The following note is taken from Afford Two, Eat One: Financial Inclusion in Rural Myanmar.
It's impossible to understand the financial inclusion space in Myanmar without having a basic understanding of the mobile landscape. For the poor personal and convenient connectivity impacts everything from information about and access to credit, business operations and opportunities, to connecting families that have been split by economic migration.
Mobile penetration in the country is currently estimated by the GSMA to be 14% and the Myanmar government is targeted penetration of 50% by 2015, through the recent sale of 3G licenses to Telenor and Qatar Telecom's Ooredoo. The sale of pre-pay airtime will also spur primary and supplemental income generating opportunities, for example through a network of an estimated 720k+ points-of-sale for top-up that Ooredoo has committed to building out.
To highlight four interrelated points:
- Access. As little as five years ago a SIM card costs $5,000 USD, and will drop to the government mandated price of $1.5 for new 3G networks. Call, text and data tariffs are yet to be announced.
- Consumer Literacy. The market for devices is currently rather quirky: a mixture of feature phones; entry level android smartphones; and super-rugged feature phones. We expect the latter to evaporate over time as connectivity improves and device costs decline. As consumer literacy rises, so will their understanding that a robust brand-name feature phone is actually a smarter middle term investment than than a super-rugged device from a Chinese 3rd manufacturer (there is little difference between the cost of a 1st tier branded entry phone and the tier 3 rugged counterpart).
- Global Lead Behaviours Our clients are constantly trying to understand what local outliers are indicative of future global trends. For a significant percentage of the Myanmar population their first regular phone calls will neither be on landline nor through the the default dialling feature on a mobile phone, but rather through "free" mobile VoIP services such as Viber, that also support messaging and picture sharing.
- There are a number of companies looking at the "next billion" smartphone users (our team have worked on a number of these projects for clients that include the usual suspects and a few less-obvious ones). We believe there is significant lack of understanding around what drives consumer behaviour in this space, particularly amongst Silicon Valley players (given their bravado, ego and bankroll the term "playa" may be more appropriate in this context). It might seem counter intuitive, but in some regards the mass market consumer in Myanmar is at the global cutting edge in terms of mobile adoption, unencumbered by legacy business models and assumptions.
Adoption is of course an endless cycle. Some of the first “cloud dwellers” were, arguably Chinese migrant workers in cities with good local connectivity: they had no need for at-home or on-person storage because “all the content” they wanted was available on-demand whenever they need it through local internet cafes, a space that also provided a place to sit, smoke and play games. It is a reminder that, as with Myanmar, consumer expectations and satisfaction is framed by their understanding of what is supplied, (a lack of) competition in the market, and by the distortions of information flows and mindshare. In China popular content is available with local subtitles within 8 hours of being broadcast anywhere in the world. It takes 30 hours to to drive a truck laden with electronics from the factory gate of the world's most vibrant manufacturing ecosystem to the Myanmar border.
It is a unique landscape to observe and track emergent behaviours.