Final Documentation

Providing telecommunications to poor communities in South Africa, Vodacom 2003

    Description
    This study is part of the World Resource Institute's Digital Dividend project "What Works" case study series to examine promising approaches to delivering products and services to the poor through information and communications technologies.

    Vodacom Community Services, a program of Vodacom, South Africa's largest cellular phone company, is an example of how business and government can work together successfully to achieve significant social and economic goals. Begun under a 1994 government mandate to provide telecommunications services in under-serviced, disadvantaged communities, Vodacom developed entrepreneur-owned and operated phone shops to provide affordable communication services to millions of South Africans and empower thousands of previously disadvantaged individuals with income-generating opportunities and lasting business skills.

    The Community Services business model emphasizes the establishment of phone shop franchises owned and operated by entrepreneurs from disadvantaged communities. Although initially subsidized by Vodacom, the program now covers its costs with revenue from sales. Vodacom supplies franchisees with converted shipping containers and ongoing training. Vodacom maintains the containers and owners are responsible for all equipment. Vodacom offers owners business insight and a running start, but limits involvement beyond training. An entrepreneur's ultimate success or failure is contingent on his or her own skills. The program currently partners with 1,800 entrepreneurs who operate over 4,400 phone shops throughout South Africa.

    Methods for info gathering
    Case study

    Summary of results
    The Community Services model succeeds because it offers a basic and vital service to disadvantaged communities at affordable prices. It also generates jobs, creating entrepreneurial opportunities for thousands of prospective business owners and increasing incomes. The entrepreneurial nature of the program allows Vodacom to reach three to four million customers who make close to 100 million calls a month. On its own, the company would be challenged to operate and maintain the number of phone shops that now exist. The wide geographical distribution and high number of local operations would make management costs prohibitive. And, phone shop owners are in a better position to assess community needs.