- The Washington Times - Monday, June 22, 2009

Advances in mobile phone technology will soon make it easier for Africans to exchange money and share information about crops, helping to sustain economic growth on a continent that is struggling in the face of a severe economic downturn, according to a new report by the Organisation for Economic Co-operation and Development (OECD).

“Africa faces the future with a new understanding of what trade really means and of the importance of science and technology to growth,” said Rep. Charles B. Rangel, New York Democrat, who with Rep. Donald M. Payne, New Jersey Democrat, hosted the OECD at the Capitol last week for the release of its seventh annual African Economic Outlook.

OECD Head of Strategy Charles Oman called the study “a tool for African self-empowerment” and a timely reminder of the need for technological advancement as the continent’s rate of economic growth has shrunk from 6 percent to 2.8 percent in the past year.

Forty percent of Africans will have a mobile-phone and text-messaging capabilities by the end of 2010, according to the OECD report. That growing capability makes for faster and more efficient commerce.

The transfer of remittances from relatives overseas contributes $40 billion a year to African gross domestic products, but those cash transfers have been hampered by high transaction costs. Kenyan nationals pay a fee of 50 percent to wire funds home through Western Union, the continent’s dominant wire transfer company. M-Pesa, a service offered by British telecommunications giant Vodafone, allows mobile phone users to drastically reduce those transfer fees by sharing funds by phone. Kenyan phone provider Safaricom Ltd. also offers M-Pesa, and Egyptian company Orascom will offer it soon. Both hope to gain some of the 5 million Kenyan users M-Pesa has gained in just two years.

Farmers in 10 countries throughout west and central Africa share crop prices by cell phone, taking advantage of a new electronic messaging service that has reduced some agricultural prices in Niger by 20 percent by making it cheaper for farmers to find markets for their goods.

“Short Messaging Service [text messaging] provides innovations for agriculture like we’ve never seen before,” said Sala Patterson of the OECD Development Center’s Africa Desk.

Africa’s mobile communications infrastructure is expanding rapidly, but progress has been uneven. While one fiber-optic cable serves the west coast of Africa with limited bandwidth, the southeastern part of the continent has no coastal hard line and so lacks reliable phone service.

“There’s a missing link in the east,” Mrs. Patterson said.

But by July 2010, the OECD expects Africa’s west coast capacity to expand with the addition of at least two new cables, while the east coast will get its first. The increased capacity will decrease user prices by four to 10 times by the end of 2010, the OECD report projects.

Moreover, mobile phone companies in Africa allow free roaming in a large section of the central continent, from Mali to Tanzania. That allows farmers and entrepreneurs to communicate and transfer money quickly without worrying about cross-border charges, making cellular phone use more affordable at a time when traditional phone companies are failing.

“Private investment is essential,” Mrs. Patterson said, “because the recession has made many fixed-line phone operators nearly bankrupt.”

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