Mobile coverage in rural areas makes markets more efficient and contributes to economic development, Learning Initiatives on Reforms for Network Economies Asia (LIRNEasia) states in a policy document titled Economic Impact of Mobile Phones in Low and Middle Income Countries.
A regional ICT policy and regulation think tank based in Colombo, Sri Lanka, LIRNEasia works to influence policy change through research to improve people’s lives in emerging Asia-Pacific economies.
The pro-poor, pro-market think tank has shared the findings of the policy brief with Pakistan’s telecom sector, which already has 76% cellular teledensity and expects to grow further with the rollout of third-generation (3G) mobile internet services in rural areas.
Mobile coverage in rural areas makes markets more efficient by matching demand and supply across a larger geographical space, resulting in benefits to consumers as well as producers, says the document, based on a systematic review to isolate the economic impact of mobile phones in rural areas by looking at the most robust quantitative studies available.
“It’s a good story that we are sharing globally and not only with Pakistan,” Chair of LIRNEasia Rohan Samarajivo told The Express Tribune via phone from Sri Lanka.
Explaining, he said they had reviewed over 8,000 studies on the impact of mobile phone on rural economies. “We have concluded there is a clear evidence that setting up mobile network in areas that didn’t have it previously benefits the economy of these areas.”
They also include several examples demonstrating that trend. In the case of perishable agricultural produce such as fish, there was a significant reduction in waste, according to the document.
Giving an example, it said Jensen in 2007 documented the impact of mobile coverage introduced between 1997 and 2001 in northern Kerala, India, on price dispersion and waste in the fishing industry. Fishermen were able to choose the market to sell to on their way back to shores by asking for current prices from multiple harbours or even agree on a sale, it said.
Price dispersion in terms of minimum-maximum spread between markets in the same region dropped by 38% and waste, unsold fish was reduced by 4.8% as a result of increased mobile coverage.
The document further says mobile coverage in rural areas improves direct and indirect access to employment. In the case of rural South Africa, for example, mobile coverage increased the likelihood of a person being employed by 33.7% within one year, it said.
The contribution made by mobile coverage of rural areas was reflected in increased disposable income and thereby expenditure, it said. Expenditure increased by nearly 44.6%, six years after study areas in Peru were covered by signals from mobile networks, it said.
Lack of evidence
By contrast, the evidence of impact from mobile phone-based services and applications was weak, found the systematic review.
Of the studies, which looked at free or paid services, such as those providing information about prices or agricultural advice only one showed clear evidence of positive impact. Overall, the evidence indicates that extending mobile coverage to areas where none existed before yields positive economic impacts, LIRNEasia concluded.
“Our findings demonstrate that there are benefits for the overall economy of mobile penetration into rural Pakistan,” Samarajivo said, adding the government should encourage network rollout in rural areas.
“One way of doing that is to lower taxation on telecom services to make them more affordable to users and encourage faster penetration of services into rural areas,” he said.
THE WRITER IS A STAFF CORRESPONDENT
Published in The Express Tribune, November 17th, 2014.