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By Root 514 0

enable people to get work, but also to pay for and be paid for services – mobile phone credits having become in effect a form of informal banking and payments system. In Ghana, manufacturers of T-shirts can be paid directly by American buyers using phone credits. Micro-finance banking, mobile telephony and the internet are now merging to produce systems that allow individuals in the West to make small loans to entrepreneurs in Africa (through websites like Kiva), who can then use their mobile phone credits to deposit receipts and pay bills without waiting for banks to open and without handling vulnerable cash. These developments offer opportunities to the poor of Africa that were not available to the poor of Asia a generation ago. They are one reason that Africa saw economic growth rise to Asian-tiger levels in the late 2000s.

The role of the mobile phone in enriching the poor was especially well illustrated by a study of the sardine fishermen of Kerala in southern India (though similar stories can now be told about Africa). As documented by the economist Robert Jensen, on 14 January 1997, a typical day, eleven fishermen landed good catches at the village of Badagara only to find that there were no buyers left: the local market was sated and the price of the perishable sardines was zero. Just ten miles away in both directions along the coast, at Chombala and Quilandi, that morning there were twenty-seven willing buyers getting ready to leave the markets empty-handed because they could find no sardines to buy, even at the inflated price of nearly ten rupees per kilogram they were offering. Had the Badagara fishermen known, they could have diverted to the other markets and pocketed on average 3,400 rupees of profit each, after fuel costs. Later that year, using mobile phones on the newly installed cellular network (whose signals could be picked up twelve miles out to sea), the Kerala fishermen started doing just that: they called ahead to find out where best to land their catch. The result was that fishermen’s profits increased by 8 per cent, sardine prices to consumers fell by 4 per cent and sardine wastage fell from more than 5 per cent to virtually nil. Everybody gained (except the sardines). As Robert Jensen commented: ‘Overall the fisheries sector was transformed from a series of essentially autarkic fishing markets to a state of nearly perfect spatial arbitrage.’

Using such technologies, Africa can follow the same route to prosperity that the rest of the world is following: to specialise and exchange. Once two individuals find ways to divide labour between them, both are better off. The future for Africa lies in trade – in selling tea, coffee, sugar, rice, beef, cashews, cotton, oil, bauxite, chrome, gold, diamonds, cut flowers, green beans, mangoes and more – but it is almost impossible for poor Africans in the informal economy to be entrepreneurs in such international trade. A handwritten contract between two people in Tanzania may be affordable and enforceable, but it is little help if the debtor wishes to start an export business supplying cut flowers to a London-based supermarket.

Of course, it will not all be easy or smooth, but I refuse to be pessimistic about Africa when such an opportunity is available at a few strokes of a pen and when the evidence of entrepreneurial vitality in the extralegal sector is so strong. Besides, as its population growth rates fall, Africa is about to reap a ‘demographic dividend’ when its working-age population is large relative to both the dependent elderly and the dependent young: such a demographic bonanza gave Asia perhaps one third of its miracle of growth. The key policies for Africa are to abolish Europe’s and America’s farm subsidies, quotas and import tariffs, formalise and simplify the laws that govern business, undermine tyrants and above all encourage the growth of free-trading cities. In 1978 China was about as poor and despotic as Africa is now. It changed because it deliberately allowed free-trading zones to develop in emulation of Hong Kong. So, says the economist