A Critical Look at Mobile Phone Business in Liberia

By Alex Redd

The Perspective
Atlanta, Georgia
July 18, 2005

On July 13, 2005, a consortium of six human rights and pro-democracy groups operating in Liberia released a press statement entitled: Piercing the veil of corporate conspiracy in Liberia. The press release called on all Liberians to quit using GSM, the world’s dominant mobile phone standard. The Lone Star Communications Company, a mobile-phone outfit in Monrovia, is accused for cheating mobile phone users by inflating service costs, for example, selling Sim Card for $65 and $15 for Scratch Card. The groups noticed that, with the company’s monopolistic power, the scratch card price was dramatically reduced to $5 following the swift departure of former Liberian president, Charles Taylor in August 2003. In the midst of all this, the groups heavily suspect Taylor and his cronies as business partners with the company, which helped to enrich them and fuel the regime’s war machine for nearly four years. These acts, according to the groups, are nothing short of profiteering and exploitation. Therefore, the Justice Ministry must immediately investigate this latest revelation or else the company would face a possible litigation. If the company were found guilty in the court of law, the groups would then expect the mobile phone company to pay back the alleged overcharges. What is still at stake here is for the company to either publicly deny these allegations or plead its case in the courts of Liberian law.

Attempt by these groups to discourage monopoly and graft is quite welcoming on behalf of the suffering Liberian people. This brings into light one organic rule of ethical practice that has long been conspicuously absent from previous Liberian governments including the present transitional administration: transparency. This article is intended to provide a shedding light on the essence of mobile-phone business in post-war Liberia, as well as the desperate need to encourage transparency in the business environment of our country.

These groups have envisioned a new Liberia, where business transparency will certainly promote growth and development in the reconstruction process. These groups are apparently looking at the big picture of economic and social benefits that mobile phones may contribute to the development of our poor country and its people in the future. What are the economic and social benefits of mobile phones? The increase in mobile-phone use would reduce transaction costs, broaden trade networks and reduce the need to travel. For instance, business people in Monrovia can easily transact deals on ready-to-pick-up local goods and produce with, say, other business people in other rural parts of the country. Mobile phones would help strengthen trade relationship with the global market and expedite trade transactions between local entrepreneurs and foreign investors as well.

Mobile phones would allow local fishermen and farmers check prices in different markets before selling produce, allow quick and easy transfers of funds and would boost entrepreneurship. This digital phenomenon has already created a great impact since its introduction in our country. Liberians have also rushingly embraced the use of mobile phones because of its social benefit. Unlike old-fashion fixed-line phones, mobile phones have made it apparently easy for Liberians living abroad to communicate with their families, relatives and friends without any hassle. The good thing about mobile phone is that it does not rely on a permanent electricity supply and can be used by people who cannot read or write. Mobile phone can be shared by a whole village and also rented out by the call. Besides radio, which is a predominant form of communication device use in Liberia to disseminate information, mobile phone is indispensable to boost future financial economy but it has to be encouraged, nurtured and protected by all means necessary.

What Can The Liberian Government Do?

The increase in the use of mobile phone has risen in many developing countries. Proliferation of the device has spread, and it is the most sensible and effective response to digital divide. To close the digital divide between the rich and the poor, the Liberian government would have to liberalize the telecommunications market, doing away with lumbering state monopolies and encouraging competition. The early competition is introduced, the faster the digital divide gap would close and spread fast. The government would also have to lower its taxes on mobile phones in order to allow the industry to sell the phone cheap.

According to the World Bank, countries with well-regulated competitive markets have seen the greatest investment, with private sector accounting for $230 billion in telecommunications infrastructure investment in developing countries between 1993 and 2003. Last March 14, the United Nations launched a ”Digital Solidarity Fund” to finance projects that address the uneven distribution and use of new information and communication technologies, which will enable excluded people and countries to enter the new era of the information society. The UN new plan is intended to halve the digital divide by building local rural computing centers such as telecenters.

A discussion will get underway this September on how the new UN fund will be financed and managed. The discussion is expected to encourage technology firms operating in poor countries to donate 1% of their profits to the fund, and in return the firms would be able to display a “Digital Solidarity” logo. Earlier this year GSM Association, which promotes the use of mobile phone standard, invited operators of mobile phone industry in developing countries to bid for contract to supply up to 6 million handsets for less than $40 each. Motorola won the contract.

The aim of this scheme is to draw manufacturers’ attention to the needs of poor countries such as Liberia. Developing cheap handsets for new markets in poor countries such as Liberia coupled with the UN’s ambitious agenda would certainly promote growth. The Liberian government should open its telecoms market in a transparent manner and way then firms and customers would be able to find a way to close the digital divide on their own. Promotion of both urban and rural technology appear particularly useful to the literate, to the wealthier and to the younger—those who sit at the top of the socio-economic hierarchy. As philosophers would put it, enlightenment breeds transparency. The effort by these Liberian civil groups to investigate the “dubious business activity” of mobile phone company, Lone Star Communications is helpful because the civil groups’ advocacy role are indicators of a sense of civic pride and social inclusiveness that is better known by political economists as human development.

To encourage the idea to improve our communication system in Liberia, transparent regulations and procedures are desperately needed from the top to the bottom of the public-private sector. Business contracts signed between investors and the government should be available for public perusal. If such contract deals, as a document, were made public then it would likely reduce the chance of profiteering and exploitation. The public would then know the terms and conditions under which a business or investor is operating. It would also afford the public the opportunity to know how much the government receives from the business contract and how much the government would then use from the business deal to spend on social meaningful projects.

A clarion call for such transparency would strengthen our resolve to reconstruct our country after nearly fifteen years of civil instability. On the other hand, the state should not always be a major economic actor, which is why corruption is so rife and entrenched. Instead the state should help encourage and nurture the private sector with subsidies that will make it grow and develop in order to provide jobs for the people.