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Cablegate: Ifc Village Telephony Project Underway in Nigeria

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E.O. 12958: N/A
TAGS: ECON ECPS EIND NI PGOV PREL EINV
SUBJECT: IFC VILLAGE TELEPHONY PROJECT UNDERWAY IN NIGERIA


1. Summary: The International Finance Corporation would
create, at a minimum, 1000 businesses for rural women and
extend mobile phone network coverage to rural areas. The
Village Phone Project would also expand the capacity of
microfinance institutions to manage small-scale loans. This
project was backed by the U.S. Trade and Development Agency.
End summary.

2. With U.S. Trade and Development Agency (TDA) backing, the
International Finance Corporation (IFC) of the World Bank has
begun a Village Phone Project in Nigeria to extend mobile
phone network coverage to rural areas, provide women
employment opportunities, and build capacity in microfinance.
The IFC and Mobile Telephone Network (MTN), a leading South
African-based telecom company, partnered on this project,
which has the potential to offer the telecom giant
profitable, long-term rewards. The IFC aimed to create 1000
"viable businesses" for rural women with experience in
marketing or small business; a recent pilot project trained
400 women as distributors. While the project was beginning
in Ondo, Delta, Kogi and Enugu, the IFC hoped to expand the
project to other states. It has launched similar projects in
Madagascar, the Democratic Republic of the Congo, Mozambique
and Senegal. According to Lauren Rawlings, Project Manager
of Village Phone Projects at the IFC, rural telephony
projects are attractive for telecom companies because they
allow them to bypass government regulations meant to limit
expansion.

3. Rural areas appropriate for the project are chosen by
mapping areas where mobile phone reception is poor or
nonexistent. MTN then overlays its own map of areas in which
it is interested in expanding services. Finally, IFC
identifies rural communities whose growth rate has the
capacity to sustain the project for three to five years.
Other considerations include how active competitors appear to
be and whether there are microfinance institutions (MFIs)
available in these areas. The Growing Business Foundation
(GBF), IFC's implementer, will train the microfinance
institutions in how to manage small-scale loans. In early
August, GBF will train 70 Nigerian women in basic business
skills, marketing, customer service, reporting and how to use
their phone kits.

4. According to Rawlings, one of the project's goals is to
enable rural women to access MFIs so that as their businesses
grow, so do their credit lines and subsequently their ability
to access larger loans. Microfinance institutions will
select project participants based on a well-defined set of
criteria which, Rawlings said, is meant to prevent
preferential treatment. Thus, a component of this project is
to link rural women with MFIs that will enable them to
purchase project equipment and supplies. At the same time,
the IFC hopes to increase the capacity of MFIs and services
they are able to offer through discussions between the MFIs
and rural customers about their needs.

5. Rawlings applauded MTN's responsiveness and engagement in
this social responsibility project, but she anticipated the
need for greater "business buy-in." For example, if the
network is not functional for four days and phone card
minutes expire after 30 days, distributors will want a credit
or extension on the life of their phone cards. The Village
Phone Project has the potential to expand to value-added
services such as eTransact, which offers bank and government
transfers, mobile banking, and enhanced commodities tracking,
Rawlings said.
MCCONNELL

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