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Global Development Institute

Mobile Telephony and Developing Country Micro-Enterprise: A Nigerian Case Study

Abi Jagun, Richard Heeks, Jason Whalley

Abstract

Informational challenges – absence, uncertainty, asymmetry – shape the working of markets and commerce in many developing countries.  For developing country micro-enterprises, which form the bulk of all enterprises worldwide, this shapes the characteristics of their supply chains.  It reduces the chances that business and trade will emerge.  It keeps supply chains localised and intermediated.  It makes trade within those supply chains slow, costly and risky.

Mobile telephony may provide an opportunity to address the informational challenges and, hence, to alter the characteristics of trade within micro-enterprise supply chains.  However, mobile telephony has only recently penetrated.  This paper therefore presents one of the first case studies of the impact of mobile telephony on the numerically-dominant form of enterprise, based around a case study of the cloth-weaving sector in Nigeria.

It finds that there are ways in which costs and risks are being reduced and time saved, often by substitution of journeys.  But it also finds a continuing need for journeys and physical meetings due to issues of trust, design intensity, physical inspection and exchange, and interaction complexity.  As a result, there are few signs of the de-localisation or disintermediation predicted by some commentators.  An economising effect of mobile phones on supply chain processes may therefore co-exist with the entrenchment of supply chain structures and a growing "competitive divide" between those with and without access to telephony.

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Educator's guide

Synopsis questions

  1. What are the main informational and related characteristics of developing country micro-enterprise supply chains?  [Part A]
  2. How might mobile phones impact developing country micro-enterprise supply chains?  [Part A]
  3. In what ways is the aso oke sector similar to or different from the typical informational, process and structural characteristics of developing country micro-enterprise?  [Part B]
  4. In what ways do stakeholders access mobile phones?  [Part C]
  5. What has been the impact of mobile telephony on the process and structure of commerce in this particular micro-enterprise sector?  [Part C]

Development questions

  1. What would be the impact if the stakeholders in this case had reliable access to Internet-connected PCs in addition to mobile phones?
  2. Technology has always been associated with inequality.  What sort of inequality are mobile phones causing in this case study – absolute inequality ("the rich get rich and the poor get poorer") or relative inequality ("everyone gets richer but the rich get even richer")?
  3. What are the pros and cons of using an in-depth interview and observational approach, as opposed to a large-scale survey, in gathering data on the impact of mobile telephony in developing countries?
  4. Why are mobile phones having so much greater an impact, so much more quickly, than fixed-line phones?
  5. As mobile phone penetration spreads, how do you think the impact picture will look in, say, ten years' time?
  6. What recommendations, if any, would you make to the following people on the basis of what you have read: a) an aso oke weaver; b) a manager in a mobile operator company; c) an official in the office of the telecommunications regulator?