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Jun192015

Computer ‘Gold Farming’ Turning Virtual Reality into Real Profits

Friday, June 19, 2015 at 8:11AM

The rapid spread of the internet around the global South is bringing with it new forms of work. One of these trends is so-called “gold farming”: making money in the virtual world of computer gaming by trading in virtual money, prizes and goods for busy gamers who don’t have time to do it themselves. This work now employs 400,000 people – mostly men and mostly in China, but also elsewhere in the South, according to a new report.

Working out of internet centres where they can get access to high-speed or broadband internet connections, “gold farmers” use the global trade in virtual goods for online computer games in the same way stockbrokers trade shares on the world’s stock exchanges. The trade operates similarly to the stock market, with prices fluctuating based on demand and changing by the minute.

And as the report discovered, this trade is acting as a gateway into the world of information technology employment, where computer-literate young men are able to earn an income they could not have done otherwise.

It is a trade that can provide gold farmers with US $145 a month in income. They are often given free food and accommodation to do it, and many have few other economic choices.

“You can probably think of two models,” said the report’s author, Professor Richard Heeks of Manchester University’s Development Informatics Group. “They could play as an individual at a local cybercafe doing their own in-game farming and then selling to one of the trading sites (that buy from farmers at one price, then sell on to player-buyers at a higher price). Or they could be organized into a small/medium enterprise by an owner, all working together in a room full of computers.”

There is a dark side to gold farming too: there have been reports of youths forced to gold farm by gangs who make them work 12 hour days. Crime gangs sometimes become involved and scams proliferate.

Heeks says the downside is the result of governmental ignorance. “The main problem is a lack of understanding about ICT and ICT enterprise generally in some governments in developing countries and in particular a relative lack of understanding about the spread and implications of computer games.”

Supporters see gold farming as a flourishing Southern economy that is worth hundreds of millions of dollars, and exposes participants both to information technology skills and the wide horizons of the virtual computing world. Its defenders say it shows that those who dismiss the expansion of IT infrastructure as a waste of time are missing the emerging economic opportunities it is creating.

Heeks said we still know too little about this fast-evolving sector, but that “gold farming does seem to be providing income/livelihood for young men who would otherwise be unemployed. There are claims that it has helped mop up youths who had otherwise been involved in crime, but we don’t yet know how generalized such claims are.”

The number of players engaged in online gaming has grown by 80 percent per year, and Heeks sees the rise in gold farming as linked to a bigger trend: “in both North and South, we will spend increasing amounts of work and leisure time in cyberspace. Couple that with the growing penetration of ICTs into developing countries, including into poor communities, and there will be growing opportunities for this kind of ‘virtual outsourcing.'”

Currently, more than 300 million people worldwide have access to the internet through fast broadband connections (mostly in developed countries, although this is changing quickly), and more than 1.1 billion of the world’s estimated 6.6 billion people are online.

China is working hard to capture the economic power of the internet. The country’s economic boom has helped create an affluent urban middle class clamouring for the social aspects of internet access like chat rooms, while the government has been driving the roll-out of internet access in rural areas.

The country’s largest Cyber Park is under construction in Wujin New and High-tech Development Zone of Changzhou. It will be a technology incubator, a research and development centre, and a place for small and medium-sized enterprises to innovate.

China’s most ambitious digital media industry development is the Beijing Cyber Recreation District (CRD), a collection of digital media academies and company incubators spread over 100 square kilometres, creating the world’s largest virtual world development. It is already home to more than 200 game and multimedia content producers in western Beijing.

And even in Africa, where broadband penetration rates are very poor, countries are now looking to the mobile phone companies to provide their populations with access to the internet, as they struggle to find a place at the digital table.

Mauritius, an island in the Indian Ocean strategically close to Africa and better known for tourism and luxury hotels, wants to become the world’s “cyber island”, and Africa’s e-gateway. Armed with the first 3G network in Africa (the third generation of mobile phone technology – offering high-speed internet access and video telephony), Mauritius is moving fast to make good on this advantage. And it is even moving to the next level of mobile-phone speed, High-speed Download Packet Access (HSDPA) – allowing even greater quantities of information to be exchanged.

Mauritius joins a select few countries, including Japan and South Korea, at the forefront of access to 3G. Wireless – or wi-fi – computer access is available in three-quarters of the island.

By David South, Development Challenges, South-South Solutions

Published: September 2008

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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Archive.org: https://archive.org/details/Httpwww.slideshare.netDavidSouth1development-challengessouthsouthsolutionsseptember2008issue

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsseptember2008issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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Dynamic Growth in African ICT is Unlocking Secrets of SME Treasure Trove

Monday, June 15, 2015 at 11:05AM

A newly released survey of 14 African countries in 2006 has documented the impact of Information and Communication Technology (ICT) on private sector development and how it is contributing to developing a vibrant Small Medium Enterprise (SME) sector in Africa. It discovered how dynamic the SME sector is, how it has rapidly adopted mobile phone technology (96 percent have it), and how if used properly in concert with this new technology, extraordinary economic growth is possible.

The survey – Towards An African e-Index: SME e-Access and Usage in 14 African Countries – covered only businesses employing fewer than 50 people and took in the vast informal sector in the countries. It investigated if they had access to ICTs, how they are using them and if it was making them more productive. SMEs were especially interesting because they do not waste money (most people are just trying to survive) and they only use what is really useful to them to increase income. In the informal sector this has become the mobile phone.

The countries surveyed included Botswana, Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. With most of the continent’s poor working in the SME sector, little was actually known about the impact of ICT and its link to profitability and labour productivity. And surveying only formal businesses would be telling half the story since about two-thirds of non-resource driven GDP generation is derived from SMEs, and a large share of that from informal ones.

“This is a sector that has no access to formal finance,” said Dr. Christopher Stork, a senior researcher at the Witwatersrand University in South Africa. “The mobile phones present an opportunity to tap into this market and offer finance, banking services, cash transfers – we see this already in Kenya – without the risks of other services. These informal businesses can build up a history, learn how to better control their businesses, and receive loans. Where the financial system is dysfunctional or overpriced, airtime credits can be the new cash form.”

Africa has a high proportion of entrepreneurs because people have next to no social supports to fall back on and need to do business to survive. Most fall into the informal sector where they can avoid paying tax, pay low wages, and keep overheads down. According to Stork, if governments are serious about dealing with poverty, then the best approach is to acknowledge this sector, and rather than crush it, draw it in to become more sophisticated and efficient. He sees the mobile phones as key to this strategy.

“Innovative technology can help these entrepreneurs to acquire the tools they need to do business better. There is a lack of skills in all areas, a lack of accounting skills, a lack of basic financial management. This is where ICT can overcome this. SMEs can get a monthly statement with all their business transactions, making it easier to manage things. This would be a great way to distribute micro-finance. Savings clubs could store cash on the phones.”

The e-Index also noted the trend for mobile phone providers to consolidate and offer common regional services. This could fuel an explosion in cross-border trade as it becomes cheaper and easier to communicate via mobile phone for business. The e-Index also found the ever-growing importance of internet cafes remains. They continue to evolve into multi-purpose business centres offering a wide range of services, from post to word processing. At present they still remain the main means of accessing the internet. And with broadband still minimal and very expensive, it falls on mobile phones to offer internet access, though this will remain mainly in the continent’s capitals.

The survey’s sponsor, Research ICT Africa! (RIA!) network, seeks to build an African knowledge base in support of ICT policy and regulatory design. The network emerged out of a growing need for hard data and analysis to help the continent join the information age. Throughout 2007 it is conducting household surveys on e-access and e-usage and will present the findings in 2008.