My colleague Kingsley wasn’t off the mark in his blog last month about my Christmas wish. A lifetime Netflix subscription – which needless to say was missing under the tree again this year - so I can re-watch Peter Jackson’s movie adaptations of Tolkein’s The Lord of the Rings and The Hobbit books as much as I want is definitely way up on the list. One little add-on without which the Netflix-Tolkein-mania would fall apart, one needs a good internet connection to traverse Middle Earth without that pesky buffering. The dodgy internet interrupting my Netflix sessions is probably of less consequence than it is to businesses who rely on the internet to facilitate the provision of their basic products, services and operations and to consumers who are in need of basics services like education and health care. While internet access is not the end all be all, it definitely can usher things along quite nicely by providing access points and opening up market opportunities.
Connecting the dots
The push for internet connectivity is not anything new but as has been the trend with many things this year, Covid-19 brought into stark relief the gaps in the market. In an effort to facilitate social distancing to slow the pandemic, many products and services needed to be made available digitally.
Whether the services are education, accessing gig platforms to make some extra money, distracting yourself with some idle entertainment or just keeping in contact with loved ones, and informed with what’s going on outside while you’re in lockdown, the internet made for a good avenue to deliver these services.
On the business side of things, we saw a lot of corporate winners from the tech sector. These companies’ ability to scale and reach a wider client base who’s mobility needed to be limited in order to slow the pandemics spread came in clutch for their growth. Indeed, online business seems evermore to be where it’s at these days.
While this is all great on paper, connectivity does really slow things down when it comes to realising the full potential of the internet as a medium for business.
Developing countries and internet business
Out of Africa’s 1.35 billion population, an estimated 525 million are internet users. In sub-Saharan Africa, internet usage ranges from a high of 59% in South Africa to 25% in Tanzania. Most development in the internet connectivity hustle is centred around urban areas while rural areas are left “in the dark”. In sub-Saharan Africa, which is widely viewed as the world’s fastest urbanising region, about 60% of the population live in rural areas.
So what gives? Well, there are a myriad of obstacles slowing the digital shift in Africa. The problems include obsolete infrastructure and the cost associated with upgrades as well as power fluctuations, policies and regulations.
Many African countries have low bandwidth and while having some of the world’s lowest internet speeds, still boast the most expensive cost to consumers. The bulk of the cost passed on to consumers is that of power consumption, infrastructural management and operational costs of the mobile service providers as well as consumer facing taxes.
While it’s clear that there needs to be more investment into the telecoms space to boost wide-spread connectivity, many governments have largely left this to the private sector. The nature of such a rollout would be very capital intensive and might not be economically feasible for telecom companies if at all it falls into their corporate motivations.
The result is costlier and sparse connectivity centred mainly around urban areas. To put the cost aspect into perspective, 2019 Q2 records by the Alliance for Affordable Internet indicated that the cost for 1 gigabyte (GB) of data in Zambia was USD 3.90 which worked out to around 3.3% of monthly GNI (Gross National Income) per capita, while in neighbouring Zimbabwe it cost as much as USD 15 which was about 10% of monthly GNI per capita. With the UN broadband Commission affordability target of no more than 2% of monthly GNI per capita, there’s clearly more work to be done.
Barriers like these limit consumers’ accessibility to beneficial services like e-learning, tele-health, online banking, video chatting while also leaving a less-than-ideal environment to foster the growth of internet dependent companies and initiatives and thus hinders Africa’s growth in the IoT (Internet of Things) development.
What’s on the Horizon
There are some initiatives like Facebook’s 2Africa which is planning a subsea internet cable network in partnership with MTN, Orange and Vodafone connecting 16 African countries around the coast with Europe and the Middle East.
The World Bank Group through the Digital Economy for Africa (DE4A) in line with the African Union’s digital transformation strategy is supporting policy reforms and interventions that catalyse the growth of Africa’s digital economy and calling on African countries to spend more on their digital economy.
Expanding access to reliable internet in Africa is akin to expanding the market opportunities for existing and new businesses on the continent. It opens up the 1.35 billion market of consumers to various services and allows for development of new digital businesses that can grow and flourish on the back of online technology. Africa’s internet economy stands to gain significantly with an estimated USD 180 billion added to GDP by 2025, much of this growth driven by increased and affordable access to better internet and connectivity, a growing urban population and tech talent, new market opportunities and Africa’s commitment to the development of its single market under the African Continental Free Trade Area.