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Fishermen on the net
Nov 8th 2001
From The Economist print edition

The digital revolution is helping the poor, too

The remittance is on its way

THE global great and good are obsessed with the “digital divide”. Half the people in the world, they fret, have never made a telephone call. Africa has less international bandwidth than Brazil's city of Sao Paulo. How, ask dozens of inter-governmental task-forces, can the poor get connected? Amid all the attention paid to developing countries' lack of Internet access, some people feel that more fundamental problems are being ignored. Ted Turner, an American media boss, observed last year that there was no point in giving people computers when they had no electricity.

He may be wrong. Indian scientists recently produced a prototype of a battery-powered device called the Simputer—short for “simple computer”—that is expected to cost only $200 a unit. Even at that price it may be too expensive for the truly poor. But computers can be shared. And the time may come when they will pay for themselves. Information and communication technology (ICT) may be overhyped, but it does matter. True, people in poor countries need food and medicine before they need Internet access, but ICT could help them lay hands on both of these more easily.

In several fishing villages on the Bay of Bengal, for example, an Internet link-up allows a volunteer to read weather forecasts from the US Navy's public website and broadcast them over a loudspeaker. For fishermen who work from little wooden boats, knowing that a storm is looming can mean the difference between life and death. The Internet also lets them know the market price for their catch, which helps them haggle with middlemen. And they can download satellite images revealing where fish shoals are.

Communication, as everybody knows, is getting cheaper. Any task that can be digitised can now be done at a distance, which creates all sorts of opportunities for developing countries. Fixing software for a London firm does not require Indians to travel to Britain. They can do it from Bangalore. That is why India's software industry has grown from almost nothing ten years ago into the most dynamic business on the subcontinent, employing 400,000 people and generating more than $8 billion in sales last year. The country has almost as many fluent English speakers as England, and universities that turn out hordes of computer-literate graduates. Charging a small fraction of what Californians demand, Indian programmers fixed a large chunk of the world's millennium-bug troubles, and take on a larger share of western companies' back-room operations each year.

And they are not the only ones. Dial a helpline for an American bank, and you may find yourself talking to someone in the Philippines or Puerto Rico. A computer screen tells the telephonist what the weather is like in whichever city the customer is calling from, and suggests appropriate responses to the customer's grumbles about the local baseball team's performance last night. Creepy? Maybe, but it lowers costs for consumers and creates jobs where none existed before.

Accurate, timely information is useful in almost any field. Take health care. The Internet is the quickest and cheapest way yet devised of disseminating medical research. Using websites such as Healthnet, doctors in poor countries can easily and cheaply keep up to speed with the latest developments in their field. In Bangladesh, the local Medinet system provides access to hundreds of expensive medical journals for less than $1.50 a month. Throughout Africa, outbreaks of meningitis are tracked over the Internet so that epidemics can be stopped early.

Yuppie toys in rural Bangladesh

Granted, these health-care schemes mostly depend on charity for their funding. And the lack of Internet content in languages other than English is a problem. But new websites in other languages pop up every day. And as the cost of ICT falls, it may not be long before poor people start clubbing together to buy time online with their own money. It has already happened with mobile telephones.

For many Bangladeshi women, the mobile phone provides upward mobility. Women in rural areas borrow money from Grameen Bank, a microlender, to buy a GSM phone. Handsets can cost a year's income for the whole household, but more than 90% of borrowers are able to service their loans because they earn money charging other villagers to make calls.

Everyone benefits. In Bangladesh as a whole, 97% of homes lack a telephone. In rural areas, practically no one has a phone. So when a Grameen-backed phone entrepreneur sets up shop, the whole village is suddenly connected to the outside world. Parents can call the nearest city, for example, to find out what has happened to the remittance from their son working on a construction site in the Gulf. A telephone call can take the place of a long and expensive trip: one study found it typically saved between 3% and 10% of the caller's monthly household income.

