Micro-enterprise and the 'mobile divide'

Mobile phones are starting to penetrate the informal sector in developing countries. Do they bring benefits? Reinforce inequalities? Both?

Information is vital to trade. Yet trade in the informal sector is shaped by information challenges. Information may be absent – for instance customers do not know who to buy from. Information may be uncertain – suppliers can be unsure about what prices they can charge. Information may be asymmetrical – some participants know more than others. Micro-entrepreneurs can, therefore, spend a lot of time travelling in order to gather information. They also rely on middlemen – the link between them and their customers – who hold vital information.

Mobile phones are starting to be used in this context. Can they make a difference? A study of mobiles in the aso oke (hand-woven textile) sector in south-western Nigeria addresses this question. This is an informal industry that suffers from typical information challenges. Customers and producers have traditionally relied heavily on middlemen, travel and meetings. Trade has been slow, costly and even risky, given the physical dangers of travel in Nigeria.

The study found mobile phones benefit everyone in the aso oke industry. They provide the first reliable access to telecommunications. They also:

increase awareness of opportunities for trade shorten the time taken to fulfil orders substitute for travel or complement it by improving coordination of visits reduce communication costs in terms of time spent travelling, transportation costs, and the opportunity cost of income foregone when travelling reduce travel-related risks improve monitoring of the production process to reduce errors, improve product quality, and increase customer satisfaction.

However, the need to inspect items being produced, the complexity of product design and the lack of trust between participants, means a continuing need for physical meetings. Mobiles therefore cannot substitute for all travel.

In addition, mobiles help reinforce existing structures and inequalities. Information and communication technologies (ICTs) promise to remove self-serving middlemen from trade. In the aso oke industry, however, middlemen are driving the adoption of mobiles, using them to consolidate their power and influence.

ICTs also promise to make the situation more equal for everyone involved. Yet it appears that mobiles are increasing the difference between those who can afford access to a mobile (who find greater opportunities to trade) and those who cannot (who find they have fewer orders). Also, micro-entrepreneurs with established business networks benefit more because access to a phone rarely leads to new business contacts.

It is important to recognise that:

Physical communications – supported by transport and roads – still matter to micro-entrepreneurs, even in an era of mobile digital communication.

Mobile applications in developing countries will not be used in the same ways as in developed countries. We need specific research to determine the real processes and impacts of mobiles in development.

The 'mobile divide' will increase the disparities in society unless new initiatives and innovations, including increasing the affordability of mobile phones, help reach those who are currently disconnected.

Abi Jagun Development Informatics Group, Institute for Development Policy and Management, School of Environment and Development, University of Manchester, Manchester, M13 9PL, UK To learn more about this author, visit id 21's Website.

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