Mobile magic in the rural economy

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

March 27, 2022, 11:45 a.m.

Last modification: March 27, 2022, 11:57 a.m.

Sufia Khatun, a widow from the Atharobari union of Ishwarganj in Mymensingh, obtained a mobile handset from Grameenphone with her “Palli Phone” package in the late 1990s as a microloan borrower. Grameenphone – launched on March 26, 1997 – provided the plan to around two lakh people during this period.

It was the start of a new journey in Sufia’s life that changed her family’s economic situation forever.

To turn the mobile 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 named “Ma Telecom” with only a chair and a table at the Atharobari bus stand on January 1, 2000. The small business, however, created a stir among the locals as they could then talk to their relatives living in different parts of the country using the handset in exchange for cash.

After two decades, Ujjal now runs a shop that sells cell phones and recharges mobile accounts. His business is now worth over Tk1 crore and has 10 employees, including three of his brothers. He also bought another store at the market, built a three-story building and bought some arable land.

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 dramatically over the past 25 years, thanks to the spread of mobile-based services. The spread of mobile internet has revolutionized the scenario over the past decade, helping in the start and rise of e-commerce, freelancing, ride-sharing services, mobile banking, etc.

The big breakthrough only came after the government opened up 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. It was the start of a new era that connected villages to the world and brought rapid changes to rural life and the 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, mobile operators in the country provided services worth more than Tk 37,000 crore.

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 were included in the equation.

In a report released in March this year, the GSMA said that mobile remains the primary means of internet access and continues to be the primary technology for reaching underserved populations, particularly low-income populations, women and those in rural areas of Bangladesh.

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

However, a study 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 times from Tk 4,017 crore in fiscal year 2006, according to the Bangladesh Bureau of Statistics (BBS).

According to a study by Monzur Hossain, research director at the Bangladesh Institute of Development Studies (BIDS), and HussainSamad, a former researcher at the World Bank, the use of mobile phones increases the incomes of rural populations by about 10%.

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

Trade and agriculture

Cell phones and the Internet have facilitated business and agriculture in ways that were unimaginable to rural people a decade earlier, say those involved.

Tapas Banik, a lungi and saree seller in Kendua from 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 money. Now I can do all the jobs via video calls via mobile phones and pay the money via online banking” , did he declare.

Aktarul Islam, a farmer from Durgapur village in Rangpur, said, “Now we can know the price of any vegetable in Dhaka from the village through 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 prize via mobile financial services.

Kajal Mia, a fish farmer from Kendua, learned about different fish diseases and their cure through YouTube videos. “Now I can get the drugs quickly by communicating with the pharmacies by mobile phone. It has reduced the risk of diseases on my farm,” he said.

According to sources, the government has already launched an agricultural helpline for farmers.

Revolution in freelancing and carpooling

According to the ICT Division of the Ministry of Posts, Telecommunications and Information Technology, there are about 650,000 registered freelancers in the country, of which about 500,000 work regularly.

Ataur Rahman, a resident of Dhargaon village in Nandail, Mymensingh, could not find a job after graduating. He trained in computer science and started working as a contractor in the town of Mymensingh. After the launch of 4G service on cell phones, he returned to his village to work alone. He also involved some young people from the village in his project.

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

Having enjoyed the benefits of lower cost, less risk, and less time, many large organizations in developed economies such as the United States, United Kingdom, Japan, and Australia have provided jobs IT outsourcing to developing and emerging digital economies like Bangladesh.

However, the ride-sharing service became a fast-growing industry in the country after it was established through Uber in 2016. In 2019, 138,957 people were involved in the industry, according to the BBS.

In one year, the value of services produced in the car sharing sector is Tk 10,954 crore.

E-commerce services

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

Facebook has become an essential platform for online commerce; more than 300,000 Bangladeshi shops operate through Facebook.

According to the e-Commerce Association of Bangladesh (e-CAB), the e-commerce industry in Bangladesh has revolutionized during the pandemic with an increase in online sales of 70% to 80% in July-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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Return to work and employment

Micro, Small and Medium Enterprises businesses declined by 57% due to the pandemic in 2020 which recovered 77% by the end of the year. But, according to ADBI, the business recovery of MSMEs that use 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 of MFS in facilitating business.

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

“Digitalization not only drives technological innovation and process re-engineering to support the country’s industrial and service sector to fuel economic growth, but it also acts as an engine for large-scale job creation at using digital platforms,” ​​the report said.

Data shows that massive jobs have been created in rural areas in the mobile services sector.

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

According to the Bangladesh Cell Phone Repair Technician Association (BCPRTA), around 10,000 people work in the handset repair industry.

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

Mobile financial services play 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 the Eid festival last year, the government provided Tk 2,500 through MFS to 36 lakh poor families who were affected by the pandemic. Mobile services have also been used for several years to provide allowances to primary and secondary students.

About Keneth T. Graves

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