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While the role of the informal sector in promoting economic growth in Africa is increasingly acknowledged, access to capital remains one of the biggest obstacles hindering the development and growth of the sector (Stork & Esselaar, 2006). Africa is struggling with access to formal financial services for its citizens and the informal sector. In addition to the underlying structural limitations of poverty; risk-averse bankers, unsuitable financial products and high bank charges have also been blamed for this state of affairs.

Poor people with irregular income and informal businesses often have no choice but to make use of informal financial services, which are many times more expensive than formal ones. Formal financial services are usually only extended to those with regular income or collateral (Firpo, 2008). Informal businesses also often lack the required accounting skills and systems to generate necessary data to convince a bank to extend loans to them.

Other obstacles include the bureaucratic and educational bottlenecks that prevent many Africans from having identity documents. This fosters corruption around documents such as birth certificates, IDs and passports, increasing the risk for banks in dealing with new customers.

A critical issue to overcome is that of asymmetrical information. Someone without a bank account approaching a bank for a loan is likely to be rejected unless collateral is at hand. The bank has no transaction history for this person or informal business and hence does not know anything about the applicant’s creditworthiness. Transaction patterns can be used to predict whether or not a customer will be able to repay a loan. Absence of a transaction history means that the ability to repay loans is unknown to banks, making it risky for banks to serve such a person unless the loan is fully collateralised.

Few individuals in the informal sector have access to collateral. They either have their own informal small businesses (such as street vendors) or work on an ad hoc basis. Mobile banking (m-banking) can be seen as one solution to these problems. Despite having been around for some time in several African countries, the existing offerings are mostly value-added services – where the mobile phone is a complimentary channel to operating an existing bank account. Such services are not geared towards the inclusion of the poor and unbanked, and while they are growing in popularity, they have yet to shift the access frontier in order to become “transformational” (Porteus, 2007).

To become transformational, m-banking must progress towards bringing more informal businesses and the poor into the formal economy so that they are better able to access micro-loans and other financial services. Transacting on a mobile payment platform can also generate a transaction history that can act as a basis to evaluate creditworthiness. This would address the inadequate access to finance that restricts the entrepreneurial potential of Africa's informal sector and the poor.

This paper seeks to explore how the ubiquitous mobile platform may be leveraged to move beyond simple transactions and provide an alternative banking system that provides access to formal financial services to the unbanked. This can be achieved by using applications that facilitate transactions over mobiles, which go beyond the& usual voice communications, and the money or airtime transfers.

In the context of the rapid growth of mobile phone penetration in developing countries, mobile telephony is currently considered to be particularly important for development. Yet, until recently, very little systematic evidence was available that shed light on the developmental impacts of mobile telecommunication.

The Information and Communication Technology for Development (ICT4D) program of the International Development Research Centre (IDRC), Canada, has played a critical role in filling some of the research gaps through its partnerships with several key actors in this area.

The objective of this paper is to evaluate the case of mobile phones as a tool in solving development problems drawing from the evidence of IDRC supported projects. IDRC has supported around 20 projects that cut across several themes such as livelihoods, poverty reduction, health, education, the environment and disasters. The projects will be analyzed by theme in order to provide a thematic overview as well as a comparative analysis of the development role of mobile phones. In exploring the evidence from completed projects as well as the foci of new projects, the paper summarizes and critically assesses the key findings and suggests possible avenues for future research.

SMS is everywhere, in an amazing diversity of applications. From enabling 'instant protest' in the Philippines, Spain and Albania, to election monitoring in Ghana, Lebanon, and Sierra Leone to HIV/AIDS education and support in Mexico and South Africa, we've seen that 160 characters can make a difference. This article covers the basics of setting up an SMS campaign system, looking at different approaches to suit your goals, budget and technical expertise.

The authors study the economic effects of the roll-out of mobile phone network coverage in rural South Africa, addressing identification issues which arise from the fact that network roll-out cannot be viewed as an exogenous process to local economic development.

The authors combine spatially coded data from South Africa's leading network provider with annual labor force surveys, and use terrain properties to construct an instrumental variable that allows us to identify the causal effect of network coverage on economic outcomes under plausible assumptions. 

The study finds substantial effects of cell phone network roll-out on labor market outcomes with remarkable gender-specific differences. Employment increases by 15 percentage points when a locality receives network coverage. A gender-differentiated analysis shows that most of this effect is due to increased employment by women. Household income increases in a pro-poor way when cellular infrastructure is provided.

Can price information improve the functioning of rural markets in ways that benefit farmers? Beginning in October 2000, a private company established internet kiosks and warehouses that provide wholesale price information and an alternative marketing channel to soybean farmers in the central Indian state of Madhya Pradesh. Using a new market-level dataset with spatial geo-coded information, the estimates suggest a significant increase in the monthly wholesale market price of soybeans after the introduction of kiosks, lending support to the predictions of the theoretical model. Moreover, there is a robust increase in area under soy cultivation. The results suggest that information can enhance the functioning of rural markets by increasing the competitiveness of local buyers.

Uganda has experienced a rapid increase of area covered by mobile phone service. As the information flow increases due to the mobile phone coverage expansion, the cost in crop marketing is expected to decrease, particularly more so for perishable crops, such as bananas, in remote areas. The article uses panel data of 856 households in 94 communities, where the number of the communities covered by the mobile phone network increased from 41 to 87 communities over a two-year period between the first and second surveys in 2003 and 2005, respectively.

The authors find that the proportion of the banana farmers who sold banana increased from 50 to 69 percent in the communities more than 20 miles away from district centers after the expansion of the mobile phone coverage. For maize, which is another staple but less perishable crop, the authors find that mobile phone coverage did not affect market participation. These results suggest that mobile phone coverage expansion induces market participation of farmers who are located in remote areas and produce perishable crop.

