Mobile Phone Shopping to Create Efficient Markets across Borders

 

An anticipated game-changing revolution in African trading set for 2013 is getting one innovative business very excited.

Southern African mobile phone “m-commerce” pioneer moWoza (mowoza.com) is developing new ways of selling services and products through mobile phones and developing the networks and infrastructure to capitalize on coming changes in Africa as cross-border trade is liberalized.

It is already selling food packages containing well-known South African brands that can be ordered by migrants on their mobile phones and then delivered to recipients – family or friends – even in remote and hard-to-reach communities. The service is currently operating between Mozambique and South Africa – the two countries share a border.

The start-up hopes to help the millions of migrant workers and small traders who contribute to the constant flow of trade and wealth between states in Africa. These people face many obstacles, including bureaucratic red tape, corruption and harassment.

Cross-border trade by economic migrants is largely informal. moWoza hopes to make it formal and efficient while reducing exploitation of migrants and corrupt practices by officials. By providing an easy-to-use mobile phone service, it hopes to build trust with these transactions.

Africa is a market of a billion people worth US $2 trillion in trade and business, but the World Bank estimates the continent is losing billions of dollars in potential earnings because of high trade barriers. It found that it is easier for African countries to trade with the rest of the world than with other African countries.

The continent’s leaders are calling for a continent-wide free trade area by 2017.

Studies by the World Bank and others have repeatedly shown that inefficient transport and trade barriers translate into higher prices of goods for consumers as importers pass along high transport costs to consumers. Food prices remain extremely high in Africa – almost 25 per cent higher than they were in 2006, according to the World Bank. In developing countries, people normally spend up to 80 per cent of their incomes on food.

With the world in the grip of an ongoing food crisis brought about by multiple factors – including growing populations, environmental challenges such as drought and soil depletion, declining rural economies, inefficient farming methods and commodity speculation – measures that increase efficiencies and trade can be a powerful counterweight and help drive prices back down again.

moWoza – mo stands for mobile and Woza is a Zulu word meaning running -sells a range of products including basic foodstuffs to a target market of cross-border migrants in Southern Africa. moWoza estimates there are 7 million migrant and cross-border shoppers in South Africa alone, and it’s building a network reaching into remote communities to deliver packages ordered through its m-commerce service on mobile phones.

moWoza aims to open up access to products in these underserved markets.

moWoza is trying to position itself for the new opportunities that will arise when, in 2013, 23 African borders open for regional trade, creating a vast trading area stretching from Cairo in Egypt to Cape Town in South Africa.

moWoza wants to be the m-commerce brand that people will turn to. It is chasing customer markets that include African economic migrants, small and medium-sized enterprises doing cross border trade, and the 30 million African economic migrants who are supporting family back in their home countries.

Founder Suzana Moreira says the company carried out extensive research in South Africa, Mozambique, Lesotho, Zimbabwe and Kenya before launching its first trial runs between South Africa and Mozambique. “We ran several pilots to determine the most efficient way to provide access to packages for the beneficiaries and developed the necessary technology to enable our customers (migrants) to place orders simply. We are now operating between Johannesburg and Maputo,” she said.

Officially incorporated in 2009, moWoza did not get up and running until 2010.

Once a customer has experienced a delivery from moWoza, they are introduced to other services like banking or how to download information from the Internet. Many customers are only just learning about the resources available online.

“We look forward to the opening up of cross border trade as our findings suggest that the liberalization and facilitation of the cross-border trade initiative will increase demand for all products and services from South Africa to neighbouring countries,” Moreira said. “South Africa offers an extensive range of products compared to the choice of products that are offered in many of the neighbouring countries.

“The structures and networks that compel migrants to come to South Africa are well established,” she explained.

“The social networks encourage the movement of labour. Hundreds of thousands of male migrants from the Southern African Develoment Community, SADC (http://www.sadc.int/), countries have spent the greater parts of their working lives in South Africa. They in turn had parents or grandparents who had worked in South Africa, while providing a lifeline to the family in the home country.

