It is cheaper to call America

We may not realise it now, but the significance of the little device called the mobile phone on our part of the development has been awesome. Its potential is even bigger. As President Paul Kagame put it: “In 10 short years, what was once an object of luxury and privilege, the mobile phone, has become a basic necessity in Africa” (Connect Africa Summit, October 29, 2007). Since the first hand-held mobile phone was demonstrated by John F. Mitchell and Dr Martin Cooper of Motorola in 1973, using a handset weighing around 2.2 pounds (1 kg), the device’s usage has grown from 12.4 million to over 6 billion subscribers, penetrating about 87% of the global population and reaching the bottom of the economic pyramid.The fact is that Sub-Saharan Africa has some of the lowest levels of infrastructure investment in the world. Merely 29 percent of roads are paved, barely a quarter of the population has access to electricity, and there are fewer than three landlines available per 100 people. (ITU, 2009; World Bank, 2009). Yet, access to and use of mobile telephony in sub-Saharan Africa has increased dramatically over the past decade. There are ten times as many mobile phones as landlines in sub-Saharan Africa (ITU, 2009), and 60 per cent of the population has mobile phone coverage. Mobile phone subscriptions increased by 49 per cent annually between 2002 and 2007, as compared with 17 per cent per year in Europe. Mobile phones have brought new possibilities to the continent. Across urban-rural and rich-poor divides, they connect individuals to individuals, information, markets, and services. Rural dwellers are able to call relatives living in the capital cities and across the world. Farmers are to send text messages to learn market prices from places over 100 kilometres away.This rapid adoption of mobile phones has generated a great deal of speculation and optimism regarding its effect on economic development in Africa. Policymakers, newspapers and mobile phone companies have all touted the poverty-eradicating potential of mobile phones (Corbett, 2008). An article in the Economist (2008) reported: “A device that was a yuppie toy not so long ago has now become a potent force for economic development in the world’s poorest countries.”Mobile phone coverage in Africa has grown at staggering rates over the past decade. In 1999, only 10 per cent of the African population had mobile phone coverage. By 2008, 60 per cent of the population (477 million people) had mobile phone coverage, and an area of 11.2 million square kilometers had mobile phone service -- equivalent to the United States and Argentina combined.East Africa has not been left behind. In 1999, for example, the Kenyan-based service provider Safaricom projected that the mobile phone market in Kenya would reach three million subscribers by 2020. Safaricom, alone, currently has over 14 million subscribers (Safaricom, 2009). Why are mobile phones so important? In addition to telephony, modern mobile phones also support a wide variety of other services such as text messaging, MMS, email, Internet access, short-range wireless communications (infrared, Bluetooth), business applications, gaming and photography. There are cell phones that offer these and more general computing capabilities (smartphones).Against this background, it is important that the cost of communication is re-examined and reviewed downwards. Why is it still cheaper to call the US and Canada than it is to call a neighbouring East African country? Why are you charged exorbitantly when you carry you phone across borders (roaming charges)? You are charged these rates both for making and receiving a phone call, at rather exorbitant rates too. Data costs, as the phone companies themselves will tell you, are significantly higher. This scheme of things is not good for business growth across the region. However, mobile phones companies are not the only ones that need to have a fresh look at the way they operate. It is much cheaper ($1,100) to fly to El Paso, Texas (22 hours away) than it is to fly to Douala in Cameroun ($1400) which is 5 hours away. The same goes for courier services.The typical demand and supply answer is given to explain these paradoxes. But even in the chicken egg situations that they are, we must find ways to unlock our business potential by giving due attention to lowering the infrastructure costs. It would be better for everyone in the long run.