Mobile communications – a driver of economic growth

The mobile phone and the services it provides is helping to power the world economy
There are many drivers of economic growth but it is difficult to ascribe relative levels of importance to each. Near the top of the list, however, is the rapid rate of technological advancement we have seen over the past decade, especially in telecommunications; and within that sector, mobile is the dominant force. 

There are now 5 billion mobile subscribers out of a global population of 6.94 billion. Even in Africa, the least-developed continent, half of its 1 billion people have a mobile connection. The mobile phone is a major catalyst for economic development in all countries. Many emerging markets have leapfrogged a large part of the fixed-line stage of telecoms development and gone rapidly to mobile, thereby cutting out the need for an expensive and increasingly outmoded physical infrastructure of underground and overhead cables.

There are more than 400 million smartphone subscribers worldwide with high speed mobile broadband internet access. Around 17 million new smartphone users are signing up every month.

The GSM Association, the trade body for the worldwide mobile telecommunications industry, in its latest Public Policy Annual Review, provides a mountain of statistics on how mobile broadband is improving productivity, facilitating economic growth and building ‘more efficient, information-based economies’.

The latest broadband technology to be rolled out is LTE (Long-Term Evolution), which offers throughput speeds of up to 100Mbps, rivalling the fastest fixed-line networks. LTE is being adopted by mobile network operators (MNOs) in developed and developing nations alike. ‘The number of LTE connections in Asia Pacific alone will exceed 120 million by 2015, with China accounting for nearly half,’ according to the GSMA review.

The spread of HSPA (3rd generation – 3G – mobile broadband) and LTE-enabled mobile broadband services is generating a wide variety of socio-economic benefits, including better education and health services, increased trade, and more innovation, particularly in countries with limited fixed-line networks. All of this is requiring substantial expenditure by MNOs, which are estimated to have invested $72 billion in mobile broadband networks worldwide in 2010.

Africa’s economy
What is happening in Africa illustrates the power of the mobile phone. It is not just a means of communication for the continent’s citizens, businesses and governments, but a major means of delivering economic and social development.

It has required massive investment to get Africa’s mobile networks to where they are today. Cumulative capital expenditure in fixed and mobile telecommunications in Africa between 2000 and 2008 stood at $76 billion, and is expected almost to double to $141 billion by 2013, of which 69% will be attributed to the mobile sector, according to BMI-TechKnowledge.

Citi and mobile money
Last year Citi and the GSMA hosted a Mobile Money Policy Forum in Nairobi, Kenya. It dealt with the successes of governments, financial regulators and businesses in delivering mobile payments to the continent’s unbanked or underbanked, and suggests what more could be done. Citi has been at the forefront of mobile payments in Africa, working with MNOs, MNO’s agents, government departments, central banks, the business sector, non-governmental organisations (NGOs) and others. A number of NGOs in Kenya, for example, are increasingly choosing to pay small suppliers and aid recipients with money rather than cash. Citi is involved, providing these NGOs with the ability to make electronic payments to mobile phone “wallets” in exactly the same way they make electronic payments to bank accounts.

They do it using CitiDirect® Online Banking, which has been integrated with one of the country’s main mobile payments service providers. We provide this facility to other organisations too, such as local companies, multinational corporations and public sector entities. By the end of 2011, we intend to offer similar integrated online/mobile services in Tanzania, Uganda and Zambia.

Mobile communications is therefore a power force for economic growth, empowering people to run their lives better, helping businesses, and improving operational efficiency in the public sector.