The magic of mobile in the rural economy

According to the Bangladesh Bureau of Statistics (BBS), the contribution of mobile operators to GDP is 0.89%

27 March, 2022, 11:45

Last modified: March 27, 2022, 15:49

Sufia Khatun, a widow from the Ishwarganj Atharobari union in Mymensingh, obtained a mobile phone from Grameenphone with their “Palli Phone” package in the late 1990s as a micro-credit borrower. Grameenphone, launched on March 26, 1997, provided the package to around two lakh people during that time.

It was the beginning of a new journey in Sufia’s life that has changed her family’s financial situation forever.

To turn the cell phone into a source of income, which was also the motto of the “Palli Phone” initiative, his eldest son, Ujjal Hossain, set up a shop called “Ma Telecom” with just a chair and a table on the Atharobari bus . stand on January 1, 2000. The small company, however, created quite a stir among the local population, as they could then talk to their relatives who lived in different parts of the country using the phone in exchange for money.

After two decades, Ujjal now has a store that sells mobile phones and recharges mobile accounts. His business is now worth more than Tk1 crore and he has 10 employees, including three of his brothers. He also bought another store in the market, built a three-story building and bought some farmland.

Sufia Khatun, now 80, attributes everything her family has achieved to the spread of mobile phone services in the country.

Like Sufia and her family, millions of people living in rural areas of the country have seen their way of life improve significantly in the last 25 years, thanks to the spread of mobile phone services. The spread of the mobile Internet has revolutionized the scene over the last decade, helping the start and flourish of e-commerce, self-employment, ride-sharing services, mobile banking, etc.

The breakthrough came only after the government inaugurated mobile phone service, allowing three operators to enter the market in 1997, a move that broke the monopoly and made the mobile phone a device for everyone. That was the beginning of a new era that connected villages with the world and brought rapid changes in rural life and economy.

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According to the Bangladesh Bureau of Statistics (BBS), the contribution of mobile operators to GDP is 0.89%. In the last financial year, the country’s mobile operators provided services worth more than Tk37,000crore.

According to the Global System for Mobile Association (GSMA), the contribution of mobile operators to GDP would be 5.3%, if the other sectors related to mobile services are included in the equation.

In a report published in March this year, the GSMA said that mobile remains the primary means of accessing the Internet and remains the leading technology for reaching underserved people, especially low-income populations, women and rural areas of Bangladesh.

According to the GSMA, the sector contributed $16 billion to the country’s economy in 2019.

However, research by the Asian Development Bank Institute (ADBI) suggests that a 1 percentage point increase in the number of Internet users would help Bangladesh’s GDP grow by 0.11%.

Over the past 15 years, the contribution of mobile services to GDP has increased 6.5-fold from Rs 4,017 crore in fiscal 2006, according to the Bangladesh Bureau of Statistics (BBS).

According to research by Monzur Hossain, director of research at the Bangladesh Institute for Development Studies (BIDS), and HussainSamad, a former World Bank researcher, mobile phone use is increasing rural incomes by around 10%. .

Meanwhile, Global Connectivity Index (GCI) data reveals that Bangladesh was among the top four economies along with Ukraine, South Africa and Algeria with notable improvement and fastest growth in digital economy adoption between 2015 and 2019.

Business and agriculture

According to stakeholders, mobile phones coupled with the Internet have facilitated business and farming in a way that was unimaginable for rural people a decade earlier.

Tapas Banik, a seller of lungis and saris in Kendua of Netrakona, buys most of the goods for his shop in Narsingdi, Keraniganj, Naryangaj, Sirajganj and Pabna.

“Before, I had to visit all these places in person to buy all the products with cash. Now I can do all the work through video calls through mobile phones and pay the money through online banking,” she said.

Aktarul Islam, a farmer from Durgapur village in Rangpur, said, “Now we can know the price of any vegetable in Dhaka from the village via mobile phone, which enables us to get a fair price.”

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Sultan Mia, who is involved in organic farming, said, “Several organic vegetable vendors in the capital collect produce from me. They send the price through mobile financial services.”

Kajal Mia, a fish farmer from Kendua, learned about different fish diseases and their remedy through YouTube videos. “Now I can get medicine quickly by contacting pharmacies via mobile phone. This has reduced the risk of illness on my farm,” she said.

According to the sources, the government has already launched an agriculture hotline service for farmers.

Revolution in freelancing and ridesharing

According to the ICT Division of the Ministry of Posts, Telecommunications and Information Technology, there are about 650,000 registered self-employed workers in the country, of which about 500,000 work on a regular basis.

Ataur Rahman, a resident of Dhargaon village in Nandail, Mymensingh, was unable to find a job after graduating. He took IT training and started working as a subcontractor in the city of Mymensingh. After the launch of the 4G service on mobile phones, he returned to his town to work for him. He also involved some young people from the village in his project.

“I earn around $150 a month working on a digital platform called Microworkers. I also earn several lakh taka a month with my team,” he told The Business Standard.

Having benefited from the advantages of lower cost, less risk and less time, many large organizations from developed economies such as the US, UK, Japan and Australia have been providing IT outsourcing jobs to emerging and developing digital economies such as Bangladeshi.

However, ride-sharing has become a fast-growing sector in the country since its inception through Uber in 2016. By 2019, 138,957 people were involved in the sector, according to BBS.

In a year, the value of services produced in the ride sharing sector is Tk10,954crore.

e-commerce services

According to the e-Commerce Association of Bangladesh (e-CAB), around 2,500 e-commerce sites are operating in Bangladesh selling more than $2 billion worth of products. Bangladesh is the 46th largest country in the world in terms of e-commerce revenue.

Facebook has become an indispensable online business platform; More than 300,000 stores in Bangladesh are operating through Facebook.

According to the e-Commerce Association of Bangladesh (e-CAB), the e-commerce industry in Bangladesh was revolutionized during the pandemic with online sales increasing by 70% to 80% between July and September 2020.

According to Statista, a business data platform, by 2023 the size of the e-commerce market will be $3 billion in Bangladesh.

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Business recovery and employment

The businesses of micro, small and medium-sized companies were reduced by 57% due to the pandemic in 2020, which recovered by 77% at the end of the year. But, the ADBI says that the business recovery of MSMEs using digital technology was 88%.

Businesses using mobile financial services also reported that their sales increased by more than 60% during the pandemic, indicating a positive role for MFS in facilitating business.

The ADBI study identifies mobile penetration as one of the key drivers for digitization that improves labor participation rate and worker productivity.

“Digitalization not only drives technological innovation and process reengineering to support the country’s industrial and services sector to drive economic growth, but also acts as an engine for large-scale job creation using digital platforms,” it says.

The data shows that massive employment has been created in rural areas in the mobile services sector.

Currently, 14 factories in the country manufacture phones, including foreign brands, which meet 63% of domestic demand. They have also employed some 25,000 people.

According to the Bangladesh Cell Phone Repair Technicians Association (BCPRTA), around 10 lakh people work in the mobile phone repair sector.

Bangladesh Bank data shows that 13 banks are providing financial services via mobile phones. The number of agents in this sector is 11.2 lakh.

Mobile financial services are playing an important role in providing cash assistance for the implementation of the government’s food-for-work program, employment for the extremely poor, and social security programs.

During last year’s Eid festival, the government provided Tk2,500 through MFS to 36 lakh poor families who were affected by the pandemic. Mobile services have also been used for several years to provide stipends to students at the primary and secondary levels.

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