The Power of Mobile Money

by James & Miel on September 29, 2009 · 0 comments

Miel called buying Nokia! In a world continually shrinking by the power of technology, mobile phones are arguably the front runner for driving change and offer investors a great chance to create wealth.

The Economist this week (see magazine I’m holding) has dedicated a special report to The Power of Mobile Money, about telecoms in emerging markets.

My first international trip was in 1993 as an exchange student to Finland for a year (explaining my love for the homeland of Nokia). At the time Finland had the highest usage of mobile phones in the world, and America would have been seen as an emerging market for cell phone usage.

In the early 90s, Americans like myself were still asking, what would I do with a cell phone anyway? Now what was once seen as a luxury item has now become a tool of global development. Along with that, the prices have dropped, from a basic model going for about $250 in 1997 to $20 today. Developing countries were also early adopters of text messaging, picking up the habit well before Americans took on the craze.

As much as mobile phones are now normative and “land lines” are virtually non-existent in many parts of the world – that demand just keeps on booming. For example, in the last year alone, India has seen a 52% increase from the previous year, and 32% in Africa.

Most common in the developing world, in addition to widespread use of mobile phone users overall, is the use of village mobile phone operators. This basically means that one, or several, people will purchase mobile phones and credit and then rent these out to users as was commonly the case with landlines previously. When I was a Peace Corps Volunteer in Ghana I had to travel minimum of an hour to reach a phone and then call from a similar phone shop, but with landlines back then.

Mobile banking (though not technically considered banking for regulatory reasons) is also on the rise. Since this is a new phenomenon for many people in developed nations, I’ll give this a bit more of an explanation.

Mobile banking works like this. Say you want to send money from the city to your family back in the country. You could spend time and money to go deliver them money, or you could give the money to a bus driver or the like, but that has some inherent risks. Now one can by a card with credit, call the local village phone operator or shopkeeper, read out the code on the card. The credit will be applied to the “bankers’ phone and they can then distribute the funds to your family.

According to forecasts, mobile-broadband subscribers will out pace and steeply overtake the more traditional use of fixed-broadband users by 2011.

Now mobile phones are simply a way of the world, and most particularly in the developing world. Given Nokia’s dominance in this market, I figured this would be a got place to put a bit of my money.



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