Limited physical infrastructure needs, relatively low investment cost, and the huge potential for growth make telecom an attractive sector for early entry investors.
Although governmental services and basic infrastructure are often absent in nations undergoing reconstruction, cell phones tend to become a part of daily life, even providing critical services such as banking and tele-medicine. By allowing people to stay connected to each other as well as take advantage of these critical services, the telecommunications industry demonstrates how the private sector can help alleviate rather than exacerbate conflict. Investment in the field has yielded positive results for all parties, promoting peace-building, reconstruction, and development while turning a profit.
Several factors make the telecommunications industry uniquely suited for its role in societies experiencing deep changes. These companies are able to start initiatives during a conflict, for example, and do not have to wait until stability and peace have been fully achieved. In contrast to other industries, mobile phone companies make smaller investments, and start getting a return as soon as the first subscriber makes a call, according to a World Bank report. The initial investment is usually quite low compared to other industries, and companies are able to start recovering the investment almost immediately. In developing countries with cash societies, the business model most widely used by telecom companies is pre-paid cards, which have no collection problems.
Afghanistan, Somalia, and the Democratic Republic of Congo, where the average mobile-penetration growth rate was 111 percent between 2001 and 2006, are compelling examples of the telecom industry’s grassroots appeal. In fact, the Middle East Times called mobile telephony in Afghanistan its “most impressive economic success”—strong words for a country desperate to rebuild its infrastructure.
The examples on the following pages—from Afghanistan, Iraq, and the West Bank and Gaza, and in sectors as diverse as agriculture, banking, and politics—highlight ways that the telecom industry can have an immediate impact on the economy and social fabric of post-conflict environments.
—From The Role of the Private Sector in Fragile and Conflict-Afflicted States, July 2010, updated April 2011.
In Iraq, where the movement of people and goods is complicated and heavily restricted, access to reliable, high quality voice and data services is key for economic activity and for personal and family safety. Zain Iraq, the leading mobile telephony company in Iraq, with 51 percent market share and 10.3 million subscribers, is investing in:
While Iraq’s total poverty rate is approximately 22 percent, poverty is considerably higher in many southern and western governorates as well as in rural areas. Zain Iraq will focus its growth on some of Iraq’s poorest governorates, including Al-Anbar, Diala, and Salahuddin.
The majority of private capital that has entered into Iraq in recent years has gone to Iraqi Kurdistan. Zain Iraq’s existing operations are located outside of Kurdistan, where investment funds are most needed.
As of December 2009, Zain Iraq employed 1,355 staff. Indirect employment is significantly higher through distribution networks, security, and network construction.
Zain Iraq is pioneering the delivery of services, such as banking, using the country’s mobile platform.
West bank and gaza
In the West Bank and Gaza there is a severe shortage of capital, and large projects are challenging given the territory’s borders and the small size of most active governing bodies. However, growth and integration are critical factors in the economy’s reconstruction.
Through an agreement with the Palestinian Authority’s Ministry of Telecommunications and Information Technology, Wataniya, the mobile phone network, will lead an effort to accelerate market growth while improving the current low tele-density and increasing competition within the sector. Wataniya will be required to provide coverage to 100 percent of cities and 97 percent of the population by year three; an IPO is required within six months of roll out.
81,800,000 the number of globally registered mobile banking customers.
1,000,000,000 the estimated number of people who will use mobile banking by 2017.
56,900,000 the number of registered mobile banking customers in Sub-Saharan Africa.
|There are now more mobile money accounts than bank accounts in Kenya, Madagascar, Tanzania, and Uganda.|
|of Kenya’s GDP is sent via text message each year by users of the M-PESA system.|
Sources: Global System for Mobile Communications Association & Pew Research Center.