Economics of Mobile Phones in Africa

In the developed world, mobile phones are something that we take for granted. The biggest purpose of a cell phone is to entertain its owner. Cell phones are used by people to connect with their loved ones, play games and log on to the social media. This is the reason why people in developed countries prefer smaller and faster mobile phones since they are right for the purpose. They are easy to hold while lying down and can easily fit in the pocket while travelling.

However, far away in African communities, there are other types of cell phone designs that are considered to be better. Most Africans use the cell phone which is the size of a brick. This large size of the cell phone is largely attributed to its battery life. Many critics have called this device a battery which also happens to have a phone. However, they seem to miss the fact that a long battery life is probably the number one feature that anybody would look for if they lived in a region with an unpredictable power supply.

The design of the device may be the main feature that a teenage girl living in Seattle, who is obsessed with Instagram photos, looks for in a device. For people in third world countries, a mobile phone is still a luxury item that everyone cannot afford. The ones who do spend a large chunk of their incomes buying cell phones look for very tangible economic benefits. Up until now, mobile phones have been able to provide such benefits to the sub-Saharan poor. The proliferation of mobile phones has been nothing less than an economic miracle for these communities.

In this article, we will have a closer look at how mobile phones have completely transformed the economic situation in many impoverished nations.

The Proliferation of Mobile Phones in Africa

The usage of mobile phones has grown by leaps and bounds in the African continent in the past two decades. During the year 1999, less than 10% of the population of Africa had access to cell phone. This rate grew rapidly to reach 40% by 2009. At the present moment, almost every village in Africa receives cell phone connectivity. This rapid proliferation of cell phones is staggering given the fact that 300 million people in Africa are considered to be poor, i.e. they live on less than $1 per day. Out of these 300 million, 129 million are ultra-poor, and they live on less than $0.50 per day.

The rapid growth in the number of cell phones has put Africa in a very advantageous position by completely transforming the local economy and helping in eradicating poverty.

Supports Smaller Ventures

The proliferation of cell phones has driven down the cost of communication in the African continent. This has been very beneficial for the business community since communication is an important part of any business in Africa. Most businesses in Africa revolve around processing and exporting some kind of commodity or minerals which the country has ample supplies of. Hence, freelancers are commonly used by large companies. Freelancers cut wood or mine some other resource and then sell it to a large local corporation which exports it. In the absence of cell phones, communication between thousands of freelancers and the company was severely restrained. As a result, many orders were missed, and the loss to business was humungous. Now, the cost of communication is nearing zero, and hence such businesses are rapidly flourishing in Africa.

Ease of Transactions

Mobile phones have been a boon for African farmers as well as fishermen. With the advent of the cell phone, they are now connected to the national and international markets. As a result, it is very difficult, if not impossible for middlemen to cheat these small farmers. These small farmers can call up their counterparts in bigger urban centres to find out the rates of the commodities which they are selling. Also, mobile phones have made it possible for transactions to be conducted online including receipt of payments from far away counterparties.

Healthcare

Most of the population in the African continent lives in remote areas which are centred around an urban area. Hence, for instance, a large chunk of the population lives in the area surrounding the city rather than the city itself. Hence, these people do not have access to healthcare services. Earlier, if they would fall sick, most people would die on the way to a hospital because of a lack of facilities. With the introduction of mobile phones, residents can call an ambulance to remote areas. Hence, sick people receive immediate medical attention, and the odds of their death reduce drastically. The economic benefits to the healthcare sector of Africa are also obvious.

Africans prefer mobile phones over landline phones even though the latter are cheaper. Mobile phones services are provided by private companies which provide somewhat uninterrupted services. On the other hand, landline phone services are provided by the government. As a result, the level of efficiency is very low. It is estimated that landline phones work for only 36 days out of the year without any interruptions. On most other days, interruptions are common and last for two days on an average.

The bottom line is that the private sector can do a better job of connecting people in the most remote places on earth as compared to government services.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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