Cellphones 'a tool to cut food costs'

Can owning a cellphone make a bag of grain cheaper for a poor consumer or mitigate the impact of a food crisis on a country?

The answer is yes, according to research in the 2009 African Economic Outlook, which was released on Monday.

The introduction of cellphone towers in Niger between 2001 and 2006 saw the difference in grain prices across markets being reduced by 20% and grain price volatility by 12%.

According to the report, 75% of the population are subsistence farmers who must travel long distances to get to weekly markets, sell goods or obtain any market-related price information.

Grain farmers, traders and consumers, says the report, were better able to communicate and access market information, resulting in cheaper and more stable prices. And while consumers benefited from lower prices, traders saw a 3,5% increase in profits and rural households could afford to buy an additional five to 10 days’ worth of grain a year.

In addition, during 2005, when Niger experienced a severe food crisis, grain prices were lower in those areas with cellphone markets—suggesting that the existence of cellphone towers in the country averted an even bigger food crisis.

The report—jointly released by the African Development Bank, the OECD Development Centre and the United Nations Economic Commission—deals with the impact of the global economic crisis on the continent, and points to ways in which countries can mitigate the effects of the crisis on their already struggling economies.

This includes the role that information and communications technologies (ICT) could play in helping Africa overcome the impacts of the crisis and their potential as tools for development.

ICT applications are becoming increasingly innovative in countries across the continent, particularly cellphone applications. The technology is cheaper to set up in countries that lack fixed-line networks and the problem of internet access, a thorn in the side for the continent, is often addressed through cellphone use.

The technology has seen the emergence of various products that offer poor people an agency to change their circumstances, such as South Africa’s Wizzit Bank, which gives the “unbanked” access to banking, and Kenya’s M-Pesa, which allows cellphone users to transfer money and, according to the report, has more local agents than Kenya has bank branches and ATMs.

E-agriculture is taking off in West Africa with programmes such as Senegal’s Xam Marsé initiative, which means “Know your market” in Wolof. For a fee, farmers receive SMSs with price information on the crops they produce for both their local market as well as those farther afield. Similarly, Esoko Networks in Ghana sends out price information to farmers, but also allows them to upload offers to buy or sell products via their cellphones. The SMS service is about one-seventh of the cost of a call and one-tenth of travel costs, says the report.

The report notes that investment in ICT in Africa is likely to continue to boom despite the global financial crisis. Companies such as Kuwait’s Zain, which operates widely in East Africa, will pump more than $4-billion into the continent before 2010.

Similarly, the Seacom cable, which is an example of South-South investment, being 76,25% African owned, landed last week despite the economic crisis.

But the report also points to serious challenges across the continent that threaten to widen the ICT gap between Africa and the rest of the world.

These include inefficient regulatory environments and cellphone operators that charge high tariffs. Subscribers in resource-rich sub-Saharan countries, such as South Africa, pay the most. The average revenue per user (ARPU) was about $13 a person in 2008—higher than Latin America, the Caribbean and the Asia-Pacific Region.

Speaking after the launch of the report, Antoinette Batumubwira, head of the African Development Bank’s external relations and communications, said countries that are best utilising the opportunities offered by ICT are those that have understood its importance as a development tool.

“It’s a question of understanding how ICT and telecommunications can be effective in terms of development,” she said.

“If you don’t have the political will and understanding that this is one of the most important tools to develop a country it will not happen.”



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