Mobile Powered Development: Theory of Change and Policy Recommendations to Drive Social Impact at the Bottom of the Pyramid

Over the past several years, a number of hubs, incubators, accelerators, and startup garages have sprung up along the Ngong corridor¹ in Nairobi to service the city’s emerging startup ecosystem, which has led The Economist to dub the city “Silicon Savannah” (“Upwardly mobile,” 2012). Caffeine-fueled hack-a-thons and events sponsored by blue-chip IT companies have become recurrent meeting places for “who’s who” on the Kenyan technology scene. Although some in the industry are fatigued by the hype, the excitement at competitions, at informal meetings over coffee at Pete’s,² and among the young founders of technology companies remains contagious, as many believe mobile technology has the potential to solve some of Africa’s most pressing problems. While still nascent, Kenya’s rapidly growing mobile technology scene already has produced several success stories. Unfortunately, entrepreneurs in Kenya struggle harder to bring their startup ventures to market or to scale than those in advanced innovation hubs, such as California’s Silicon Valley or Israel, which sometimes is referred to as the “start-up nation” (Senor & Singer, 2009).

As ever more young technology entrepreneurs emerge, impact investment and development funds are becoming increasingly interested in sector-driven approaches that focus on scaling entire industries and ecosystem-driven approaches that support cross-sector development in the private sector (Ayrikyan & Lee, 2013; Bannick & Goldman, 2012; Koh, Karamchandani, & Katz, 2012). This new tack reflects a convergence of issues, interests, and solutions in the developing world, and while probably the right approach, it requires a significant amount of funding and substantial collaboration. As noted by Bauer et al. (Bauer, Lang, & Schneider, 2012), coordinating the formulation and implementation of policy even in commercially viable sectors requires managing a challenging and diverse set of stakeholders. In the developing world, the situation is especially difficult, in that core pieces of the ecosystem are often absent and public support is needed until market dynamics can take over.

A policy dialogue is emerging regarding the potential of mobile services developed by entrepreneurs to have an impact on end-users at the bottom of the economic pyramid (BOP). Many of the discussions are about resolving the barriers entrepreneurs are facing, such as access to financing, lack of mentorship, and the ability to monetize. Ideas for implementation that are being piloted in various locations range from building developer toolkits to sponsoring hack-a-thons to creating Silicon Valley-style incubators and accelerators. However, before donors and policymakers finalize their strategies to support mobile entrepreneurs in the developing world, it would be worthwhile to clarify the pathways that are enabling end-users living in poverty to realize social benefits from mobile services.

This paper proposes a theory of change in terms of how entrepreneurs working in partnership with the mobile industry can deliver these benefits to people with low incomes, especially those at the BOP. We begin with our theory of change hypothesis and describe the enabling factors that make it possible to scale impact using mobile technology. We then introduce several policy approaches to addressing barriers in the entrepreneurship ecosystem that will help to accelerate the development of mobile services that reach the BOP.

Theory of Change

A 2011 paper by Accenture, the global consulting company, (Bulloch, Lacy, & Jurgens, 2011) presents the increasing reality of and desire for collaboration among donors, private sector, and government on a converging set of issues, interests, and solutions in the developing world. The theory of change we posit in this chapter describes how cross-sector convergence among the mobile industry, the entrepreneurship ecosystem, and development interests can scale mobile services for BOP end-users. As illustrated in Figure 1, we see three important enablers:

Mobile networks’ economies of scope has lowered the transaction cost for servicing BOP segments.

Mobile user digital identity enables transactions through the mobile network as trusted parties, without limitations of location and time.

Open innovation provides a collaborative framework for tapping into consumer needs and providing creative talent to help address those needs.

1. Mobile networks’ economies of scope

As noted by...