When information is limited or costly, agents are unable to engage in optimal arbitrage. Excess price dispersion across markets can arise, and goods may not be allocated efficiently. In this setting, information technologies may improve market performance and increase welfare.

Between 1997 and 2001, mobile phone service was introduced throughout Kerala, a state in India with a large fishing industry. Using microlevel survey data, we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion, the complete elimination of waste, and near-perfect adherence to the Law of One Price. Both consumer and producer welfare increased.

ICT4D – the application of information and communication technologies for international development – is moving to a new phase. This will require new technologies, new approaches to innovation and implementation, new intellectual perspectives and, above all, a new view of the world's poor. All these must be understood if we are to harness digital technologies in the service of some of our world's most pressing problems.

This paper explains the phase change – from "ICT4D 1.0" to "ICT4D 2.0" – and its implications. The background to these phases is reviewed, charting the logic and chronology of applying ICTs in developing countries. The implications of the phase change are then analysed.

First, in terms of new technology and application priorities. Then, in relation to new models of innovation we may need to embrace: from laboratory to collaborative to grassroots innovation. Next, in relation to new implementation models for funding, managing, and applying digital technology. Finally, the paper looks at necessary new worldviews to guide our thinking and our policies in this field; integrating perspectives from computer science, information systems and development studies. Additional commentaries and models provide a further set of rich insights into the future of ICT4D.

The authors explore the impact of access to information on poor farmers' consumption. The analysis combines spatially coded data on mobile phone coverage with household panel data on farmers from some of the poorest areas of the Philippines.

Both the ordinary least squares and instrumental variable estimates indicate that purchasing a mobile phone has a large, positive impact on the household-level growth rate of per capita consumption. Estimates range from 11 to 17 percent, depending on the sample and the specification chosen.

The authors perform a range of reliability tests, the results of which all suggest that the instruments are valid. They also present evidence consistent with the argument that easier access to information allows farmers to strike better price deals within their existing trading relationships and to make better choices in terms of where they choose to sell their goods.

Mobile phones are a crucial mode of communication and welfare enhancement in poor countries, especially those lacking an infrastructure of fixed lines. In recent years much has been written about how mobile telephony in Africa is rapidly reducing the digital divide with developed countries. Yet, when one examines the evidence it is not at all clear what is really happening. In one country, Tanzania, for example, some observers point to the fact that 97% of the population lives under the mobile footprint, while others show that ownership is very limited. These extreme values prompted us to review the situation in Africa as a whole, in an effort to discover what is really going on.

Even though the article is from 2007, the content is still extremely relevant. The authors write: This paper accordingly seeks to clarify the conceptual confusion that underlies the grossly different estimates of the extent to which mobile telephony exists on the continent. To this end we employ a framework that distinguishes between mobile phone subscribers, mobile phone owners, mobile phone users, those who benefit from usage and those who have access to this technology. This classification, we feel, will provide the reader with a better understanding of the state of mobile telephony in Africa and will have important implications for the type of data that are needed, but at present are unavailable. The categories that are identified, moreover, help us better to understand different views as to the extent of the digital divide in mobile phones between Africa and the rest of the world."

Due partly to costly information, price dispersion across markets is common in developed and
developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders and other market actors. We construct a novel theoretical model of sequential search, in which traders engage in optimal search for the maximum sales price, net transport costs. 

The model predicts that cell phones will increase traders’ reservation sales prices and the number of markets over which they search, leading to a reduction in price dispersion across markets.  To test the predictions of the theoretical model, we usea unique market and trader dataset from Niger that combines data on prices, transport costs, rainfall and grain production with cell phone access and trader behavior.  We first exploit the quasi-experimental nature of cell phone coverage to estimate the impact of the staggered introduction of information technology on market performance. 

The results provide evidence that cell phones reduce grain price dispersion across markets by a minimum of 6.4 percent and reduce intra-annual price variation by 10 percent.  Cell phones have a greater impact on price dispersion for market pairs that are farther away, and for those with lower road quality. This effect becomes larger as a higher percentage of markets have cell phone coverage.  We provide empirical evidence in support of specific mechanisms that partially explain the impact of cell phones on market performance. 

Robustness checks suggest that the results are not driven by selection on unobservables, nor are they solely a result of general equilibrium effects.  Calculations of the four-firm concentration index suggest that the grain market structure is competitive, so the observed reductions in price dispersion are not due to greater market collusion.  The primary mechanism by which cell phones affect market-level outcomes appears to be a reduction in search costs, as grain traders operating in markets with cell phone coverage search over a greater number of markets and sell in more markets.  The results suggest that cell phones improved consumer and trader welfare in Niger, perhaps averting an even worse outcome during the 2005 food crisis.

The number of mobile phone subscriptions has increased by approximately one billion between the end of 2007 and the end of 2008 (ITU, 2009).  At the beginning of 2009, the number has surpassed four billion.  With this, the use of mobile phones and networks in the mobile health has become increasingly popular in low- and middle-income countries, including Ghana where a broad range of mHealth initiatives are now being implemented. 

This offers many opportunities to translate information and communications technology into gains, particularly for fighting disease and improving population health.  This mHealth Ethnography serves as a critical entry point to both assess the initial state of information, communication, and mobile phone use for maternal and newborn health both within the health sector and the general population in the Dangme West District in the Greater Accra Region of Ghana. 

Key study findings illustrate that there is a strong foundation upon which the MoTECH Project can build to advance the use of mobile telephony to support the achievement of the Millennium Development Goals for health.  These can be divided into two broad categories – those within the health sector and those that extend services to target beneficiaries in the general population.