Iqbal Quadir, founder of GrameenPhone, and Nicholas Negroponte, founder of the One Laptop Per Child Foundation, recently “squared off” in the pages of Good magazine to debate the respective merits of two very different technologies.

Quadir, as you might expect, comes out in favor of cell phones, as a technology that is spreading fast on its own because of its immediate perceived and real economic value–which will allow adults to provide better education for their children.

Negroponte, as you might expect, favors laptops, for their value in offering children a “window” on the world and a medium that encourages learning and creativity–which will make them more productive adults.

It’s hard to argue with either side, but it’s pretty clear which side is winning the debate in the marketplace. It’s not exactly Ali-Frazier, but it’s a good debate with both sides accomodating their opponent’s perspective.

Maybe the next such debate will be Smartphones v. Netbooks.

M-PESA, the extremely popular mobile-banking product offered by mobile carrier Safaricom in Kenya, is being audited by the Central Bank of Kenya.  In December, a cartel of local banks attacked M-PESA as a “Ponzi” scheme and asked the government to investigate.  See the story in allAfrica.com.

M-PESA, launched by Safaricom in 2007 in conjunction with Vodafone, has gotten the attention of bankers because of its quick growth. M-PESA now has 5 million users and 5,000 outlets–compared to 3 million with bank accounts at 750 banks.

Because M-PESA is primarily aimed at the “unbanked” population, the limit on a single transfer is under $500.

Safaricom overall counts 12 million users.

An AP story for a new project I’m involved with to get cell phones into the hands of people who need them, an innovative new program from Tracfone Wireless:

By LUCAS L. JOHNSON Associated Press Writer (August 18, 2008)

A cell phone company is offering free wireless phones and 68 minutes of free air time to more than 800,000 low-income Tennessee residents in a program aimed at ensuring they can make a call in an emergency.

Prepaid cell phone provider TracFone Wireless Inc. announced Friday that it’s launching its SafeLink Wireless program in Tennessee, which officials said would become the first state to have widespread, free emergency wireless service for poor people.

SafeLink provides eligible low-income households with a cell phone, access to 911 emergency services and 68 minutes of free air time for up to a year before customers If customers run through their 68 minutes, they can still call 911 (which is a free call) and they can purchase additional minutes for other calls at a discounted rate, said Jose Fuentes, director of government relations for Tracfone Wireless. The cell phone’s standard features include voicemail, text capability, call waiting, international calling to over 60 destination and caller ID.

John Taylor, a spokesman for Sprint Nextel Corp., one of the nation’s top three carriers, disputed Fuentes’ claim of sparse advertisement. He said Sprint participates in the Lifeline program by offering a discount on services and advertises on its Web site and through print, such as mailings. According to the FCC, 21 million households across the country qualify for Lifeline. “I’m elated that this program is providing needy families with access to basic cell phone service,” said Democratic House Speaker Pro Tem Lois DeBerry of Memphis, which has the state’s highest low-income population.

Fuentes said families may qualify if their household income is not above 135 percent of the federal poverty level, and if they receive assistance through government programs such as Medicaid and Supplemental Security Income.

Nicholas P. Sullivan, a visiting scholar at Massachusetts Institute of Technology, recently released a study (“Phoning in a Major Econmic Boost”) analyzing the impact of mobile phones on low-income households. He said the troubled economy makes the phones even more of an asset.

Tennessee Safety Commissioner Dave Mitchell agrees a cell phone is a valuable safety tool, especially when someone is traveling. “This program will allow drivers to call 911 if they encounter an emergency or get stranded while on the road,” he said. “I am thrilled that Tennessee is the first state in the country to offer this program and help keep our citizens safe.”

That cellphones are full-fledged computers useful for a lot more than basic communications is well known, but actual, practical applications are just coming online. To date, most have been in the transfer of market information (CellBazaar) and money (M-PESA), with a host of trials in the medical arena. But getting doctors to use new technology isn’t always easy–unless it fits right into what they are used to doing.

ClickDiagnostics, a new company spawned at MIT (and winner of the MIT Enterprise Forum’s $100K competition in the “development” field), may have accomplished that. The idea is to use cell phones in the field, particularly remote rural areas, to take pictures of people’s eyes and skin, then transmit those images to doctors for diagnosis of cataracts and skin cancer. In an initial test last winter students travelled to Bangladesh to shoot images, then tested their quality with doctors at Massachusetts General Hospital (aka MGH, aka “man’s greatest hospital”) in Boston. The doctors said they were of high enough quality to make an initial diagnosis and prescribe a treatment regimen–or point to the need for immediate hospital-related care.

In addition to the common skin disease prevalent in all developing countries, these simple cell phone images can detect the onset of HIV, Malaria, Hepatitis C, and TB. To the extent the product can be deployed in the field, it could have a huge impact on the early recognition and treatment of these debilitating and potentially deadly diseases.

