Myth 2: Poor people have no alternatives.

Would you pay an additional 20% per year of your annual income, on any of the following…?
   a)      A chauffeur service
   b)      Reliable news
   c)       Private tutoring services
   d)      A supplementary health plan

Most people probably would not. The fact is, most of us already have alternatives to these things – transport, news, education, healthcare – at a much lower cost, and so even if we’re not getting the best version of those services, we’re content with what we have and would probably not pay a lot more.

Yet, coughing up the cash for a high-quality information service is often exactly what some ICT4D projects expect of very poor communities. Many telecenter projects, for example, thought that they could become self-sustaining by charging customers… 10 cents for a printout, 25 cents for an hour of Internet usage, $1 for a few hours of computer-literacy classes.

But, rich do-gooders often don’t realize that poor people have their own alternatives. A researcher I know once put together estimates of the costs of various information-based services available to a person in peri-urban neighborhoods of India metropolises [i]. She found the following: The per-hour cost of services ranged from free (e.g., general information, health information, agriculture information), to not much more than 12 cents (e.g., entertainment, news, education).

Meanwhile, the typical cost to use an Internet café for an hour in India is around 25 cents, and Internet café owners aren’t exactly raking in the big bucks. Any transaction cost that would help recover operating costs for ICT-delivered services, are often greater than what a poor client would be prepared to pay for the sake of services they already believe they have sufficient access to.

Granted, the services they can afford are not of the quality that you or the Jester would find acceptable. But, then, what you and the Jester find acceptable are probably not acceptable to Bill Gates and Sergei Brin. I’m sure their kids have healthcare plans that would teleport the world’s best plastic surgeon to the scene, in the event of a skinned knee. It’s all a matter of what you’re used to.

So, what are the lessons for an ICT4D project hoping to recover costs from the client? (1) If you’re planning to charge poor people for services that are supposedly to be good for them, the cost needs to be incredibly low; it needs to beat the alternatives they already have. (Note: This is not necessarily true for products they really want — but those are rarely products that are supposedly good for them. See Myth 3.) (2) Poor people have alternatives. (3) Yes, they do. Look again!


[i] The researcher was Aishwarya Ratan, Microsoft Research India.

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