World Bank Joins Fletcher Club for Presentation of Alumnus Richard Sullivan's Work, "You Can Hear Me Now"

Cover of Richard Sullivan's book"You Can Hear Me Now" -- posted on World Bank's internal communications website

March 16, 2007—The amazing growth of cellular telephone technology in poor countries and its potential to trigger further economic growth was analyzed at a recent discussion with Richard Sullivan, author of You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. Tim Carrington, senior communications officer for the Africa Region, chaired the discussion.

Sullivan compiles the annual Wealth of Nations Index, a ranking of seventy developing countries. He told the story of the growth of cell phones with authority, as he has closely followed developments in the sector.

“There are 2.5 billon cell phones in use worldwide, and more growth is expected to come from poor countries than in the developed world, which may have reached a saturation point,” Sullivan said. Startlingly, he revealed, “more cell phones are sold in Sub-Saharan Africa than in North America.”

Markets for Technology

Sullivan observed that markets for technology can be found in unlikely places—for good reasons. When users understand the benefits of a new technology they will immediately it put to use. Therefore, connectivity has led to productivity that has translated into economic growth, and ultimately reduced poverty—all without donor support, he said.

Yet a decade ago, few foresaw the rapid growth of cell phones in poor countries. It was not regarded as possible, let alone financially viable. Sullivan recounted the story of the growth of GrameenPhone, a branch of Grameen Bank, founded by Muhammad Yunus, winner of the 2006 Nobel Peace Prize.

The phone company had difficulty attracting foreign investors, but it eventually formed a partnership with Norway Telenor whose management had a hard time convincing its Board to go along with the idea. A majority of investors turned down Grameen’s requests for partnership because they could not see how poor Bangladeshis would afford cell phones.
That was then. According to Sullivan, there is now one phone for every seven Bangladeshis, a jump from a decade ago when the figures were one cell phone for every five hundred.

Effect on Growth

“This is an instance of successful public-private sector partnership and an example of how external technology—external ‘combustion engine’—can lead to growth. The cell phone explosion is truly a silent revolution, and more than anything else it has led to the bridging of the digital divide between the North and the South,” Sullivan said.

Sullivan cited research findings that posit a .6 percent gain in Gross Domestic Product whenever cell phone connectivity reaches 10 phones for every 100 people.

He explained how it happens. In Africa alone, there are now more than 200,000 outlets selling prepaid phone cards catering to the now-$3 billion industry that was virtually nonexistent ten years ago.

What is more, the cell phone platform has proved versatile enough to allow the addition of new services, such as mobile banking and market information dissemination. “The exponential growth in cell phones in poor countries has shattered the myth that the digital divide was unbridgeable,” Sullivan said.

Cell Phone Banking

Michael Trucano, ICT and social sector innovation specialist for InfoDev, highlighted the innovative uses of the cell phone in various countries, noting that in the Philippines, banking using the cell phone has taken off. He also cited Kenya and Senegal as Sub-Saharan examples where the cell phone is used to disseminate timely market information and, increasingly, banking services.

In Kenya, the major carrier, Safaricom, recently rolled out mobile banking services that allow the transfer of money of e-money using cell phones. Several foreign investors back the program.

Bank Group as Major Player
Aniko Szigetvari, senior investment officer in the Global ICT Department, provided insight into the Bank Group’s role in the growth of cell phones in poor countries, pointing out that the IFC has been a major player in the sector by lending money to private companies engaged in mobile telephony.

She estimated that the IFC has mobilized over $6 billion across the sector. “There is ample room for further growth in the sector, which is providing coverage—despite the successes it has registered—to only 30 percent of the world’s population,” she said. “Coverage of rural areas in many places is still lacking, and we need to work on that,” Szigetvari added.