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 Sunday, May 22, 2005

Mobile Phones Change Ways Africans Live and Do Business

The rapid growth in mobile phone use throughout the developing world, especially in sub-Saharan Africa, is helping to transform national economies, producing a thriving entrepreneurial class and marked growth in private capital, according to Leonard Waverman, an economist with the London Business School.

Speaking at the American Enterprise Institute (AEI) in Washington May 5 on a panel of fellow economists and representatives of one of Europe’s largest wireless telephone providers, Vodafone UK, Waverman pointed to the extensive use of mobile phone accounts in the developing countries as a new source of economic development in Africa.

Although mobile phone penetration is only about 9 percent in Africa generally, mobile phones account for approximately 75 percent of all telephone connections in 19 of the poorest African countries, Waverman said, adding, "If you look at it globally, the growth in the number of mobile telephone subscribers in developing countries is twice that in the developed world"

In most instances, he explained, mobile phone infrastructure is easier to set up and cheaper to maintain than the standard fixed-line telecommunications systems that were technological holdovers from the colonial past and often controlled by the government. The new systems sidestep the control issue, have fewer technical problems and are having a noticeable effect on the future of telecommunications in Africa, as antiquated analog networks are being replaced with newer digital ones.

Scott Wallsten, formerly an economist at the World Bank and now a fellow at AEI, added that "mobile telephony often succeeds in developing countries because state monopolies rarely view [the companies] as a threat -- until they are established. By then, the investment has been made, and the customer base has already been set up."

Waverman stressed that a good communications network is important in producing economic growth in developing nations by transforming the enterprise sector and spreading wealth as far as the voice can be carried through the ether.

"Information is power. Providing information to everyone takes the power away from the few. And we are seeing this [dynamic] occurring across much of Africa today. We are seeing the emergence of a new middle class," he said, as new businesses and businessmen emerge with new capital for growth.

[US Dept of State via my weblog]