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How ICTs are being misused to perpetuate poverty

How ICTs are being misused to perpetuate poverty

By Charles Dhewa

Contrary to the hype in which ICTs are presented as a panacea, ICTs-related costs in many African countries eroding the meagre promised benefits. Countless studies and articles (including this one show that the cost of data is increasing in Africa when such costs are decreasing in other parts of the world. This is dampening hopes of an ICT-driven industrial revolution. 

Impact on agriculture and rural livelihoods

At the moment, if a Zimbabwean or Zambian farmer wants to sell 10 indigenous chickens at $10 each and uses a mobile phone to call buyers for 10 minutes at $2, the cost of communication translates to $20 which is more than 20% of the expected revenue from the chickens. This does not include other costs like transport and inputs that are also continuously increasing. The bigger the portion taken by costs of knowledge and information, the bigger the negative implication on agribusiness and livelihoods.
Increasing the costs of information and knowledge sharing translates to business costs. Emerging business opportunities are lost and misinformation increases as value chain actors try to take advantage of each other. When farmers don’t have accurate and timely information they also produce commodities that do not match market expectations. The other impact is on innovation. Raising the cost of accessing external knowledge forces farmers and ordinary people to rely on local ideas which may not be enough for competing in the fluid and dynamic market. Resultantly, competitiveness goes down especially for the disadvantaged farmers who end up resorting to what exists within their localities and what is affordable. 

ICTs benefits being eroded

In the past few decades, ICTs had started generating some benefits such as accelerating information and knowledge sharing. Collaboration between banks through facilitating electronic bank transfers has also been increasing, fueling economic growth. Also notable has been the transformation of the education system through laying the foundation for online and distance learning. In addition, for a long time, agricultural extension services and medical services have been classroom-based and hospital-based respectively until ICTs came in with innovations like e-extension, e-health as well as e-administration which is one of the current fascinations in governments trying to digitize their operations.

The social fabric had also started counting the benefits of leveraging ICTs. Daughters and sons living in cities could easily talk to their parents in rural areas several times a week.  This was unheard of before the ICT revolution. Parents with children in the diaspora could also stay in touch with their children and grandchildren. All these benefits had strengthened the social fabric unlike the previous period when letters and word of mouth were the main means of communication. It also became easy to send money home from the diaspora or city, thanks to embedding ICTs within financial systems. 

Is the honeymoon is over?

All the above mentioned benefits are being rapidly eroded. For instance, in spite of having full-fledged public relations and marketing departments, banks have not been able to convincingly explain the rationale for regularly increasing bank charges. These charges, including the cost of mobile money, are becoming highly prohibitive such that traders are failing to buy commodities that will have been identified through information and knowledge sharing among value chain actors. 

Bank clients deserve to know what it is about account maintenance that attracts a fee of $9/month. What  it is about point of sale transacting that causes $0.85 to be deducted from a client’s account. What it is about bank to wallet transfers that attracts a $3 deduction for every transaction above $100. What justifies a $10 charge for an RTGS?  After paying $9 account maintenance fee, why should a client be charge $0.99 service fee? Why is someone sending money through mobile money charged an eye-watering amount of money and the recipient on the other side is also charged the same amount of money? Reluctance by financial institutions to answer these questions breeds enormous suspicion and explains why cash is now in the streets and people are keeping money in their homes. People are realising that gone are the days when saving money was part of wealth creation through interest earnings.

Invisible costs

High costs of ICTs and financial transacting are stalling economic development, starting from an individual trying to communicate with many value chain actors, especially those at the Bottom of the Pyramid where agriculture constitutes 70% of economic and social value. One of the challenges is that costs of failure to communicate due to high costs of ICTs are invisible to the point of not being taken seriously compared to the cost of tangible items like seed, fertilizer, chemicals, heifers, bulls and equipment such as ploughs, among others.

In real terms, the cost of information and knowledge can be much higher than the cost of tangibles particularly for those at the Bottom of the Pyramid and SMEs. What is ignored is the opportunity cost of not gathering information and knowledge timely. Agriculture is driven mainly by knowledge and information sharing more than other sectors like manufacturing and mining. For instance, mining depends on in-house skills. While markets are already established, mine employees receive the same kind of training. There is not much expected in terms of communication-related information and knowledge sharing. For agriculture, only a few agricultural commodities like cocoa, tobacco and sugarcane, have well established markets. Knowledge-related costs for these commodities may only relate to extension. 

The situation is different in horticulture and other field crops where farmers have to stay up to date with diverse trends. If the cost of knowledge goes up, it increases the cost of business since farmers have to continuously seek appropriate knowledge and information from diverse markets. Farmers who fall behind end up relying on low quality information which translates to low quality commodities and poor market performance. For instance, when farmers stop participating on the market, they fail to know about new varieties. On the other hand, as major producers for the majority of households, SMEs in the food sector end up pushing the costs of communication to consumers or end-users. No one will blame traders for deducting the cost of airtime from what they pay farmers for commodities. This leads to high inflationary tendencies where farmers and buyers embed costs into products.

