1. Socio Economic Impact of Mobile in Developing Markets Neil Gough – Vodafone Group

2. Mobile penetration per 100 people, major regions Source: ITU

3. Ownership of assets and income distribution (South Africa)

4. Mobile phone status and education

5. Frequency of use and income (South Africa)

6. Specifics of Usage Usage related to income –On average respondents in rural South Africa spent 10-15% of disposable income on mobile Income effects seen at community level –Inbound voice calls exceed outbound by 2:1 –Inbound text messages exceed outbound by 8:1 Also a literacy effect: ratio of voice calls/text messages was 13:1 (compared to 3:1 for South Africa as a whole)

7. Summary of Impacts Impact South Africa (%) Tanzania (%) Improved relationships* 78.785.3 Call rather than travel to family and friends* 77.4 91.1 Easier communication with family and friends 72.284.6 Useful in emergencies 25.827.1 Assists in job search 15.5 2.7 Easier to organise meetings 8.29.0 Faster or improved communication 7.753.2 Business information/business purposes 7.2 34.0 Saves money 5.71.6

8. Impacts of mobile on small businesses EgyptSouth Africa Increased call costs67.347.1 Increased turnover66.056.6 More customers65.356.2 Increased profits58.761.8 Faster/better communication 57.325.7 Increase efficiency56.021.4 Save time24.710.0 Available to clients all the time 23.347.1 Save costs22.015.7 Breakdowns/emergencies10.020.7 Place orders on the job15.321.4 Reduced travelling8.750.0 Contact with office8.025.0

9. Developing Countries Potential importance of good communications network: Widens markets, creates better information flow. Lowers transaction costs. Substitutes for costly physical transport. Transport costs significant- rural African trader could spend 20 to 40 percent of gross income on renting bicycle for 1 year. Fixed line deployment low and slow-to-grow in developing countries.

10. Growth in Mobile Penetration, 1995 to 2003, Selected Developing Nations Blue bars represent mobiles per 100 population in 1995, orange bars show same in 2003. Source: ITU.

11. Our Model: Endogenous Growth Established literature, from economists such as Barro and Romer. Look at broad averages of growth over time. Ask which factors cause countries to differ in their long-term growth rates. Did the endowment of fixed lines in 1980 predispose growth? Have mobile network deployments contributed to growth? 92 countries, developing and OECD, for the 1980 to 2003 time period.

12. Model Conclusions Mobiles- growth dividend in both developing and developed nations. Growth dividend twice as large in developing nations. Positive and striking result. Mobiles have “value-added” benefits in developed nations, but are taking on the role of primary communications network in developing nations.

13. Indonesia Versus Philippines: Predicted Growth, 2003-26. Predicted difference between Philippines and Indonesia growth rate, assuming (1) current levels of education and mobile, (2) if Indonesia matched Philippines in mobiles, and (3) if Indonesia matched Philippines in education. (1)(2)(3)

14. Significant variation in FDI between developing countries

15. Conclusions Communications networks are an important determinant of FDI flows into developing countries There is a relationship between mobile network penetration rates and FDI inflows. They are more significant in sub-Saharan Africa and have become increasingly so over time.

16. Access to communications infrastructure % of respondents with access to each type

17. Use of communications infrastructure Average number of times each type used per week

18. Social Capital Social capital = The intangible value of the group, on whatever scale, above and beyond the value of its individual members alone. Social networks Willingness and ability to invest and withdraw

19. Survey groups (rural communities)

20. Investing in social capital Mobile owners members of more community groups - South Africa

21. Investing in social capital Helping others in the community in past six months - Tanzania

22. Drawing on social capital Life satisfaction - South Africa

23. Impacts of mobile phones at level of individual Accessibility of mobile extended by resellers and sharing Age, education level and income not insurmountable barriers to access Much more accessible (and used) than other forms of communication Importance of pre-pay Value of mobile accentuated by paucity of existing infrastructure Over 52% of respondents in South Africa and 65% in Tanzania said savings in both travel time and costs were large Expenditure on mobile telecommunications surprisingly high South African rural community respondents reporting 10-15% of disposable income Data usage low 13:1 Voice:SMS messages in rural communities relative to 0.6:1 in UK

24. Impacts of mobile phones at level of economy Mobile acts as a catalyst to economic growth Twice the impact as in developed markets Leapfrog technology Benefits of “mobility” matter less for individuals. Still important for business productivity Linkage between mobile investment and FDI Mobile seems to have important role in building social capital