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Mobile phones creating entrepreneurial culture across globe: report

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World Bank report indicates that mobile technology -- now in the hands of three-fourths of the world's population -- is creating economic growth opportunities on a historic scale.

More than any economic trend or program seen in modern times, mobile phones have become a force lifting many parts of the globe into a new realm of entrepreneurial opportunities.

That's the conclusion of a new report released by the World Bank and infoDev, its technology entrepreneurship and innovation program. Overall, the report states, about three-quarters of the world’s inhabitants now have access to a mobile phone and the mobile communications.  The number of mobile subscriptions in use worldwide, both pre-paid and post-paid, has grown from fewer than 1 billion in 2000 to over 6 billion now, of which nearly 5 billion in developing countries. Ownership of multiple subscriptions is becoming increasingly common, suggesting that their number will soon exceed that of the human population.

But the big story isn't how many phones are out there -- rather, it's how they are being used, and the impact on societies. For example, there's the rise of the "app economy" -- the report observes that more than 30 billion mobile applications, or “apps,” were downloaded in 2011 – software that extends the capabilities of phones, for instance to become mobile wallets, navigational aids or price comparison tools.

"Mobiles can stimulate entrepreneurial activity, as the demand for mobile industry hubs and mobile incubators has shown, and it can create many more opportunities for self-employment, part-time work, and flexwork. In a mobile-driven economy, second and third jobs will become much more common—and much more important."

In the United States alone, the mobile app industry provided an estimated 466,000 jobs in 2011 with annual growth rates of up to 45 percent from 2010 to 2011. Mobile money applications have also proved to be net generators of jobs. For example, Safaricom’s M-PESA system supports 23,000 jobs for agents in Kenya alone. Airtel Kenya, the second-biggest mobile operator, plans to recruit some 25,000 agents for its mobile money service, Airtel Money.

The report observes that the global mobile industry is today a major source of employment opportunities, through direct jobs, indirect jobs, and jobs on the demand side.

In developing countries, citizens are increasingly using mobile phones to create new livelihoods and enhance their lifestyles, while governments are using them to improve service delivery and citizen feedback mechanisms.  As the report puts it: "in some developing countries, more people have access to a mobile phone than to a bank account, electricity, or even clean water." Mobile communications "offer major opportunities to advance human and economic development – from providing basic access to health information to making cash payments, spurring job creation, and stimulating citizen involvement in democratic processes," says World Bank Vice President for Sustainable Development Rachel Kyte.

The World Bank report cites examples, such India's state of Kerala’s mGovernment program, which has deployed more than 20 applications and facilitated more than three million interactions between the government and citizens since its launch in December 2010. Kenya has emerged as a leading player in mobile for development, largely due to the success of the M-PESA mobile payment ecosystem.  Nairobi-based AkiraChix, for example, provides networking and training for women technologists.

The report also highlights how mobile innovation labs – shared spaces for training developers and incubating start-ups – can help bring new apps to market.  For instance, infoDev, in collaboration with the Government of Finland and Nokia, has established five regional mobile innovation labs (mLabs) in Armenia, Kenya, Pakistan, South Africa, and Vietnam. infoDev is also using mobile social networking to bring grassroots entrepreneurs together with other stakeholders in mobile hubs (mHubs).

There's an irony here as well: "The simple cell phone has probably done more to reduce poverty globally and promote economic growth around the planet than all of the efforts of the World Bank," comments University of Michigan economist Mark Perry.

Valerie D’Costa, Program Manager of infoDev, sees a parallel to the growth of the 1980s tech sector:

“Most businesses based around mobile app technology are at an early stage of development, but may hold enormous employment and economic potential, similar to that of the software industry in the 1980s and 1990s.  Supporting the networking and incubation of entrepreneurs is essential to ensure that such potential is tapped."

Collaboration is also being enhanced, and opened up, thanks to mobile technology. "In today’s open innovation model, partners, customers, researchers, and even competitors are finding new ways to collaborate in the product development process," the report states.

The report also notes that in the developed world, "mobile communications have added value to legacy communication systems and have supplemented and expanded existing information flows." However, in the developing world, "new mobile applications that are designed locally and rooted in the realities of the developing world will be much better suited to addressing development challenges than applications transplanted from elsewhere. In particular, locally developed applications can address developing-country concerns such as digital literacy and affordability."

The report sums it up nicely with this observation:

"Mobile applications not only empower individual users, they enrich their lifestyles and livelihoods, and boost the economy as a whole. Indeed, mobile applications now make phones immensely powerful as portals to the online world. A new wave of 'apps,' or smartphone applications, and 'mashups' of services, driven by high-speed networks, social networking, online crowdsourcing, and innovation, is helping mobile phones transform the lives of people in developed and developing countries alike. The report finds that mobile applications not only empower individuals but have important cascade effects stimulating growth, entrepreneurship, and productivity throughout the economy as a whole. Mobile communications promise to do more than just give the developing world a voice. By unlocking the genie in the phone, they empower people to make their own choices and decisions."

Mobile phones have truly become the lever which lifts the world.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure