A growing number of sub-Saharan African countries – South Africa, Tanzania, Kenya, Botswana, Cameroon, Ivory Coast, and more recently, Ghana – now require that the Subscriber Identity Module (SIM) card in a mobile phone be tied to the user’s name.
The main reason: to combat crime. But I am afraid that with its narrow rationale and focus, this exercise misses the big picture; i.e., a golden opportunity to develop a good database that could become the building blocks for stronger institutions and economic transformation.
Cross-country growth studies show that strong institutions are the surest bet out of this quagmire, a fact that has been echoed several times by Prince Kofi Amoabeng, CEO of UT Bank and arguably, the most-respected CEO in Ghana. When asked in a recent interview on how to reform the institutions, Mr. Amoabeng emphasized the role of information. “We have to go back to the basics.
Information about the people, proper home and business addresses; proper identification make it possible to collect appropriate taxes that will fund projects,” he added. But developing good institutions, when powers that be benefit from its absence, is not going to be easy. Sure, a fixed-address system will help, but you only need to take one look at Accra, not to mention smaller towns/villages, to realize that street addressing remains a dream for now.
So what can Ghana do? The solution may lie in the 14 million-plus mobile phones that have now become a fixture in the daily lives of Ghanaians. Almost all adults have cell-phones; about 14 (out of a population of 23) million existing subscribers. Each has till end of June 2011 to voluntarily register the SIM card, else lose the number. All that was required to register my TIGO number, besides my name, was an ID (in my case, passport) number.
Elsewhere, I would have to provide more personal information, such as a residential address (where I can be picked up should I commit a crime or fail to pay a fine). This information is then linked to other databases: e.g., at the revenue office, or my driving record at the DMV. Understandably, the nature of Ghana’s economy, of which about 70% is informal, makes it impossible to require much to register a SIM card.
But this should not preclude a well thought-out plan that addresses Ghana’s developmental challenges. For example, it can become a tool to enhance (i) tax collection, and (ii) the public’s trust that government will use taxes for its intended purposes. Low levels of trust means that almost everyone would rather evade taxes. Ironically, most will tell you they have no problem with taxes (just add up what they collectively give to organized religion each week and you’ll know); after all, they desire the same quality services as those in the developed world. Problem is they have no way of holding the government accountable.
The result: a huge ‘infrastructure gap.’ Local and state governments say they have no money to build good roads or schools; and people point to the lack of infrastructure as evidence of a corrupt and inept government, so why pay taxes?
Millions across Africa, who are still unbanked, can now store and transfer their monies electronically in MTN’s “mobile money,” Zain’s “zap” or Safaricom’s “m-pesa,” effectively turning a cell-phone into an ATM. Farmers in remote parts of Ghana can now receive timely crop-price information if their phone is esoko-enabled, a product developed by an Accra-based firm, BusyLab. Very soon, the problem of fake medicines will be a thing of the past when consumers start using “m-pedigree” on their mobile phones to check on the authenticity of a drug at the point-of-sale.
And when some “wise guy” sent a text message (a prank) around midnight of Jan. 18, 2010, warning others to stay clear of buildings because of an impending earthquake in Ghana, the news spread like fire through texts and calls. (Haiti was hit a week earlier). Within an hour of that text message, the entire nation was out on the streets till 5am. And guess the one thing each person grabbed before leaving their homes? Not the TV, not jewellery; they took their cell-phones.
Bottom line, cell-phones have become indispensable in millions of households, in spite of the high illiteracy rate. My colleague here at Tufts University, Jenny Aker, has been studying how cell-phones are improving literacy levels in Niger. We now know that, partly due to the pre-paid contracts on talk-time (where consumers manually text-in the PIN on a scratch card), the uneducated can be trained to be numerically literate to a basic level. It is this “asset” that can be harnessed to make the SIM card register more than a crime-fighting tool. In fact, it can be leveraged to address Ghana’s twin problem mentioned above: low tax revenues and mistrust of government. However, the SIM card registration should be done in moderation with sufficient public knowledge and reassurances for not using personal information for other purposes.
There is depressing news about the expansion in the subscriber base of most Telcos. Mobile operators MTN and Milicom recorded respectively a 3% and 0.17% decline in subscriptions over the third quarter of 2010. According to MTN, the trend results from the SIM card registration process, which slows down gross connections.
To exploit the digital features of a cell-phone, each administrative zone in Ghana (e.g., the 170 districts) should first be assigned a 3 or 4-digit code.
These codes will then be required of subscribers to register their SIM cards. Then, to address the ”accountability” problem, each time a resident pays taxes/levies, that information can be texted in to an auditing office together with receipt numbers (just like topping up talk-time), providing half of what’s needed to facilitate an independent audit. To conserve resources, 10% of the districts (i.e., 17 of the 170) can be audited each year, picked randomly (e.g., in the same way winning lottery numbers are picked each week, so the process is seen as fair and transparent). However, as evidence from Brazil suggests, the impact will go beyond those audited.
Federico Finan (University of California, Berkeley) and Claudio Ferraz (at PUC, Rio de Janeiro) have studied the impact of random audits of municipal accounts in Brazil. They found that results from the audits, when broadly disseminated, had a significant effect on mayoral elections outcomes. Incompetent mayors were voted out. More importantly, the random nature of these audits led to overall reduction in corruption because it kept heads of local governments “on their feet.” In another example, Zubair Bhatti, a Pakistani bureaucrat and head of Jhang district land transfers department, makes random phone-calls to clients to check for corruption in his office. When charges were brought against a staff member who had asked for a bribe, the others realized that Mr. Bhatti was serious. Clients reported a sudden improvement in service, and now the Jhang-model is being extended to other services.
To be sure, alone, big picture ideas for the SIM register is neither a panacea for poverty reduction nor going to be easy to implement; but then no one said managing an economy of 23 million is supposed to be a cake-walk. It must be supported by other structures (such as directly electing District Chief Executives – i.e., the mayor – so they can be held accountable).
And will require lots of social awareness. More importantly, the government needs to partner with the private sector (here, the service providers) who have better access to today’s cutting edge technology. Writing in the Wall Street Journal Asia Edition (May, 2008), Microsoft’s Chairman Bill Gates stressed the need for such public-private partnerships to leap-frog developmental stages in poor nations. According to Mr. Gates:
“Public-private partnerships make it possible to multiply the impact that a single organization or company could hope to achieve working alone. These partnerships combine public sector organizations’ knowledge of local communities with private companies’ technical expertise and implementation experience. As a result, public-private partnerships can develop and deploy relevant and effective information technology solutions that solve specific challenges with much greater speed.”
There is no doubt that cell-phones have become the computers in the developing world. Any policy framework aimed at radically transforming the economy cannot ignore this. Yes, the SIM card register may curb the crime rate (I hope so), but it is not too late to integrate other smart features so as to enhance its potential for economic and social transformation. The Government of Ghana is currently accessing a US$45 million loan from the World Bank for an e-Ghana project. The objective of this project is to assist Ghana in leveraging ICT for growth and development. What better way to spend this money than to create the right institutions of governance, with the help of the citizens and their cell-phones, so they can begin to live better lives and in dignity.
Source: Edward Kutsoati is an Associate Professor of Economics at Tufts University and an associate of AfricanLiberty.org