At the Future of Mobile-Empowered Development Technology Salon, an audience of development practitioners and technologists had the unique opportunity to host Terry Kramer, Board Member of the Vodafone Americas Foundation, as well as Vodafone’s Group Strategy and Business Improvement Director, and hear about Vodafone’s vision, strategy, and engagement in emerging markets and the base of the pyramid (BoP).
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We focused on the desire by mobile network operators (MNO) to increase revenues and market share by expanding into rural areas, where it becomes more difficult and costly to provide service. We also recognized that the development community wants to capitalize on the success and reach of the mobile network to assist the poor, but these two actors are still wrestling with how to make that happen.
So how would the development community partner with an MNO like Vodafone? The Salon identified two issues that are key to developing partnership opportunities:
- MNOs have specific business objectives and drivers. The development community needs to understand these requirements to design projects that will engage MNOs.
- MNOs want to partner with the development community. They are looking for key applications that solve a common need for many in developing countries. MNOs want to satisfy those needs for better business results.
In essence, both parties need to understand each other’s business better. Let’s begin with briefly outlining Vodafone’s strategy and then what they are looking for and how development initiatives can partner with them. We’ll conclude with a mDevelopment challenge from Terry.
Vodafone’s Emerging Market Activity
Vodafone has been successful in the higher end of the developing world market – urban areas, more affluent populations – and are now reaching into the mass market at the base of the pyramid because this is where an MNO can achieve scale. India will be a major market for Vodafone – they’re forecasting it will account for one-quarter of all their revenue growth in the next four years.
The challenges Vodafone and others face in serving the BoP are that return on investment is low. On average the monthly revenue per user in emerging markets is only $4-5, so it is not usually economical for an MNO to go into remote areas. In most markets today there are four competitors and in general there are low-priced players, igniting price wars.
Business Drivers for Mobile Applications
Vodafone applies the “80/20” rule – they want to find the key applications most commonly needed by many (“80%”), the programs with the greatest impact. Vodafone is interested in mobile applications that:
- Generate a high volume of transactions and therefore more revenue
- Protect market share or retain subscribers
- Increases market penetration and adds new customers
- Has mass market appeal, works on a large scale
Key Applications Needed by Many
Vodafone is particularly interested in developing projects from corporate social responsibility (CSR) activities that can then be scaled to commercial activities. M-PESA was originally a joint project with DfID that is now a commercial success and Vodafone believes some m-health applications will eventually become mass market commercial products. They are now looking to the development community for the next key application.
In the Salon, thought centered around agriculture apps that scale and satisfy business drivers, as there was consensus in need but not services – NGOs are saying “wouldn’t it be nice if” but don’t see solutions that can help with:
- Agriculture market price information systems that scale and are sustainable
- Supply chain finance between farmers, suppliers, buyers, and banks, possibly leveraging M-PESA type systems
- Farmer education on crop rotation, fertilizers, or weather information
- Farmer market linkages between associations & co-ops and commercial actors
- Food traceability for food security & export quality requirements
Yet agriculture is a hard nut to crack because at first glance, one does not see a high volume of transactions being generated out of this system, nor an inherent path to achieving scale and sustainability, which creates difficulties in getting the interest of the MNOs.
On a larger scale, there are many silo systems (m-banking, health, agriculture, etc) that could be an opportunity for the development of common platforms which could scale across industries and countries. The Ministry of Health in Senegal is asking their software development industry to create a single m-services platform.
Ways to Engage with Vodafone Foundations
Vodafone has the Vodafone Group Foundation headquartered in the UK that focuses on global programs, and foundations in 23 markets, each with their own programs. The Vodafone Americas Foundation can also fund US organizations that do international work.
Social investing is the Foundations biggest focus. The Wireless Innovation Project is a great example. Its a new initiative that identifies and funds unique innovations grounded in local needs and yet can scale to solve critical social issues around the world.
Generally Vodafone keeps foundation and commercial work separate, but there is commercial value in CSR projects. Vodafone is able to do more when they can present themselves to a new market as a firm that helps build the economy. It allows them easier access to licenses and facilitates a more effective rollout.
A Concluding Call for Engagement
Mobile network operators (MNO) want increase revenues and market share by expanding into rural areas, and see partnerships with the development community as a key market entry strategy. Specifically, Vodafone is looking to the development community for key applications that solve a common need for many and can be scaled into commercial activities.
Terry Kramer emphasized that he wants to hear of new ideas and new approaches directly from us, and spur a vibrant dialogue on possible solutions and their ability to scale and meet Vodafone objectives. Vodafone is willing to put great effort into application with great social benefit, as doing well while doing good has direct benefit for Vodafone.
Let the comment section below be that feedback forum – submit your ideas today!