Mobile phones offer hope to 'bottom of the pyramid' | Bangkok Post: tech

ISLAMABAD : Sriganesh Lokanathan, senior research manager at LIRNEasia, spoke of the need to address the agricultural sector in South Asia which makes up a large share of the labour pool but a low share of GDP.

Sriganesh Lokanathan explains his research on agriculture value-added services in India. Today’s best programmes are still voice led and all but one are based around gaining new subscriptions rather than being a sustainable service in themselves.

"You have highly inefficient agricultural markets with a large information disparity," he said.

ICTs cannot solve all problems, chief of which is land reform, but when it comes to making decisions, lowering transaction costs and going to market and selling, information can make a big difference.

The researched categorised the decision-making process and information value in each from decisions to seed, planting, growing to harvesting and selling.

Information search costs are highest at the beginning of the cycle. Information on deciding what to grow are three times all other costs, and this is where ICTs have a potential role to play.

Lokanathan said that ideally he wanted to change the decision-making chain into a cycle where the decision on what the farmer wants to grow is based on the price when he expects to harvest. For this to happen, prices and supply and demand needed to be predicted and farmers need to get into forward sales contracts which does not often happen in this part of the world.

A number of mobile information services aimed at farmers are now available in India offering crop advisory, weather forecasts and market price information.

Bharti Airtel offer a non-subscription voice-based service through the phone with 1.5 million subscribers. The revenue model is through the sale of specially enabled SIM cards and the service costs one Indian rupee (0.70 baht) a minute.

Dr Harsha De Silva explains how mobile phones with near-field communications can enable feedback and choice so that perfect pricing and resource allocation can be possible even with very cheap bus services in Sri Lanka.

Reuters Market Light has 170,000 subscribers in 17 states. It does not partner with telcos and instead sells scratch cards directly to the farmers.

Mobile operators are getting into the market to gain subscribers now that the urban market is saturated. Apart from Reuters, revenue from the service itself seems to be secondary right now.

The problem with agricultural value-added services is that it is very localised. A farmer in Punjab wants weather conditions, markets and soil conditions for his farm, not what is happening in the city.

Lower literacy levels mean that they prefer voice to text, but with the younger generation becoming more technology-savvy, the farmers' children are now serving as information conduits.

Harsha De Silva, PhD Professor of economics at the University of Missouri, conducted a study on the use of mobile payments to create efficiencies in public transport in Sri Lanka.

In Sri Lanka 93 percent of public transport is by bus. Buses are old and public buses have archaic ticketing machines.

Twenty five percent of bus revenue is lost in leakage and as a result, buses are over-crowded to make up for lost revenue.

Commuters were getting played out. In a study for a 6.50 Sri Lankan rupee bus ride (1.80 baht) where 7 rupees were paid, 60 percent of the time change was not given. Often tickets are not issued at all after payment.

Muriuki Mureithi explains that while the mobile payment system in Kenya has been a great success, lack of regulation means it is a lock-in by incumbent telcos.

For the state, the issue becomes a matter of subsidies. Instead of subsidising the bus operator, money needs to be focused on the poor.

Many have moved to the use of contactless smart cards, but De Silva thinks that the mobile phone will be the future. Buying a bus ticket by SMS would be cumbersome, but a NFC (near field communication) enabled phone allows the system to ask yes or no to authorising a payment. It gives an additional layer of security.

The state could offer a conversion subsidy for NFC-enabled readers or the duty-free import of NFC equipment.

A lot of work needs to be done on standardisation of the SIM card for NFC-enabled chips and with regulatory concerns both from the radio and banking regulators.

But after all this is done, what are the benefits of mobile ticketing? De Silva believes that intelligent ticketing with feedback from the phone will enable better use of resources, for instance, selecting a different bus if it is less crowded. First and last buses often run almost empty so pricing by congestion and time of day would increase utilisation. In other words, mobile public transport ticketing would bring about perfect pricing.

Muriuki Mureithi of Summit Strategies, Kenya, spoke of the mobile payments experience in Kenya - a country were 26 percent of the 39 million population have bank accounts but 52 percent have mobile phone SIM cards.

A study of the unbanked said that most did not have a bank account as they do not have regular income; that they do not need a bank account or that they did not quality for a bank account.

"That was a challenge, for these people not to be excluded from the mainstream of society," he said.

M-Pesa, a mobile payment system launched by market leader Safaricom, today has 9 million users. Twenty three percent of the population are registered on M-Pesa but it is not necessary to be registered to receive payments, but it is cheaper.

The average transaction per month across all the users comes out at 2,500 Kenyan shillings (1,032 baht) which addresses the Bottom of the Pyramid.

Before M-Pesa, Kenyans were transferring remittances by hand, by bus drivers or via direct deposit. One side effect of M-Pesa is that post office drafts have all but been killed off.

The project has been such a success that some companies are now paying employees' salaries through the platform and it is now moving to add bill payments and paying for purchased goods as well.

Mureithi said that the problem was that operator-led programmes lock out other operators and bank-led programmes lock out other banks. M-Pesa is a mobile operator led programme with no licensing by the ICT regulator. He said that a better way forward would be for a neutral third party agency providing a platform.

Aamir Ibrahim, Chief Strategy Officer at Telenor Pakistan, explained the success of the EasyPaisa microfinance branchless banking system but also explained the culture of innovation at Telenor which has a dedicated incubation engine.

"We are inundated with new ideas. The problem is not ideas, but ideas which make money. We want to break away from the clutter of what is happening in the mobile world, away from the price wars, from the fighting and get into new opportunities," he said.

More than 40,000 ideas have been generated and some of the projects that have graduated from the incubator include mobile classifieds, tele-doctors, tele-lawyers, and tele-kisan (news and weather).

Products have to be able to stand alone in terms of revenue generation after an initial period.

The local term for the ethos behind the incubation centre is "Karo Mumpkin" or "Let's make it happen".