Failure to innovate by financial institutions and ICT players is exacerbating climate change and deforestation. Rather than keeping their money in the bank where bank charges can consume all the savings within a few months, farmers are investing in livestock and this is causing over-stocking/over-grazing. Instead of putting money in the bank, some farmers are investing in short cycle horticulture commodities – depleting soil nutrients, water sources and contributing to gluts.

What explains negative circumstances surrounding ICTs?

Instead of taking ICTs as enablers, Mobile Network Operators (MNOs) and financial institutions have resorted to using ICTs as cash cows. They are not investing in understanding the implications of increasing the cost of ICTs on information sharing and financial transacting. Farmers who had begun to use ICTs to improve decision-making are beginning to realize that all is not rosy. Given the prohibitive costs of using mobile phones compared to the gains, consumers such as farmers and traders have started realizing that calling for a minute can be more expensive than getting onto a bus to meet the person you want to call. Depending on the amounts involved, jumping onto a bus and going to deliver money is much cheaper than using mobile money or sending it via a bank.

The high cost of ICTs has also started damaging the social fabric. At the beginning of the ICTs revolution, parents living in rural areas had become used to receiving calls from their children living in the cities almost daily. Since the frequency of these calls has gone down due to high costs of communication, parents are beginning to think that their children no longer love them.

Individualism in the ICTs Sector much to blame

Instead of collaborating, MNOs prefer to compete yet sharing resources would reduce costs through economies of scale. In countries like Zimbabwe where the sector has gone for a long time without new competitors, the few actors function like an oligopoly by conniving to set the same prices as if they incur the same costs. It is not surprising that at the end of the year, MNOs and banks declare millions of profit which confirms they are abnormal profit-seekers. The situation also reveals the pitfalls of commercializing communication services. If communication is 100% commercialized, the majority will not be able to share information and knowledge. Government should play a leading role just like in the water and energy sectors which if left to market forces the majority would go without water and energy.  Commercializing ICTs is risky for economic growth, which is why governments are now failing to control social media.

Limitations of an import-dependent ICTs sector 

ICTs are more than 20 years in Africa. When will African countries stop importing ICT-related knowledge? These countries are not developing local skills enough to be able to rely on their own ICT expertise instead of continuing to import gadgets and knowledge. As long as this continues, these countries will be importing inflation through SMS and USSD gateways. Why should messages shared between farmers and the market go through an international gateway? Paying US$0.3-4/SMS for such routing obviously increases the cost of communication.

Poor business modelling

Financial institutions and MNOs have failed to develop viable and growth-oriented business models. They prefer working in isolation even when collaboration would be more profitable. Tariffs are always increasing because MNOs do not have content.  It is nonsensical to charge consumers just for talking to each other irrespective of content. If MNOs had content consumers would be comfortable paying at whatever cost.  Unfortunately consumers are being punished by incompetence within MNOs who do not want to creatively collaborate with content providers towards reducing the cost of communication. 
The situation would be better if MNOs were willing to provide holistic packages. Currently, mobile phones are sold by different actors from those selling airtime and consumers are forced to move around all these actors. There is also no integration in relation to airtime. Instead of forcing consumers to buy three separate airtime cards, why can’t MNOs invest in one airtime card and share revenue?

From necessity to emergence use – what can policy makers do?

When costs continue to increase, mobile calling and short message services end up being used for emergence only rather than for enhancing business operations. Farmers fail to communicate with the market and the market also fails to communicate with farmers. Where a trader has to call 10 – 20 farmers and try to do negotiations over the phone, costs become completely unaffordable and s/he eventually stops doing so. People end up using formal financial systems when they have no option, for instance, when contractors insist on paying through the bank. It means communities are going back to the Stone Age where letters were send through buses and money was also sent via the bus driver/conductor for delivery to rural relatives rather than using banks or mobile money.
If these issues are beyond financial institutions and MNOs, policy makers have to urgently step in to assist so that farmers and marginalized people stay in the global information, knowledge and financial loop. Meanwhile, community knowledge hubs where farmers and other actors congregate to share content are emerging to try and solve some of these challenges. Farmers and rural communities are waking up to the fact that, in addition to lacking appropriate content, ICT platforms owned by MNOs are merely channels of self-promotion. Each community requires a community of practitioners who can generate context – specific and needs-based content.
To avoid cases where community knowledge hubs can become white elephants, knowledge brokering is becoming an emerging profession where community knowledge brokers are capacitated to gather, process and share knowledge with the outside world using various means at their disposal. Communities are also beginning to frequent local knowledge hubs where they connect with the world in cost-effective ways than each person trying to call the market or seek information individually. These are some of the ways in which communities are re-defining the role of ICTs for knowledge sharing and better decision-making.

About the author

Byron Adonis Mutingwende