“This practice will continue: mobile money to a degree will facilitate this lifeline but as long as products can be sourced cheaper in South Africa, the demand for South African products will continue.”

The people behind moWoza sound like business radicals, proclaiming that traditional ‘bricks and mortar’ businesses will be replaced in a shopping revolution by WAP (wireless application protocol) and SMS (short message service) business platforms operating on mobile phones.

Apart from developing the m-commerce business, moWoza aspires to become a well-known brand for the migrant community.

“Becoming a lifestyle brand is a bold statement on our part,” Moreira said. “However, this goal reflects a measure of success and would demonstrate that we are delivering value to our customers (migrants and micro-merchants) and their beneficiaries.”

The moWoza brand hopes to reflect the lives of their customers and be all about embracing fluidity and mobility.

“As our primary customers are transnational and highly mobile (immigrants with a dual existence), we would like moWoza to represent mobility and fluidity (attune to anytime, anywhere, always).” she said. “Their greatest aspiration is an improved livelihood and a simplification of the rigours of grass-roots existence.”

moWoza foresees big changes coming for the economies of the African countries affected by the opening up of regional trade. According to its website: “New markets and trading routes will mushroom, traditional value chains will be replaced with ICT [information and communications technology] innovations; a savvier and younger consumer will emerge who will value convenience and simplicity.”

For users, moWoza’s service works like this: A customer uses a mobile phone to make a purchase. An agent helps with selecting the right package and delivery options. When the payment is made, an SMS mobile receipt – a so-called m-receipt – is sent to the customer. The person who will be receiving the parcel will also receive a text message. During the delivery process, ‘m-updates’ are sent on progress to both parties and when the parcel is finally delivered, a final notification is sent of delivery.

Special drop-off points have been set up in countries where the service is available and there is follow-up contact with the customer to determine their continuing needs.

MoWoza hires people from the communities they operate in as agents. An agent works with the customer to show how the Internet works on mobile phones and to improve their literacy skills.

Product parcels are selected to meet the World Health Organization (WHO) nutritional guidelines. The packages are selected based on focus groups and customer feedback.

With offices in South Africa and the United Kingdom, moWoza is looking forward to expanding what it can offer.

“We will continue to innovate, and deliver services that improve the livelihoods of our target market and their beneficiaries,” Moreira said. “We will extend our packages to include seeds and other agricultural products, school and educational materials, and health products. As we grow, our services will extend to digital (virtual) goods, e.g. insurance products specifically targeting the underserved communities.”

By David South, Development Challenges, South-South Solutions

Published: August 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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False data makes border screening corruptible

“Big Brother” system could violate rights of Canada’s visitors

By David South

Now Magazine (Toronto, Canada), May 21-27, 1992

New technology that can spew out a person’s life history in less than six seconds is now available to Canada’s customs and immigration officials.

And while Canada customs and immigration officers say this toy is a boon – replacing the need to memorize names of so-called undesirables – civil rights workers and refugee activists point out that the gizmo could have serious consequences, with little recourse.

The technology is called PALS, or primary automated look out system, and is already in operation at airports in Toronto, Montreal, Calgary, Winnipeg, Ottawa and Vancouver.

PALS’ operation is based on the use of computer-readable passports. Canada is one of several countries that have started including computer strips on passports and identity cards. Officers use PALS by either keying in a special number printed on the passport or identity card or using a scanning machine to read the strip.

The system went into effect at Toronto’s Pearson airport on January 20, after a three-year pilot project in Vancouver, adding Canada to the 11 countries that have machine readers for passports. Under the old system, customs officers combined judgement, questioning and the most-wanted list to decide if a passenger required further interrogation and search.

During a demonstration of the system, customs officials at Pearson airport boast about the system’s role in apprehending a drug smuggler in PALS’ first week of operation.

