Lonely as a Cloud: How Poor Countries Are Leading Technological and Social Change

by Charles Krakoff on May 8, 2012

in Business Models, Competitiveness, Development, Free Markets, Innovation, poverty

I have just seen a graph prepared by technology consultant Chetan Sharma of Issaquah, Washington, which purports to show that a greater number of Earth’s inhabitants – six billion, if the data are correct – have mobile phone subscriptions than have electricity or safe drinking water. The data aren’t correct. For one thing, these six billion people, according to Mr. Sharma’s chart, constitute 80 percent of the world’s population, which would put world population at 7.5 billion, when the World Bank tells us it is only 6.84 billion. Also, in most of the world outside Europe, Japan, and North America, the overwhelming majority of mobile phone usage is via prepaid cards rather than contract subscriptions. And to add to that, if a substantial number of people have cell phones but not electricity, how do they recharge their phones? Still, the basic message conveyed by this chart – that mobile phone penetration is becoming nearly universal among people at all income levels – stands.

I have also just come across a not entirely unrelated report by the Pew Research Center, which suggests that by 2020 “most people will access software applications online and share and access information through the use of remote server networks, rather than depending primarily on tools and information housed on their individual, personal computers.”

I ponder these statements from Nairobi, Kenya, where I am working on a logistics assessment of the East African Community, which comprises, in addition to Kenya, Burundi, Rwanda, Tanzania and Uganda, as well as, potentially, the newly independent republic of South Sudan, which has applied to become an EAC member. The client’s office is in a spiffy new office and shopping complex, and my Internet connection speed is pretty close to what I get at home. But I have also been to South (and North) Sudan and some of the remoter corners of countries like Nigeria, Congo, and Mali, and I predict that if I am still traveling to these places in 2020 I will have to lug along my laptop, its hard drive filled with the stuff of my professional and personal life. By that time it may be technically feasible, almost anywhere on the globe, to store and retrieve all necessary data and applications from the cloud, but there is the matter of power supply.

Throughout much of the developing world, continuous supply of power cannot be taken for granted. Consider Nigeria, a country of 140 million people, which has an installed generating capacity of 4,000 megawatts, slightly less than the state of Maine, population 1.3 million, and of that only about 2,500 MW of capacity is operational at any given time. People and businesses that can afford to, have diesel generators that, at least in Nigeria, are the main power supply, the grid on average supplying only a quarter of their needs. If the lights or the fridge cut out for a couple of minutes while you switch over to the generator, nothing much is lost. But if it happens when you are working on tomorrow’s client presentation it can be pretty catastrophic.

The future, at least in the developing world, is more likely to belong to mobile telephony than to cloud computing. You could argue that a country like Kenya is already more advanced in that domain than Europe or North America. We can read articles about how mobile phones will transform commerce, but in East Africa that future has already arrived. M-Pesa, a joint venture between Vodafone of the U.K. and Safari.com, the leading Kenyan mobile operator, initially launched in Kenya in 2007 and in Tanzania in 2008, is a mobile-based payment system that allows users to deposit and withdraw money, transfer funds to other users and non-users, pay bills, and purchase air time. As of the end of 2011, M-Pesa had 14 million users in Kenya (out of a population of 40 million and 8.8 million households) and nine million in Tanzania (33 million people and 5.8 million households).

Add to that the Boston start-up TxtEagle, which has come up with a technology platform and payment mechanism that allows several billion people in nearly 100 developing countries the opportunity to earn money by participating in crowd-sourced market research.  Clients hire TxEagle  to conduct market surveys and TxtEagle then forwards the survey to thousands of individual members via their GSM phones, using the USSD protocol, which GSM phones use to communicate, free of charge, with the service provider’s computers. Once they have completed the survey, the members are paid, either in airtime or transfer of funds to their M-Pesa account. The 220 mobile carriers in 100 countries that TxtEagle has signed up don’t mind free use of their networks because most people elect to receive payment in airtime, which TxtEagle buys in bulk from the carriers.

TxtEagle has nothing at all to do with smart phones and Android or Blackberry or iPhone technology. It works on the cheapest dumb phones you can buy new for $30, which are what most of the two or three billion people in TxtEagle countries use.

While smart phone users in Europe and North America while away their time playing Angry Birds on their Android and iPhone devices, GSM users in developing countries are using a less advanced technology to transform their lives, even to the extent of changing the basic financial infrastructure of the countries in which they live, with the mobile operators challenging the banks for financial supremacy. I am not sure that replacing Citibank with Verizon would lessen systemic financial risk in the United States, and I’m not all that keen on the company that already provides my fixed line, mobile phone, Internet, and cable TV becoming my banker as well. But it is immensely gratifying to see countries that too many people have written off as basket cases now in the vanguard of profound technological, social, and economic change.

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