With the MIT prize and some seed funding under its belt, ClickDiagnostics has its first contract to provide service in Egpyt, starting this fall.

CellBazaar, a kind of “Craig’s list for cell phones” that is available only on GrameenPhone in Bangladesh, won the Best Use of Mobile for Social and Economic Development Award at the GSM Association’s blowout meeting in Barcelona, Spain. Here’s the citation:

“Grameenphone CellBazaar is a user-generated virtual marketplace, accessible via mobile phone or PC to nearly 17 million people in Bangladesh. In developing countries, limited communications hinder commerce and uninformed farmers and traders have little bargaining power with exploitative middlemen. Using CellBazaar, buyers and sellers trade basic goods from their mobiles, bringing the benefits of information exchange and one-to-many trading to a previously unwired rural population. Users post or search an item, spending less than US$.02, either by SMS or WAP or WEB, depending on their preferences. While common telephony establishes one-to-one communication, CellBazaar links many-to-many using the same basic mobile infrastructures.”

Judges’ comments: “Great initiative – full marks for self-sustainability. This grass root level initiative is not only for operators to make money but for rural folks to sell and trade their goods and increased price transparency and help for the illiterate is also available. It has clear environmental benefits through reduced travel.”

CellBazaar was founded by Kamal Quadir, brother of Iqbal Quadir, one of the founders of GrameenPhone. The company was initially developed by Quadir when he was a student at MIT’s Sloan School of Management, and was a prize winner at MIT’s annual $100K Entrepreneurship Competition.

See the proud press release on Telenor’s web site.

Not along ago, India’s Tata Motors introduced the Tata Nano, a car that sells for rougly $2,500 USD. Now, another India’s Spice Telecom has introduced a people’s phone selling for roughly $20. It lacks a screen and other bells and whistles, but is aimed at the “next billion” owners of cell phones in the developing world.

Dear Mr. Sullivan,
 
I hope this e-mail finds you well into the new year.
 
As you know, the Kenya Elections has been an ongoing situation keeping us at AfricaNews.com pretty busy. Here is some background on what we are doing and in terms of mobile reporting. Pretty interesting stuff that might be interesting to you and your readers. 
  
Rgrds,
 
Ben and AfricaNews.com team!
+31 (0)23 531 5040
benwhite@africa-interactive.net
 

See Voices of Africa for mobile news reports, and see how cell phones are democratizing the media. 

The mobile banking phenomenom is one of the more exciting and unpredictable offshoots of the cell phone revolution in poor countries. People who until very recently had no phones and no bank accounts are now transferring money by phone.

M-banking is most pronounced in the Phillippines, where it started, but it’s heating up in Africa. Vodafone in conjuntion with Safaricom in Kenya recently launched M-PESA (“mobile money” in Swahili), initially with the intention of streamlining microfinance operations by allowing loans dispersal and repayment by cell phones. In three months, the service has attracted 175,000 subscribers, who aresigning up at the rate of 2,500 a day.

Nick Hughes, Vodafone’s head of international payments, told The New York Times (In Poorer Nations, Cellphones Help Open up Microfinancing):

“The idea was to reduce the cost of loan disbursal and recovery, but what we found was that customers were using it for person-to-person transfers.”

Customers don’t need a bank account, but can load money into their phones by paying cash at selected outlets, including grocery stores and gas stations. They then text money (“stored value”) to other cell phones.

The Vodafone/Safaricom m-banking case study is fully detailed in Innovations journal (MIT Press), in the current issue (M-PESA: Mobile Money for the “Unbanked” Turning Cellphones into 24-Hour Tellers in Kenya). The June 28th Economist has a piece on M-PESA called Dial M for Money. And, of course, there Chapter 9 in my book, Cell Phone as Wallet, which tracks the evolution of mobile banking. 

The Times’ article (above) also describes the way new technologies, including fingertip authentication, are being used by microlenders to extend the reach and efficiency of their lending operations.

One of the main themes of You Can Hear Me Now is that cell phones give both producers and consumers much better pricing information and thus help create fairer and more efficient markets. Much of the evidence in support of this theory is anecdotal, and most of the rgiorous academic support is at the macro level. For example, I cite Leonard Waverman of the London Business School and his econometric “proof” that adding 10 phones per 100 in a developing country adds .6 points to annual GDP — i.e., it will rise from 4% to 4.6%.

An upcoming paper by Harvard’s Robert Jensen (The Digital Provide: Information (technology), market performance and welfare in the South Indian fisheries sector, to be published in the Quarterly Journal of Economics in August) looks at the impact of cell phones at the micro level — that is, how have cell phones affected the economic gains of fishermen in Kerala, India.

