Eric White ftf presentation
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Rural ICT Solutions for “Feed the Future” Eric White INTEGRA LLC 15 December 2010
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Transcript of Eric White ftf presentation
Rural ICT Solutions for “Feed the
Future”
Eric White
INTEGRA LLC
15 December 2010
What is “Feed the Future”?
“The US Global Hunger
and Food Security
Initiative”
So…
“ICT for Feed the Future”
becomes…
“ICT for Food
Security”
What do we mean by “Food Security”?
Availability
Access
Utilization
Stability
The Components of Food Security
Food
Security
Agricultural
Development
Rural
Economic
Growth
Trade
Facilitation
The importance of ICT infrastructure
to Economic Growth
Controlling for all else,
access to voice and
broadband is associated
with big increase in GDP
(10% to 1%)
How ICT causes growth in rural areas
• Lowers search costs and transaction costs, making
labor more productive.
• Increases the rate of social learning (better workers =
increased human capital)
• Reduces risk (increasing investment)
Income = f(productivity, human capital,
investment)
How ICT increases rural productivity
1. Voice, the killer app
2. Market information
systems
Lowers
Search Costs
How ICT increases rural productivity
1. Voice, the killer app
2. Market information
systems
1. Warehouse receipt
systems
2. Commodity
Exchange
Lowers
Search Costs
Lowers
Transaction Costs
How ICT improves rural human capital
Farm Extension Services
• Disease Identification
(GrameenAppLab
“Community Knowledge
Worker” Program)
• Google SMS: Farmer’s
Friend
Increases
Social Learning
How ICT increases investment in rural areas
Increases Incomes
Risk levels move inversely with income
Secure Money Transfers/Savings-
Safaricom M-PESA
Knowledge instead of
guessing
Weather- Reuters Market
Light
Reduces Risk
New Frontiers: m-Insurance, forward contracts via
ICT, buyer/agro-dealer ratings, input verification
systems…
Lower transportation costs
by reducing border
inefficiencies
11
Trade Facilitation via ICT
•Market Information Systems (where are the deficit
areas?)
•Logistics Management Systems (more efficient
trucking)
•Transportation system monitoring (pot hole crowd-
sourcing)
Busting myths about ICT Infrastructure
Myth #1
Telecoms are more than poor people need.
Priority should be put on
irrigation, electricity, roads, sanitation, etc.
In the 21st century,
ICT is just as important as
any other piece of infrastructure.
And, for Rural Economic Growth,
perhaps more so!
Busting myths about ICT Infrastructure
Myth #2
Poor people can’t afford ICTs,
don’t want them,
and don’t think that they need them.
The fastest growth rate in
mobile adoption
is in the developing world.
BOP has shown a huge willingness
to pay for ICT as a share of total income
Willingness of Poor to Pay for ICT
“In richer economies,
households spend on average
1.5-2% of their income on
communications. In emerging
markets, it’s not unusual for this
number to reach as high as 8-
10%”
-Pyramid Research
To the astonishment of the
industry, people living on a few
dollars a day have proven avid
mobile phone users”
-Business Week, Sep.
2007
• Low capital cost coupled with high customer willingness-
to-pay, means that the private sector is willing to play.
15
ICT – The best way to leverage private
sector funds for infrastructure
0
3
6
9
12
15
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Investment Commitments to Private Sector Infra Projects in SSA by Sector
Energy Telecoms Transport Water and sewerage
Source: World Bank Private Participation in Infrastructure Database, in billions of 2008
US$
16
Investment commitments to telecom projects with private participation
in Sub-Saharan Africa, by segment, 1990–2008
Source: World Bank and PPIAF, PPI Project
Database.
0
2
4
6
8
10
12
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Mobile access Multiservice providers Fixed access and long distance Fixed access Long distance
2008 US$ billions
Private ICT investment is overwhelmingly
in Mobile Infrastructure
The “Gap” Model of Telecoms Access
Current network
reach & access
Market efficiency
gap
Smart Subsidy
Zone
True Access Gap
Geographical Reach
ARPU*Users > (OPEX+CAPEX)
ARPU*Users > OPEX
ARPU*Users < (OPEX+CAPEX)
OPEX*Users > ARPU
Covering the “Smart Subsidy” zone
Most countries already have a mechanism in place to
institute a state-managed subsidy.
In most countries, these Universal
Service and Access Funds
(USAFs) do not function well
On average only disperse 13%
of the amount they take in.
Multiple reasons for this, not just
corruption
Getting to Universal Service
• To reach households beyond the Sustainability
Frontier we must FUNDAMENTALY ALTER the
economics of the situation.
• Since we can’t instantaneously raise ability to pay,
our only choice is to lower costs. How?
• The private sector is in the early stages of
experimenting with a new technology and a new
architecture that has the potential to reach everyone.
Low Cost Base Stations
Sat. Receiver/
RouterSatellite Service
Provider Uplink Sub. Management
Internet
Backbone
Sat. Receiver/
Router
Sat. Receiver/
Router
Sub. Management
Sub. Management
Femtocell
Femtocell
Femtocell
Base Station Specifications
• Low-cost base stations require a capital expenditure of <$20,000 as opposed to $100,000 for standard cell sites
• They are solar powered and completely stand-alone
• Operational costs approach 0. Standard cell sites cost $2000/month in generators alone
• Profitable at an ARPU of around $3, which is within the “willingness-to-pay” of many rural poor.
• Signal range of up to 10 miles = >1 base station per village.
Issues and scope for USAID
Technical Assistance
• Reaching the Market Efficiency Gap – standard
legal/regulatory/competitiveness issues. Room for
Technical Assistance in these areas.
• Reaching the Sustainability Frontier with Smart
Subsidies
– USFs, on average only distribute 13% of money taken in
• Achieving universal service
– Working with technology companies to help demonstrate the
business model and to link them to Universal Service Funds
USAID contracting vehicles
ready for this work
• Meets the market efficiency gap
– Provides Legal/Regulatory/Competitiveness TA
• Runs a Program on Universal Service Fund
Administration, with a specific focus on Africa
– Partnering with Intel
• Connectivity on the Rural Edge (CORE) program
– Works with Micro-Femto companies, network
operators, and USAFs to achieve universal access.
• Altobridge (Ireland)
• VNL (India)
• iDirect and Ubiquisys (USA)
Global Broadband and Innovations (GBI)
Summary
1. ICT accelerates rural economic growth through better access to information.
2. Rural Economic Growth means more (and more reliable) agricultural output. Combined with better trade outcomes, this is Food Security.
3. To expand rural connectivity USAID should engage in legal/regulatory/competitiveness work, provide Technical Assistance to Universal Service Funds, and push for the adoption of new, low-cost technologies.
4. The GBI program provides an avenue within USAID to engage in each of these activities
Points of Contact
Joe Duncan
GBI Program Manager, USAID
Eric White
Managing Associate, INTEGRA LLC
