African Economy

Continuing yesterday’s post from Reuters

“That is not to say it will be a smooth ride. Eric Chirwa, a 40-year-old Zambian miner, can tell you what a tough year it’s been in Luanshya: its century-old copper mine was mothballed in the depths of the global slump, leaving 1,700 miners out of work and at the mercy of the banks with whom they had racked up huge debts in the boom years. He’s been tracking world copper prices on a daily basis, and has seen them rebound: “In the past, we never used to know the copper price,” he said. “Now I’m checking the price every day in the internet cafe.”

Internet access is one aspect of the technology driving changes in Africa that go far beyond letting a miner anticipate fluctuations in copper prices. In central Africa, Rwanda has invested heavily in broadband and is promoting itself as a business services hub. Far more visible, of course, is the cell phone. One person in three has one: in 2007 Africa had 270 million of them, according to industry association GSMA, up from 50 million in 2003. The uptake shows little sign of slowing as five years of annual growth above 5 percent swell the middle classes.

Mobile money transfer systems such as M-PESA from Kenya’s Safaricom (SCOM.NR) have allowed people with no bank accounts — still the vast majority — to ping money to each other for a fraction of the cost of transfers or a bus ride to deliver cash. The system has evolved to incorporate an array of payments from taxi fares to food, drinks and movie tickets, making it possible to spend a whole day in Nairobi without carrying cash. Cities, towns and villages are cluttered with billboards advertising the latest cell phone service or gimmick.

The macroeconomic effect is huge.

A World Bank study released in November suggested half the 5 percent growth Africa enjoyed from 2003-08 was due to improvements in infrastructure, mainly telecommunications. “Cell phones have already transformed many economies in Africa,” said Arthur Goldstuck, head of Johannesburg-based technology research firm World Wide Worx. “But the cell phone will become far more important than it is now.”

Researchers of M-PESA’s impact on Kenya say it is boosting rural incomes by as much as 30 percent, allowing small farmers to diversify out of subsistence agriculture. As browser-enabled “smart” cell phones go mainstream in the next 5-10 years, Africans will gain access to the internet-based services and information that have driven huge productivity gains in the rich world.”

In Zambia pity then that internet services are still so unreliable and expensive, and that the cellphone network also grinds to a halt so frequently. We’re told that more Africans have access to a cellphone than to running water. How’s that for ‘development’?

The Picture
A Kenyan enjoying Victoria Falls on the Zambian side!