Sinister sign

But to civil libertarians with experience of such systems in other countries, PALS has a sinister implication. Many say that PALS spews out what is fed into it. And depending on the country involved, what is fed into it may not necessarily be true.

While customs emphasizes PALS’ role in apprehending popular targets like drug smugglers, terrorists and child kidnappers, its reach also includes people who have smuggled in too many cigarettes or bottles of alcohol, convicted criminals who have finished serving their time, immigrants, refugees and a range of petty offenders.

All of these face a second interrogation and detention based on what their governments have decided to incorporate into the computer strip. And it is this that worries civil libertarians and refugee workers.

Consider the case of a legally sponsored Portuguese immigrant who arrived at Pearson just after PALS had been introduced. He was detained based on information stored in PALS. His immigration lawyer Ali Mohideen recalls how the man was held because of a cheque that he bounced in his native Portugal about eight years ago.

Ed Lam, director of research for the Canadian Ethnocultural Council, feels customs and immigration already have “too many powers.” He regularly receives complaints from visible minorities and immigrants who feel they are singled out for harassment at the airport.

“This is big brother. Legal protection is not enough,” he argues. “It leads to costly court battles with the government. I would like to see an ombudsperson or complaints bureau set up. As for refugees turned back at the border, we will never hear from them.”

False data

Other critics, especially those in the US, where a PALS-type system has been in operation for more than a decade, worry that the system will simply accept information given by tyrannical governments.

“It is hard to trace false information to a foreign government,” says Jeanne Woods, legislative counsel to the American Civil Liberties Union, which monitors abuse under the United States system.

“People have been accused of being communists or terrorists who have denied it. The El Salvadoran government is one example of a regime which has called prominent human rights activists and lawyers terrorists.”

She would like the Canadian Parliament to pass a law similar to one passed last November in the US requiring the state department to report to Congress when somebody is denied access because they have been called a terrorist, so that the origin of the information can be tracked.

The Canadian database draws its information from several sources, according to customs spokesperson Suzanne Bray. The sources include immigration records and the Police Information Retrieval System, which is a database shared between customs and the RCMP.

Bray refuses to divulge any other sources, citing security, but both RCMP and customs operate their own intelligence services, sharing information with their counterparts all over the world, especially the US. Information is also drawn from the Canadian Security Intelligence Service (CSIS) and its sister organizations such as the CIA. However, CSIS spokesperson Ray Boisvert says they have adequate safeguards against false information provided by countries known to be human rights abusers.

“CSIS does look at bias in intelligence reports,” he says.

The US equivalent of PALS has been criticized after several cases of abuse were detected. Gara LaMarche, executive director of the Fund for Free Expression, a project of US-based Human Rights Watch, has documented abuse on political and ideological grounds.

“The US public has a right to hear dissenting views under the first amendment of the Constitution,” he says. “I don’t think improving the technology of border control violates civil liberties, but keeping a massive database of information which includes people’s political associations is bad.”

Similar concerns are expressed by John Tackaberry of Amnesty International in Ottawa, which is only now beginning its own analysis of PALS. “We have concerns over data input, who controls information and basic civil liberties.”

Even as Canadian civil rights activists take stock of PALS, Canada customs is planning to use it to check cross-border shopping by expanding the system to all land entry points.

As for those visitors who feel wronged by PALS, they may have a problem seeking redress from such organizations as the Canadian Human Rights Commission. A spokesperson says the CHRC can only help those who have been admitted to Canada. And visitors turned back at the border are not considered admitted.

Sherry Gerstl, a customs superintendent responsible for the implementation of PALS at Pearson, says that people can also appeal to the Privacy Act to see information that is kept on them. But two fact sheets explaining how this can be done are located in a corner, pretty much out of public view.

Bray acknowledges that “honest” passengers could face the prospect of a search with PALS, but given its positive attributes, she says, passengers involved in such delays should simply “grin and bear it.”

"False data makes border screening corruptible": Now Magazine 1992

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