As reported in To do with the price of fish (The Economist, May 12, 2007), Jensen studies fishermen in several villages before and after cell phones were introduced, beginning in 1997. (This, of course, is what econometric research tries to do — simulate change while holding all other factors equal.) Before phones, fishermen late to their local market would find it oversupplied and have to dump some or all of their catch for lack of buyers. Once phones were introduced, they could shop amongst other markets along the coast, and bring their supply to meet the demand. Over time, this reduced waste and smoothed prices, leading to the Law of One Price. Fishermen’s profits increased by 8%, and consumer prices have dropped by 4%. Yes, a win-win — except, of course, for the middle man, who has had to reduce payouts to reflect an efficient market.

Here’s a report I submitted to the Development Through Enterprise blog at www.nextbillion.net:

“The 8th annual Harvard Social Enterprise Conference last Sunday (March 6) at the Harvard Business School drew a sellout crowd of 1,000 people. Cheryl Dorsey, president of Echoing Green, and Victoria Hale, founder and ceo of the Institute for One World Health, gave morning keynotes.

Echoing Green acts as an “angel for emerging social enterprises,” and has awarded $25 million to more than 400 entrepreneurs since 1987. Dorsey noted that when she graduated from medical school, she intended to practice medicine, but saw a Boston Globe story on the high incidence of infant mortality in Boston’s black neighborhoods. It was this “ZIP code as destiny” epiphany that led her in 1992 to start The Family Van, a community-based mobile-health unit that provides basic medical services to at-risk residents in Boston’s inner city neighborhoods, and earned her an Echoing Green fellowship.

Dr. Hale is an Ashoka Fellow festooned with awards from The Economist, Skoll Foundation, and Schwab Foundation, not to mention a MacArthur Fellowship. She is founder of the America’s first non-profit pharmaceutical company, which recently received Indian government approval (FDA approval in 2005) for a low-cost drug to combat Visceral Leishmaniasis, a deadly disease of the spleen and liver that occurs primarily in the Indian state of Bihar (as well as Nepal and Bangladesh). More “geography as destiny,” for in this state alone a sand fly bite injects the deadly parasite. She showed slides of children with inflated bellies trying to fight off infection, slides of Indian women and girls with red hair due to malnutrition. Because the disease is confined to a poor and remote region, it has not been on the radar screen for big pharma, but Hale has corralled industry to develop a low cost drug.

One World Health now has a $10, 21-day cure, but still has to deal with the issue of distribution and education. Hale notes that of all the big pharma companies who have tried to develop effective drugs to combat diseases in poor countries (Glaxo Smith Kline, Merck, Pfizer, Novartis, Eli Lilly), only Merck has succeeded—with its cure for river blindness in Africa. Hale is out to change that lamentable track record, and noted that “industry doesn’t know the world’s poorest people, doesn’t know what need doing, but they want to do well and do good. We need to ask, she says, ‘What do you need to engage? What are you afraid of?’”

The “Private Capital in Development” panel, moderated by HBS’s Michael Chu, former CEO of ACCION International, was superb. Sarah Alexander, executive director of EMPEA (Emerging Markets Private Equity Association), noted that $33 billion in private equity flowed into emerging markets in 2006, compared to $26 billion in 2005, $6.4 billion in 2004, and $3.5 billion in 2003. She also noted that the “barbarians at the gate” (Carlyle and Blackstone?) mentality was widespread in Europe and emerging markets, and that private equity’s image in developing countries was an issue for governments. They want the money; they don’t want the buyouts, the cut-and-run.

Yasminda Zaidman, a director at Acumen Fund a non-profit venture capital fund (one of my favorite oxymorons), says they use “philanthropic capital to show private capital the path.” She also mentioned the “lost year” that many social entrepreneurs face when they try to start a business and spin regulatory and financing wheels for 365 days. Acumen prefers loans to equity, as “it’s hard to see exits.” Milton Namude of the IFC split the difference, saying the IFC took a long-term horizon, using debt and equity when needed, that private equity and venture capital were a small piece of the puzzle. He urged students to “join the IFC and have it all!”

The “Past, Present and Future of Microfinance” panel, also moderated by Michael Chu, hit the many fissures in the microfinance industry. Nancy Barry, president of Women’s World Banking, started out by saying that Grameen Bank was a huge success but had not innovated on its original models, and that MFIs should not be “loan dispensers” but “financial intermediaries” that provided insurance, savings, and consumer finance. Jeffrey Ashe, manager of community finance for Oxfam America, noted that 6 of 7 borrowers come from a “handful of countries” and that his Saving for Change Initiative aims to promote savings (rather than lending) as a way of changing lives and mobilizing capital. Carlos Castello of ACCION International, spoke about the commercialization of microfinance. Of ACCION’s 33 partners, 28 are generating better than 20% returns. He pressed the idea that returns were key to sustainable success.

All panelists talked about the impact of commercialization, and saw a split in the industry between banks that moved further upstream (targeting the rich poor), and NGOs that moved further downstream (targeting the poor poor).

This conference moved the ball, however defined, forward.”

http://www.nextbillion.net