Impact of mobile phone coverage on market participation: Evidence from Uganda

 
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June 28, 2012

With the coverage of cellular networks expanding rapidly across the developing world, researchers are investigating how the access to information that mobile phones make possible can be leveraged to help alleviate poverty.

An early piece of research in this area is a 2009 study published in World Development, “The Impact of Mobile Phone Coverage Expansion on Market Participation: Panel Data Evidence from Uganda.” The study, from National Graduate Institute of Policy Studies in Japan, builds on the insights of similar studies in places such as Ghana, Bangladesh and India. The researcher analyzed a sample of 856 households from 94 Ugandan communities in 2003 and 2005, a period during which the penetration of mobile networks rose from 42% to 92%. Given this difference in access, the authors seek to determine the effects on banana and maize farmers’ trading patterns and their subsequent income levels.

The study’s findings include:

  • No clear causal impact between a household’s mobile phone ownership and increased banana sales of that household.
  • However, access to mobile phone networks in remote areas was found to have a “significant impact” on banana sales of those communities, suggesting that “even those households which do not possess mobile phones benefit from the network.” This finding further implies that “the farther away the farmer is located from the district center, the larger the impact of mobile phone coverage on market participation.”
  • Neither mobile phone ownership nor network access was found to have an impact on market participation of maize farmers.

The author concludes that the results “suggest that the expansion of mobile phone coverage in Uganda encourages the market participation of farmers who are located in remote areas and produce perishable crops.” However, access to mobile phones does not necessarily eliminate information asymmetries between farmers and traders, nor does it ensure that farmers have alternate markets for their goods — two key variables in increasing rural farmers’ income through market access.

A 2011 study using a sample of 196 heads of households in Uganda also found that access to mobile phones, and the increased access to information they provide, has a positive impact on economic development of individual households.

Tags: telecommunications, mobile tech

 

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Citation: Muto, Megumi; Yamano,Takashi. “The Impact of Mobile Phone Coverage Expansion on Market Participation: Panel Data Evidence from Uganda," World Development, December 2009, Vol. 37, Issue 12, 1887–1896. doi: 10.1016/j.worlddev.2009.05.004.