A Report by Ecobank has cited the high cost of data across the continent as a stumbling block to digital innovation in Sub-Saharan Africa (SSA). The report which was released this month highlights the rapid growth of mobile phone technology in Africa but also emphasises on the high cost of internet connectivity on the continent.
In July 2017, a hashtag, #DataMustFall, went wild in South Africa spreading like a wildfire on Twitter. South Africans were fed up with the inability of their Government and Mobile Network Operators (MNOs) to reduce the data prices in the rainbow nation, which ranks as the seventh most expensive in Sub Sahara Africa.
Though unlike before, most people in Sub Sahara Africa now have access to mobile phone and internet connectivity, however, the high fee charged by Mobile Network Operators on the continent makes the cost of data very expensive for most Africans.
Average Cost of 1gb
Although, the cost of 1gb of data varies on the continent; but the painful fact that Africa has the most expensive mobile data in the world, both in real and income-relative terms is a fait accompli.
The report indicates that Nigeria has one of the cheapest mobile data in Africa with $2.76 per 1 gigabyte. The most affordable mobile data can be found in East Africa. The average cost for 1gb in Ethiopia, Tanzania, Burundi, Kenya and Rwanda lies below Africa’s relatively expensive median of US$7.04. Equatorial Guinea’s average cost of $35.47 is Africa’s most expensive cost for 1gb of data while the cheapest data in Africa can be bought in Mozambique for just $2.08.
Cost of 1gb to income
The average cost of data compared to monthly income (relative to Gross National Income) in Africa is 4.1%. It is significantly lower in some countries like South Africa (0.9%). Also, African mineral-rich countries boast of the lowest percentages – less than 2%. They include Namibia, Botswana, Nigeria, Gabon, Angola and South Africa.
Countries with the most expensive cost of 1gb of data relative to their income include Zimbabwe, DRC and Liberia, with an average of 14-16%. Those with percentages that double the African average are Sierra Leone, Chad, Burundi and Malawi averaging 6-8%. Nevertheless, the data in these nations is highly distorted due to the wide income inequality in their oil economies.
Why is data still expensive?
Differences in the mobile data cost in Sub-Saharan Africa is inversely proportional to the level of competition in the telecommunication sector of each country. Many African Governments built their own state-owned MNOs and created a monopoly in the mobile sector when mobile telecom infrastructure was first built in the late 1990s and early 2000s. Many of them still exist in several countries with one or two other competitors. The monopoly enjoyed by these state-owned MNOs is the major reason why data cost is high in these countries.
Expensive data prolong digital divide
Mobile phone penetration is expected to grow faster in Sub-Saharan Africa than any other region in the world from 2005 to 2015, with a rising year on year rate. Today, an average African can afford an internet-enabled phone. This can be attributed to the fact that the prices of mobile phones are reducing on the continent while Africa’s purchasing power is rising.
However, the accessibility of these Africans to digital services widely varies, as it depends on their country. The ability of Sub-Saharan African countries to spread digital innovation like mobile banking, pay-as-you-go solar energy etc depends on the cost and access to mobile data in those countries.
One of the reasons why two of Africa’s leading tech hubs – Nigeria and Kenya – are dominating fintech market on the continent is the accessibility of their citizens to relative cheap mobile data. Consumers in these countries can buy mobile data more regularly than those in costlier countries like Zimbabwe, DRC etc; where mobile data is higher than 13% of their monthly GNI per capita.
How to reduce data cost
- Countries with the lowest data cost are those with three or more MNOs, since there is an inverse relationship between the number of mobile operators in a country and the average price of 1gb of data. In a nutshell, the more the MNOs, the cheaper the data.
- Licensing fees for new mobile operators should be reduced by African Governments, so as to encourage new MNOs.
- The government should encourage competition among operators, particularly in countries with only two or three MNOs, so as to reduce data price.
- African MNOs need to have access to reasonably-priced and reliable radio spectrum, to enable them to provide affordable internet coverage, which will lead to lesser data prices.
- African governments should endeavour to reduce double taxation in the mobile sector. Chad, for example has 13 different taxes for mobile operators. Little wonder, Chad has the fourth most expensive data price on the continent.
- The recently introduced of social media tax in Uganda and Benin could hinder digitalisation by preventing low-income earners from accessing the internet.
- Fintechs and technical giants like Facebook, Google, Yahoo, etc could help bridge the digital gap on the continent. For example, Google recently announced plans to set up free Wi-Fi in some selected locations in Nigeria.
Economic effects of expensive data
- Apart from preventing the consumers from accessing the internet regularly, since it is unaffordable; it prolongs digital exclusion on the continent.
- SMEs, which make up 90% of African businesses, cannot provide their services and information digitally to meet their needs. A global survey of 4,800 SMEs found that those that make use of internet grow twice as fast as those that do not.
Nigeria in the mix
According to the National Bureau of Statistics (NBS) Telecoms Data for the second quarter of 2018, Nigeria’s active internet subscribers in Q2 2018 were 103,514,997. This represents a quarter on quarter subscribers’ base growth of 2.57% from the total of 100,923,580 that subscribed for the internet in the first quarter of 2018.
The report further added that the highest share of total internet subscribers in Q2 2018 belonged to MTN with 39,191,085 active subscribers, followed by Glo with active 27,206,445 subscribers. Airtel and 9mobile are third and fourth with 27,206,445 and 10,807,862 internet subscribers respectively. A total of 362,271 subscribed for internet through other operators in the second quarter of 2018.
