Issue 4 - What are the Economic and Social Impacts of the Mobile Phone Sector in Developing Countries?

Issue 4 - What are the Economic and Social Impacts of the Mobile Phone Sector in Developing Countries?

Editorial

By Luc Rigouzzo, Proparco's Chief Executive Officer

This issue of the magazine Private Sector and Development is being published at a time when Haiti has been struck by a powerful earthquake which has thrown the country and its capital, Port-au-Prince, into chaos. This disaster carries serious consequences for a country which remains one of the most vulnerable in the world, despite efforts to help it emerge. Thanks to an evaluation study conducted a few months ago, we had planned to highlight - in this issue of the magazine dedicated to the developmental impacts of the mobile phone sector - the encouraging lessons to be learned from the development of telecommunications on the Island. We have decided to go ahead with the publication of this article because we see it as an example that should be promoted and a sign of hope and encouragement to send to Haiti.

In most South countries, the mobile phone sector has developed – under the impetus and supervision of public regulatory authorities – via the private sector. A considerable number of developing countries have seen a remarkably rapid establishment of mobile phone networks; for example, over the past four years Africa has recorded an average annual growth rate in the number of subscribers of over 40%. This success – in a context where the share of available income for these new services would appear limited – demonstrates that the right model is being implemented and, more generally, it bears witness to the dynamism of Africa’s domestic market.

I am consequently very pleased to share this fourth issue of Private Sector and Development with you. I would like to extend my warmest thanks to each of the authors for their contributions which provide readers with a summary of the various impacts that the development of the mobile phone sector has had in recent years. First, they estimate its macroeconomic impact by taking a look at the link between the development of this service and GDP growth in the relevant countries. Its microeconomic impact can then also be measured by assessing the extent to which the mobile phone sector facilitates interactions between economic agents, and contributes to developing income-generating activities. Finally, the mobile phone sector has unquestionably positive social impacts: it increases social ties, makes certain households less vulnerable, gives access to new services such as mobile banking… Unfortunately, as we can see in some articles, it is not free of negative effects, which are specifically related to the weight of phone expenditures on household budgets. Moreover, some of the poorest populations – particularly in rural areas – continue to be deprived of access to the network.

Many challenges remain. Operators need to reinforce customer loyalty and provide more services with high added value. For public authorities and users, population coverage needs to be extended and the cost of access to the service needs to come down. Finally, international donors must play a role in ensuring there is a balance between players, they must help reduce the negative effects of the mobile phone sector and – at the same time – make sure its developmental impacts are maximized. They must also provide their financial support to the expansion of broadband connections in order to give easier access to Internet, which would appear to be an even more important factor for economic growth in developing countries than the mobile phone itself.