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| Cell phone use has expanded rapidly in Africa |
Technology
can be used to spur business growth in developing countries, a UN agency says.
The Internet, computers and mobile phones facilitate banking services and
improve access to market information.
Information
and communication technology (ICT) enables private sector growth in developing
countries, according to report published Wednesday by the United Nations
Conference on Trade and Development (UNCTAD).
The African
ICT sector is growing rapidly. Last year, there were close to 500 million
mobile phone subscribers.
But there
are wide disparities across the African continent. In 2010, less than one in 10
Ethiopians had a mobile phone compared to more than seven in 10 Ghanaians,
according to the International Telecommunications Union. This year, Ghana was
reclassified by the World Bank as a lower middle income economy.
Enlarging
the market by taking it to the poor
Despite
Ghana's high mobile phone usage, ICT has yet to make a substantial contribution
to the country's private sector development, according to the World Bank. It
estimates 80 percent of the business sector is informal.
"The
IT revolution [in Africa] is enabling smaller farmers to have access to
information which they didn't have earlier, but not much has changed for larger
companies," said Sebastian Kahlfeld, a senior fund manager at DWS
Investments, Deutsche Bank's investment arm.
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| Mobiles aren't used just for communication, they are also payment devices |
Mobile
phones in particular are enabling access to services like banking and
information, according Sebastien Dessus, the World Bank's lead economist for
Ghana.
"In
theory, [ICT] can play a role in enlarging markets because access to
information improves and transaction costs are reduced," he noted.
Farmers now
use mobile phones to obtain market information on the latest prices for their
crops. In Ghana, cashew nut farmers can use a phone application to compare
trader bid prices. And since 2008, the Ethiopia Commodity Exchange has granted
farmers access to real-time information via text messages, electronic display
boards and a website.
Kenya's
mobile banking system, M-Pesa is bringing banking services to millions. The
service has 20,000 agents in the country compared to 400 for the largest bank,
according to UNCTAD ICT analysis chief Tobjoern Fredriksson.
Apart from
providing banking services, ICT has also helped create employment for thousands
since it was launched in 2007. The service, which was developed for
person-to-person transactions, is now being used by small entrepreneurs to
carry out payments, Fredriksson said.
Technology
helps but is not the only solution
But
technology is not only good for enlarging the market and empowering small-scale
businesses, it can also be used to fight corruption, according to UNCTAD. ICT
improves transparency and accountability, said Johan Hellstroem, a researcher
at Swedish Program for ICT in Developing Regions.
"The
very presence of mobile phones decreases corruption and secret activities
because it leaves footprints and audit trails," he added.
Corruption
is third leading constraint to doing business in a country after electricity
and tax rates, according to a 2010 World Bank survey.
Crowdsourcing
techniques like Kenya's Ushahidi can be used to report incidents of bribes or
corruption. Similar initiatives are springing up all over Africa; with
stopthebribe in Nigeria, and No bakshish in Cameroon. Through such initiatives
and global ones like bribespot and corruption tracker, ICT is empowering people
to take a stance against corruption, according to Transparency International
(TI).
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| Bribes are often needed get something done in African countries |
The
platforms are providing means of discussing corruption and mobilizing people
while providing them with ways to avoid paying bribes, said TI spokeswoman
Natalie Baharav. But challenges remain.
"An
integrated approach that includes an offline approach is needed," Baharav
said, noting that Internet access was still very low in most countries.
For
Hellstroem, the challenge is changing people who are corrupt.
"It's
the users who are corrupt and they are the part of the corruption that is hard
to address," Hellstroem said.
Experts can
only speculate on the extent that ICT will have on private sector development
in Africa or other developing countries. For investors, it is the current
financial climate that matters.
"If
you aren't certain about European banks, then you are not going to invest in a
Nigerian bank," said Kahlfeld of DWS Investments. "Global stability
is essential for investors to invest in African markets."
Author: Chiponda Chimbelu
Editor: Sean Sinico
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