Boosting Productivity: How Mobile Broadband Transforms Benin's Food Supply Chain

Mobile broadband adoption significantly boosts productivity among grains and legumes suppliers in Benin, with younger, wealthier, and more educated individuals benefiting the most. Policy improvements in broadband quality can drive higher adoption rates and enhance food supply chain efficiency.

Mobile technologies are proving to be a game-changer for productivity in small-scale businesses, particularly in the food supply sector in Africa. A study by Pierre Nguimkeu and Cedric Okou, published in an IMF Working Paper, delves into the impacts of mobile broadband internet on the productivity of grains and legumes suppliers in Benin. With data collected from semi-rural markets, the research reveals that digital technology adoption significantly boosts business transactions among suppliers.

Boosting Business Transactions with Digital Adoption

The study employs a structural model to analyze digital adoption, defined as using mobile broadband through smartphones, and its effects on productivity. The findings show that younger, wealthier, and more educated suppliers, particularly those surrounded by other users, are more likely to adopt mobile technologies. On average, adopters perform four to five more business transactions monthly than non-adopters, a substantial increase given that non-adopters average ten transactions per month. Notably, most adopters are women, although the productivity gains from adoption are more pronounced in men. The model suggests that policy improvements in broadband quality and accessibility can drive higher adoption rates and productivity gains. Simulations indicate that enhancing internet quality could potentially double the adoption rate and significantly boost productivity, while merely reducing costs has a moderate effect unless accompanied by quality improvements. Improving access to credit also shows limited impact on adoption rates, highlighting that connectivity quality is a critical factor.

Addressing Food Security with Technology

Food security remains a significant challenge in Africa, where many people face chronic undernourishment and acute food insecurity. Market frictions, including limited market access, poor transport infrastructure, and constrained storage capacity, exacerbate food insecurity. However, the rapid uptake of mobile phones and broadband internet across the continent offers a promising solution. This study, focusing on Benin, illustrates how digital technology adoption can improve the productivity of small-scale businesses in the grains and legumes markets, which are vital for food security in Africa. Data collected from two semi-rural markets in Benin reveal that about 45% of respondents use mobile broadband to navigate social media and digital applications, and 30% use it to trade their products. Despite high connection costs, which constitute a significant portion of the minimum monthly wage in Benin, the benefits of digital adoption are clear. Younger, wealthier, and more educated suppliers are more likely to adopt mobile technologies, and those who do perform significantly more business transactions than their non-adopting counterparts.

Understanding Adoption Patterns and Their Impacts

The study's structural model helps explain these adoption patterns and their impact on productivity. It shows that suppliers adopt digital technologies only if their digital-specific productivity exceeds a certain threshold, which is higher for credit-constrained suppliers. The model's empirical tests confirm that digital technology adopters are more productive, performing more transactions per month than non-adopters. Interestingly, while women adopt mobile technologies more than men, their productivity gains are lower, suggesting that men benefit more from these technologies. This gender disparity in productivity gains might be due to various factors, including the different ways men and women use digital tools. Policy simulations with the model indicate that improving the quality of broadband internet yields the most significant improvements in adoption rates and productivity gains. Specifically, enhancing network quality can lead to a 100% adoption rate and a 180% increase in productivity. In contrast, reducing internet costs without improving quality has a limited effect on adoption rates. Access to credit also shows limited impact on adoption, suggesting that without quality internet connectivity, other interventions may not fully realize their potential benefits.

Policy Interventions for Enhanced Connectivity

The implications of these findings are profound. By improving internet quality and making digital tools more accessible, policymakers can significantly enhance the productivity of small-scale businesses in the food supply sector. This, in turn, can contribute to better food security and economic development in regions like Benin. The study highlights the need for a comprehensive approach that addresses both the cost and quality of internet connectivity to maximize the benefits of digital technology adoption.

Transforming Food Supply Chains in Benin

The adoption of mobile technologies in semi-rural markets in Benin has the potential to transform food supply chains and improve market efficiency. Younger, wealthier, and more educated suppliers are leading the way in adopting these technologies, which significantly boost their productivity. However, policy interventions focusing on improving internet quality and access to credit are crucial for broader adoption and more substantial productivity gains. This research provides valuable insights for policymakers and stakeholders aiming to leverage digital technologies for economic development and food security in Africa. By addressing the barriers to digital technology adoption, such as high costs and unreliable networks, they can create an environment where small-scale businesses thrive, ultimately contributing to broader economic development and improved food security.