Category Archives: Observations

A Noble Use for Mobile Phones

with Meika Jensen

As ‘the Internet of things’ becomes more pervasive and as wireless connectivity becomes more widely available, the possibilities for what can be done with is are constantly growing. Someday it may be the case that someone in rural Africa could remotely earn an accredited online masters degree, or could start a Fortune 500 company. For the time being, information technology use in Africa is a little more immediate and pragmatic. Although the industry is still in its nascent stages, we have witnessed more than a few creative technology applications, aimed at ambitious impact goals in terms of African development and welfare.

It is not a surprise to anyone that mobile phones are extremely popular among the fluid and changeable populations of urban and peri-urban Africa. But what about poorer rural communities? As a matter if fact, rural and traditional communities in Africa are strongholds of deep-seated oral cultures which have adopted the use of the mobile phone as much as it has become part of our own Western culture. The value of basic mobile functionalities (voice and SMS) to rural communities has been well documented. Increasingly, the mobile channel is becoming a channel for direct access to the Internet and the information service opportunities it can offer. As mobile network expansion opportunities are coming to their natural limits, intensifying rural-based use of value added services is becoming a priority. Multimedia channels combining mobile functionalities (voice and data) with traditional broadcasting methods (radio, TV) hold considerable promise.

The earthquake in Haiti, the civil unrest in North Africa, the natural disasters and tsunamis that hit the Pacific over the past few years are considered “game changers” in terms of our understanding of mass communication with poorly-resourced and poorly-organized groups of people, reachable exclusively via mobile signal. Not only were cell phones and their use of text messaging essential for coordinating relief efforts and letting victims stay on top of rescue updates, they allowed those with limited access to reach out directly to relief agencies or to get support indirectly, through their social networks, thereby finding hope and organization rather than chaos and tragedy.

mPedigree has put itself on the cutting edge by using cell phone technology and text-back messages based on short codes and SKU #s so Africans can verify weather malaria drugs are legitimate or counterfeit. And before cell phone use became widespread across the African continent, groups like the World Health Organization wouldn’t have been able to organize a mass database of cell phone users and cell phone numbers to organize vaccination stations and reminders, schedule health check-ups, and push reminders to massive numbers of people.

In 2001, a mere 3% of Africans had access to cell phone. By 2004 that number had grown to 7% and represented 50-million cell phone users. Four years later, in 2008, that number ballooned to nearly 350-million and it continues to grow at the quickest rate in the world. And these numbers are just scratching the surface as new cell phone contracts are projecting at 550% growth over the next five years.

The role of mobile phones in daily life ranges from busting counterfeit drug suppliers, getting emergency weather alerts, to breaking local, national, and international news. But experts predict mobile will play a key role in the development of Africa’s rural and isolated communities. Nigel Scott and his colleagues wrote a report in 2004 called “The Impact of Mobile Phones in Africa” and argued that mobile phones are becoming increasingly important to African countries in areas such as infrastructure service, as a household investment that improves the quality of life via social capital and personal finance management, as a source of jobs and reinvestment from mobile operators with a vested interest in improving the quality of life for their customers, and finally as a tool for building a nation. Their research showed how mobile phones could increase the efficiency of news and service delivery to the poor (weather, education trends, market prices, news and health updates). The very definition of “third world” is being redefined as the gap between the haves and have-nots is shrinking.

Unlike almost any time in its history, Africa is becoming connected to itself and to the world at large. As mobile phones and mobile Internet continue to shape rural Africa’s next decade and century, it won’t have to struggle in order to have its voice heard.

Esoko blog: Mira Slavova, MIS Researcher

As I’ve been settling down in Ghana and struggling to find the time to start posting more often. Luckily, an invitation from the Esoko blog managed to get me to focus and write something coherent on MIS topics again. I am re-posting the sections, other than the introduction. If you are reading this, you’d know who I am.

MIS as Intermediaries?

I prefer to consider the broad topics of Market Information Systems MIS, Warehouse Receipts Systems and Commodity Exchanges in Africa within the context of the intermediation theory of the firm. According to this theory see Spulber 1999, intermediaries emerge within the space of decentralized trade due to the encountered transaction costs. Firms providing agricultural market information alongside other services exist in Africa because decentralized exchange with agricultural commodities is plagued by transaction costs. Intermediated exchange emerges as a stable form of organization because intermediaries are able to economize on transaction costs and deliver net gains from trade, in excess of the gains obtainable from direct exchange.

The Difference between MIS, Warehouse Receipt Systems, and Commodity Exchanges

In considering MISs, Warehouse Receipt Systems and Commodity Exchanges as intermediaries, it is clear that some of these services are involved in more extensive intermediation than others. MISs often define their role purely as that of alleviating market price information asymmetries. MISs deliver mobile price information to farmers, leaving the bargaining and the details of the transactions to the farmers to sort out for themselves. To say the least, in the absence of consistent grading and sorting practices in many value chains in Africa, verifying the correspondence, between the quality of the commodities the price information refers to and the quality of the commodities being traded, becomes a non-trivial matter. By certifying the quality of the commodities and the identities of the buyers and sellers, Warehouse Receipt Systems go one step further in addressing the transaction costs present due to lack of communication between producers and buyers.

Commodity Exchanges go even further by providing an auction mechanism for reaching agreement on the terms of trade. As market-making intermediaries, they determine the mechanism of exchange and institutionalize that mechanism. Commodity Exchanges provide the market microstructure for the transactions between the buyers and the sellers. The market microstructure includes the details of the process through which the exchange occurs. By contrast, the market microstructure on which MISs rely tends to be the product of recurring, customary behaviors on behalf of the buyers and the sellers. The institutions governing their transactions are informal and based on relational norms, rather than formalized.

Reducing Communication Costs

In considering MISs, Warehouse Receipt Systems and Commodity Exchanges as intermediaries, it becomes clear that the differences among these market systems stem from the different transaction costs they are aimed at alleviating. Clearly, there can be numerous sources of transaction costs. The choice of a bundle of transaction costs which to be addressed is part of the strategic positioning of an intermediary. Within the complex social-business hybrid value chains, encountered within the agriculture sector of developing countries nowadays, communication costs can form a significant part of the transaction costs. Technology platforms such as Esoko enable, for-profit and non-profit organizations interested in streamlining agricultural value chains by acting as intermediaries, to address communication costs.

via Esoko.