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Worrying side of mobile telephony diffusion

In a country like Indonesia, where engagement of citizens in all types of social media through mobile devices is flourishing, a question may arise: Has mobile usage helped increase economic productivity, especially for those living below the poverty line?A cost of living survey published by Statistics Indonesia in 2014 — based on the last available data in 2012 — may come as a surprise to some, especially the proportion of expenditure spent on mobile credit and data packages

Ibrahim Kholilul Rohman and Hasib Ahsan Nadeem (The Jakarta Post)
Seville, Spain/Dhaka
Tue, September 1, 2015

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Worrying side of mobile telephony diffusion

I

n a country like Indonesia, where engagement of citizens in all types of social media through mobile devices is flourishing, a question may arise: Has mobile usage helped increase economic productivity, especially for those living below the poverty line?

A cost of living survey published by Statistics Indonesia in 2014 '€” based on the last available data in 2012 '€” may come as a surprise to some, especially the proportion of expenditure spent on mobile credit and data packages.

The proportion of mobile credit expenditure to total expenditure (2.28 percent) ranks seventh among goods and services. This proportion is higher than expenditure on rice, the main food component, and local transportation.

The proportion is also more than half of housing rental (4.44 percent), the highest proportion of all living cost components. Additionally, mobile credit expenditure has jumped four ranks since 2007 '€” the only previous survey available.

Despite being quite astonishing, the trend is surprisingly consistent with mobile diffusion in other developing countries. Mobile telephony is two sides of a coin, with the greater emphasis long on the positive side.

When the benefits are concerned, numerous studies have shown strong linkage between mobile telephony diffusion and economic growth (e.g. Dutta, 2001; Nadiri & Nandi, 2011).

Mobile telephony plays an increasingly prominent role in the expansion of rural telecommunication networks in developing countries. It offers a substantial cost advantage over fixed-line infrastructure for rural networks and is thus better suited to service the demands of rural low-income populations (Proenza, 2006).

However, the other side of the coin concerns usage. In the majority of developing countries in Africa, for instance, the emerging use of mobile devices still mainly aims at maintaining social networks and as such has a weaker link with daily business activities amid the spread of poverty (Rettie, 2008).

Mobile top-up expenditure often substitutes food and might even reach up to 15 percent of total expenditure. Consequently, there is little proof of a causal relationship between adoption and family prosperity, as well as poverty alleviation, in most African countries, based on a survey conducted by Research ICT Africa in 2011 (Rohman, 2012).

There were stark contrasts between current mobile telephony and fixed and public coin adoptions in the early 1980s. Surveys in Kenya and Ethiopia in the early 1980s revealed that subscribers used these devices mainly for business purposes, as was the case in Indonesia. During the heyday of fixed telephony, Chu et al (1985) revealed that 48 percent of usage in Indonesia was for business purposes.

A more recent survey conducted by the University of Indonesia'€™s School of Economics'€™ research institute LPEM FEUI and LIRNE Asia in 2011 on the use of mobile devices by bottom of pyramid (BOP) users (those who have a personal income of less than US$1.25 per day, a threshold set by the World Bank) corroborated the contrast. The survey showed that business purposes comprised only 15 percent of mobile usage among BOP users.

There are two important follow-up questions: What is the best tool to further exploit the benefits of mobile adoption, especially for BOP users? And who is the best target group?

BOP users should be made aware of the potential benefits of wiser use of the technology with which they are already familiar.

The role of telecenters could be a focal point, playing a role as an agent of change. A telecenter is a public space where people can access ICT gadgets (mobile devices and computers in particular) to gather and communicate the information with others while acquiring essential digital skills. This process enables an increase in economic, educational and social progress.

The target group? The agriculture sector has a 34.5 percent share of total employment, yet contributes only 14 percent of gross domestic product (GDP). Furthermore, up to 2012, Statistics Indonesia reported that 6 million farmers (16 percent) were living below the poverty line.

Thus, the sector is occupied by a vulnerable group of people where the ubiquity of mobile telephony and ICT in general could contribute to poverty alleviation.

The role of agricultural-based telecenters in Indonesia is not a new initiative, having been introduced in the early 2000s. Several public-private partnerships have been established to run the programs.

For instance, Microsoft, in cooperation with Bogor Institute of Agriculture (IPB) and IPTEKNET, has developed a project called Pustaka Tani '€” an e-library providing online and offline agricultural content. Garis Tepi '€” an agriculture consortium '€” also provides information by collecting relevant agriculture data from BPPT, Warintek and several NGOs.

In general, however, these programs are still a long way off their goal. The availability of online agricultural information is still limited, according to national Internet usage patterns assessed in the report An Indonesian Digital Review '€” Internet Infrastructure and Initiatives (Purbo, 2003).

It is furthermore regrettable that schemes for telecenters and agricultural intermediary programs in Indonesia are still very scattered, without no umbrella organization, unlike in other countries with the same characteristics, such as Bangladesh, where the agricultural sector accounts for about 40 percent of total employment and 19 percent of total GDP, making the country a suitable benchmark for the development of the sector thanks to the emergence of ICT to deal with the problem of asymmetric information '€” a common obstacle to farmers'€™ welfare and prosperity.

As part of the national flagship program Digital Bangladesh, a comprehensive approach to agricultural information is systematically developed. There are three main bodies working hand in hand: the Union Digital Center (UDC) '€” providing a one-stop service outlets operating at all lowest tiers of local government to provide regular citizen services, the Agriculture Information Communication Center (AICC) at the Agriculture Information Service Department (AIS) '€” building telecenters in rural Bangladesh allowing the farmers to access agricultural and market information through private agents, and the Farm Information and Advisory Center (FIAC)-providing services at the grassroots level.

Through the collaboration of these institutions at the national level, the Bangladeshi government aims to empower farmers through ICT following a more comprehensive national policy.

More robust impact assessment analysis may be needed to measure the impact of ICT on the program introduced in 2007, but as a rough indicator, Statistics Bangladesh reported that from 2008 to 2011,
the volume of crops increased by 14 percent for cereal, 7 percent for rice and a massive 58 percent for potato crops.

Indonesia may need to develop a similar systematic strategy to exploit the window of opportunity from the growing penetration rate of mobile telephony in rural areas, especially among BOP users.

The current flagship of the Indonesian Broadband Plan (Rencana Pitalebar Indonesia), for instance, could be operationalized with a little more detail at the sectoral level to accentuate the use of ICT (fixed, mobile and broadband) to eradicate poverty, especially in the vulnerable agriculture sector.
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Ibrahim Kholilul Rohman, who obtained his PhD in technology management and economics at Chalmers University of Technology in Gothenburg, Sweden, is an ICT industry analyst living in Seville, Spain

Hasib Ahsan Nadeem, who obtained masters in Development studies at North South University, is ICT Head of Operations at USAID Agricultural Extension Support Activity Project, living in Dhaka, Bangladesh.

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