The service also turns a profit. The callers may be poor, but because there are so many of them, rural phones in Bangladesh generate more revenue than urban ones. Grameen Phone, a Grameen Bank offshoot founded to provide services for the poor, now sells to everyone and has become the largest provider of mobile-phone services in Bangladesh.

Mobile phones are popular everywhere, but in poor countries they have extra advantages. It is quicker and cheaper to sell a poor person a mobile telephone than to install a payphone in a remote village. A phone in someone's house is constantly guarded, which makes it unlikely to be vandalised.

Mobiles are user-friendly, too. Fixed-line telephone services in most developing countries are provided by awful state-owned monopolies. Ask for a telephone line to be installed in your home in Zimbabwe, and you can choose between bribing someone or waiting for several years. But if you walk into a mobile-phone shop, your handset will be up and running in five minutes.

Nor is lack of a credit history a problem. Poor people are barred from opening accounts with traditional telephone companies because no one trusts them to pay their bills. With mobiles, however, they can buy pre-paid cards. When they have used up all their minutes, they buy another. There is no chance that they will receive an unmanageable bill at the end of the month.

Because the mobile-phone companies get paid in advance, they waste no time or money on chasing bad debts, as fixed-line firms do. So their cashflow is better and they are able to expand their networks faster. In many poor countries the number of mobile users has overtaken the number of land-line users in less time than it takes to get a land line installed. In Uganda, for example, it took two years for MTN, a private mobile-phone firm, to outstrip UTL, the clumsy state-owned telecoms firm. Before it was privatised last year, UTL in a typical year lost 40% of revenues in bad debts, and another 30% because of “audit adjustments”. In 1997-99, the number of land-line users in Uganda inched up from 54,000 to 59,000. Over the same period, the number of mobile users exploded from 7,000 to 87,000.

This still means that only one Ugandan in 240 has a mobile phone, but it's a start. And ICT is spreading faster than any technology in the whole of human history. In 1900, 24 years after the telephone was invented, only 5% of homes in America were hooked up to the telephone network. In most other countries, the figure was negligible. Compare this with the spread of the Internet. In 2000, 18 years after the creation of a rudimentary Internet and 11 years after the beginning of the World Wide Web, 6.7% of the world's population were logging on. In other words, the Internet is spreading around the whole world faster than the telephone spread around its richest country a century ago.

The poor are catching up

And poor countries, for once, are not missing out on this revolution. In 1998, according to the UNDP, only 12% of Internet users were in non-OECD (ie, less developed) countries. By 2000 this proportion had almost doubled, to 21%, when the cake itself had more than doubled in size over the same period.

The Internet is not only a marvellous technology; it is a tool that helps developing countries to adopt outside technology faster, and sometimes to develop their own. The makers of the Simputer used free open-source software, which they could not have downloaded without the Internet. Indeed, without the Internet, open-source software would not exist, as it depends on large numbers of volunteer programmers swapping ideas online.

In developing countries scientists are thin on the ground. A decade ago, if a researcher from a poor country wanted to bounce ideas off lots of other experts every day, he probably had to move to a rich country. Now he simply logs on. Cheaper communications mean more north-south collaboration, and indeed more south-south collaboration. In 1995-97, American scientists co-wrote papers with colleagues from 173 other countries. Kenyans published papers with scientists from 81 other nations.

The Internet also allows more collaboration within countries. Brazilian biologists work with colleagues at opposite ends of the Amazon river and on both sides of the equator. Some of them surprised the world last year by sequencing the genome of a bacterium that shrivels oranges. It was the first time that a free-living plant pathogen had been sequenced anywhere, a breakthrough for southern-hemisphere science. According to Andrew Simpson, one of the project's leaders and an old Brazil hand, this would not have been possible without the Internet. “It's a godsend,” he says. “It gives us confidence that what we are doing is as good as what is going on in America, because we can see what is going on in America.”

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The UNDP Human Development Report 2001, “Making New Technologies Work for Human Development”, is online. See also Simputer, GrameenPhone, Medinet and MTN.



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