Friday, December 12, 2008

Mobiles & Market Participation: Uganda research

The Impact of Mobile Phone Usage Coverage Expansion on Market Participation: Panel Data Evidence from Uganda, 2008, Megum Muto, Japan International Cooperation Agency Research Institute

Fascinating paper on a panel data study which finds that mobile phone network expansion (in Uganda) has a larger impact on the market participation (perishable goods) in areas farther from districts.

The researcher also states that it is not clear "whether farmers obtain the full efficiency gain due to the mobile phone expansion" particularly breaking the information asymmetry between trader and farmer. He recommends community capacity building in retrieving and sharing timely market price information through producers' associations (thus including non-phone owners).

Just reading this article reminds me of driving through Kanungu District (Uganda) at 6am and watching men and children pushing bicycles uphill with big banana bunches (locally called matooke - usually 3 bunches on one bike) and pineapples to sell at the nearest market. When I asked our driver how much they get, it was:

2500 to 3000 USH ($1.56 - $1.88 USD) per bunch
COSTS: 1000 USH to PUSH uphill & return + 500 per bunch from farmer = 1500 expenses ($0.94)
PROFIT: 1000 to 1500 USH ($0.63 - $0.94) a bunch x 3 = ($1.89 - $2.82) if all bunches were sold. This does not include paying the little boys for their help and their lunch. At least that's what I calculated in my head according to the rough information from our driver.

Tell me where the farmer can make more money because he still has to push.

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