain their activities. Bringing these unique qualities together is expected to increase the individual potentials of the partners at the same time ensuring higher quality service to the users.

NB: The Next in the series (5th) is “Reflections on mAg Services: Content Sourcing, Quality Assurance & Dissemination” (Available on 01/03/2012)

The first, second and third posts are:

1. “Reflections on mAg. Services: Partnerships Between MNOs and APs”

2. “Reflections on mAg. Services: Barriers to Scale“

3. “Reflections on mAg Services: Is there a Business Case for Serving Farmers?“

December 31, 2011/by actualize