Entry Modes and the Impact of Mobile Microfinance at the Base of the Pyramid: Scenarios of “My Village Phone” in Egypt

Entry Modes and the Impact of Mobile Microfinance at the Base of the Pyramid: Scenarios of “My Village Phone” in Egypt

Mostafa Mohamad (Manchester Business School, UK), Trevor Wood-Harper (Manchester Business School, UK) and Ronnie Ramlogan (Manchester Business School, UK)
Copyright: © 2015 |Pages: 32
DOI: 10.4018/978-1-4666-7332-8.ch013
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The expansion of mobile telecoms in the Egyptian market has contributed to different development paradigms. The entry mode and the way telecoms follow to access the Base of the Pyramid market in Egypt identifies which paradigm will take place in the future. Using the case of “My Village Phone,” the authors develop a scenario analysis to explore the linkages between the entry modes and development paradigms. They find that “Pro-poor,” “Para-poor,” “Per-poor,” “Per-poor exports,” and “Networked” are expected to take place if telecoms followed the Base of the Pyramid entry mode. However, they may fail to achieve one or more of these paradigms if they followed different entry modes such as “Capitalists mode,” “Skimming mode,” “Social responsibility mode,” or “Sustainability mode.” This chapter contributes toward a typology of entry modes and development scenarios for mobile telecoms market in general and for mobile microfinance specifically. At the policy level, the authors provide a testable business model for the candidate mobile telecom that looks for holding the fourth mobile license in Egypt. At the theoretical level, they offer a new conceptual framework, the balance of power (Albin, 1997; Jasperson et al., 2002), that is drawn from three social science domains: systems thinking, systemic foresight, and theories of power.
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Liberalisation of human rights and political democracy became a default status, while liberalisation of commerce is still under question (Al Gore, 2013). The idea of globalisation tends to alleviate disenfranchising and reallocate the power between nations, social classes, and individuals. This foresight paper aims to set scenarios of “how mobile technology empowers its users to escape from poverty and turn to off-poor or middle classes”. Today’s global economy embeds real-time flow and exchange of information, investments, and inter-cultural communication. Such exchanges shape both production and consumption (Castells, 2011). Accordingly, we also assumed that “different entry modes of mobile telecoms to the slum market (and production modes) results into different impacts (as consumption modes)”. In doing so, we contribute to the rising debate of finding business solutions for poverty (Anderson, 2006; Anderson & Billou, 2007; Rangan et.al, 2007; Seelos & Mair, 2007). The dominant approaches to liberalise commerce during the last decade delaminated the economy into either an aristocratic class or a striving class, leaving no space for the average class (Cowen, 2013). The former class represents the world minority that is highly educated and invest on computerised systems to synergize and create wealth, while the latter class includes the immense majority that fight poverty and earn less than $2 American dollars a day and live on junk and low priced goods produced by the rich class. The financial crises and the collapse of mega financial institutions in the US and other dependent economies resulted into 60% decrease the jobs of mid-wage occupation with no party left to blame.

Using mobile technology as operant has enabled the poor Egyptians to recall some of their deserved economic power by creating social capital, improving their productivity and purchasing power parity (PPP)1. Such elements reflect the degree of empowerment (or development) that those Egyptians have in their lives. The Multinational Corporations (MNCs) and especially mobile telecoms penetrated in the Egyptian market, aiming to reach to a win-win situation. On one side, they build-up profits and extend their reputation by selling to the poor market. On the other side, this served market (counted to 32 million Egyptians) earns less than 2$/day use the mobile telecommunication to gain stable sources of income and improve their well-being (Verme et.al, 2014). In rural villages, poverty reaches to 28% and some villages have 81% poverty rate. The Base of the Pyramid (BoP) quest raised by Prahalad sheds the lights over market opportunity in serving the poor market through collaborative ties with non-traditional partners (Mohamad et.al, 2014a). Our research, then aims to explore “how the interactions among Vodafone, AYBSD, state officials, and low-income users — the context within which the BoP model is implemented — influence its success on the ground?” We also tend to predict “how could the interpretations and dilemmas of multiple actors shape the development impacts of mobile telecommunications?”

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