Micro-entrepreneurs and the ‘mobile divide’: new benefits and old inequalities in Nigeria's informal sector

Mobile phones are starting to penetrate the informal sector in developing countries. Do they bring benefits? Do they reinforce inequalities? Do they do both?

Information is vital totrade. Yet trade in the informal sector is shaped by information challenges.Information may be absent – for instance customers do not know who to buy from.Information may be uncertain – suppliers can be unsure about what prices theycan charge. Information may be asymmetrical – some players know more thanothers. Micro-entrepreneurs can, therefore, spend a lot of time travelling inorder to gather information. They also rely on middlemen – the link betweenthem and their customers – who hold vital information.

Mobile phones are starting tobe used in this context. Can they make a difference? A study of mobiles in the aso oke(hand-woven textile) sector in south-western Nigeria addresses this question. Thisis an informal industry that suffers from typical information challenges. Customersand producers have traditionally relied heavily on middlemen, travel andmeetings. Trade has been slow, costly and even risky, given the physicaldangers of travel in Nigeria.

The study found mobile phonesbenefit everyone in the aso oke industry.They provide the first reliable access to telecommunications and they:

• increase awarenessof opportunities for trade
• shorten the timetaken to fulfil orders
• substitute for travelor complement it by improving coordination of visits
• reducecommunication costs in terms of time spent travelling, transportation costs,and the opportunity cost of income foregone when travelling
• reducetravel-related risks
• improve monitoring of the production process to reduceerrors, improve product quality, and increase customer satisfaction.

However, the need to inspectitems being produced, the complexity of product design and the lack of trustbetween participants, means a continuing need for physical meetings. Mobilestherefore cannot substitute for all travel.

In addition, mobiles helpreinforce existing structures and inequalities. Information and communicationstechnologies (ICTs) promise to remove self-servingmiddlemen from trade. In the aso oke industry, however, middlemen are driving theadoption of mobiles, using them to consolidate their power and influence.

ICTs also promise to make the situation more equal for everyoneinvolved. Yet it appears that mobiles are increasing the difference between thosewho can afford access to a mobile (who find greater opportunities to trade) andthose who cannot (who find they have fewer orders). Also, micro-entrepreneurswith established business networks benefit more because access to a phonerarely leads to new business contacts.

It is important to recognisethat:

• Physicalcommunications – supported by transport and roads – still matter tomicro-entrepreneurs, even in an era of mobile digital communication.
• Mobileapplications in developing countries will not be used in the same ways as in developedcountries. We need specific research to uncover the real processes and impactsof mobiles in development.
• The ‘mobiledivide’ will increase the disparities in society unless new initiatives andinnovations, including increasing the affordability of mobile phones, helpreach those who are currently disconnected.