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Cell phone monies
I heard a report that in northern Tanzania they are using cell phone credits in lieu of traditional money. If you want to pay for something, just make a call to the provider and transfer cell phone credits to the other trader's account. Why should those credits be any less liquid than currency? They are easier to store and transfer and just about everybody uses them.
Monetary economics in Africa is very, very difficult. It must start with the presumption that money is the asset with the highest carrying costs, if only because your relatives find it so easy to take away from you.
Posted by Tyler Cowen on May 16, 2007 at 02:43 PM in Economics | Permalink
Comments
Yes, Theodore Dalrymple wrote about his days in Rhodesia that the black doctors who made the same salary as him had much lower personal living standards as the white doctors, because the black doctors' obligations to support relatives constantly expanded to more and more distant relations as their pay went up. This made corruption inevitable, as Big Men were corrupt less for their own comfort than for that of their vast extended families.
Similarly, in John Updike's amazing 1978 novel "The Coup" about a hyper-intellectual African dictator, Updike makes the same point when the dictator Ellellou visits the French colonial villa that his most traditional wife had seized and which was now populated by an entire village of his extended family from the Salu tribe:
"Nephews, daughters-in-law, totem brothers, sisters by second wives of half-uncles greeted Ellellou, and all in that ironical jubilant voice implying what a fine rich joke, he, a Salu, had imposed upon the alien tribes in becoming the chief of this nation imagined by the white men, and thereby potentially appropriating all its spoils to their family use. For there lay no doubt, in the faces of these his relatives … that nothing the world could offer Ellellou to drink, no nectar nor elixir, would compare with the love he had siphoned from their pool of common blood."
Posted by: Steve Sailer at May 16, 2007 3:08:22 PM
We have been using airtime as currency in Nairobi for a while. I regularly take change from taxi drivers in airtime - they don't like carrying cash as they are at risk from thieves.
Here is an even weirder one for you: the creation of a fractional reserve banking system (of a type) with disastrous results:
In a refugee camp for Sudanese in N.Kenya, men are separated from their cows, which are their wealth and currency. To trade in the refugee camp, the men have developed a chit system (IOU one cow etc). However, there are far more chits than cows in the system as no-one can check on true ownership).
The effects: (1) As cows are used for dowries, men are accumulating wives at a hitherto unprecendted rate, and (2) inflation in brideprice.
A tale for our times, I think.
I work down in Tz as an applied environmental economist. Drop me a line if you would like to know more.
Posted by: Mark at May 16, 2007 3:34:29 PM
Monetary theory is no harder in Africa than it is in the US. The value of their money, like ours, is equal to the value of the assets backing it.
Posted by: Mike Sproul at May 16, 2007 6:52:58 PM
How do you stop your relatives from "borrowing" all your phone credit?
Posted by: doctorpat at May 16, 2007 10:23:49 PM
Money is not really that liquid over there either.
I spent some time in Kenya, and I had all sorts of problems breaking large(ish) denomination bills. Is liquid really the right word for this?
Posted by: A student at May 16, 2007 11:39:44 PM
I think the point of phone credits is that it's much easier to hide phone credits than currency/other assets.
Posted by: nelsonal at May 17, 2007 8:54:09 AM
Suppose a friend or relative is in need, and they ask you for money. You say no, you cannot help them now. They then steal the money from you. You cannot confront them about it, without admitting that you in fact had the money and refused to help them. The airtime, while still subject to on-demand sharing, is not subject to its cousin, socially tolerated theft.
Posted by: Cyrus at May 17, 2007 10:35:35 AM
This is an easy way for theft, but it is easier than carrying money. Both ways you could be robbed. As long as the seller is getting paid they do not care about security they are meeting demand and making money. I think that consumers should be more concerned with security of their credit card numbers given to other people. Consumers are ignorant when it comes to safety of their card and money information.
Posted by: Susan at May 20, 2007 11:33:01 PM
I think it a misnomer to think mobile phone companies are givign any reals ervcie to africa, betweebn thenm and the big fizzy drink companies money is being pumped out of africa.
Posted by: DECT Phones at Aug 12, 2009 8:39:08 AM
I think it a misnomer to think mobile phone companies are givign any reals ervcie to africa, between them and the big fizzy drink companies money is being pumped out of africa.
Posted by: DECT Phones at Aug 12, 2009 8:44:48 AM
