More internet access is coming to Africa, but the continent isn’t ready for the associated costs

The prospect of connecting Africa’s 55 countries and over one billion people via better road and rail networks has often run into the challenge of raising the billions of dollars needed to turn a decades-old vision into reality. Graphic: Quartz Africa

 

By Yinka Adegoke and  Yomi Kazeem

 

The prospect of connecting Africa’s 55 countries and over one billion people via better road and rail networks has often run into the challenge of raising the billions of dollars needed to turn a decades-old vision into reality.

While the investment in building and maintaining intra-country road networks has been slow in coming, connecting Africa via the internet has lately made more progress.

This week, French telecom giant Orange struck a deal to invest in the West Africa-based Main One Cable company, whose landing stations are in Nigeria, Ghana and Portugal.

It will enable Main One to extend its  7,000-kilometer system to Dakar, Senegal and Abidjan, Côte d’Ivoire by mid-2019.

Liquid Telecom, a unit of Zimbabwe’s Econet Wireless, has confirmed financing and partnerships to expand its system over 60,000 kilometers from Cape Town through all southern, central, and eastern African countries up to the Sudan-Egypt border.

This is the other Cape to Cairo.

But what happens when these cable systems open for business? Remember internet access still has to be bought, packaged and resold to consumers via local telecom operators. Mobile networks are the dominant providers of internet access in Africa.

On the ground, the reality is African countries have the world’s most expensive internet access, according to a study by the Alliance for Affordable Internet.

Few African countries come close to the UN Broadband Commission’s target that a gigabyte of data should not cost more than 2% of average monthly income.

As we’ve noted, it’s a problem for many developing countries, but it’s particularly acute in Africa. One reason for this is a lack of meaningful competition in some countries, particularly smaller African economies that struggle to support more than a couple of network operators.

Research by Ecobank showed the average cost of buying 1GB of data in countries with two or fewer operators is more than twice than in countries with four or more.

Competition is key, and it should not be measured simply by the number of operators. For example if a country with three or four operators is dominated by a dominant player with say 70% share (Hello? Kenya?), it’s what economists refer to as a market being too concentrated.

Building out infrastructure is undoubtedly a positive step in Africa’s development, but so is a functioning,  competitive marketplace that will be able to deliver the best economic outcomes for citizens.

Having more rival mobile networks in a country often means cheaper internet for Africans

Depending on where you are in Africa, purchasing a gigabyte (GB) of mobile internet data can set you back as much as $35.

While smartphone penetration has spiked over the past decade in Africa, progress in the reducing the cost of accessing the internet has not been as rapid. Indeed, findings of two new reports focused on the price of mobile data, show that affordable internet still remains out of the reach of many Africans.

In a survey of 60 low and middle-income countries, the Alliance for Affordable Internet (A4AI) found that, at the end of 2017, only 24 met the UN Broadband Commission’s target of affordable cost of a gigabyte of data not costing more than 2% of average monthly income.

Across countries surveyed globally, users were found to pay an average of 5.5% of  monthly income for a gigabyte of data. But the problem is more acute than anywhere in else in Africa where users pay the most for mobile data relative to average monthly income.

Similarly, a report by Ecobank Research also finds that Africa has the most expensive mobile data, “both in real and income-relative terms.”

In Equatorial Guinea, Zimbabwe and Swaziland—the three most expensive countries—a gigabyte of data costs more than $20.

Across the continent, the median price across Africa is estimated at $7.04 with a majority of countries recording prices above UN Broadband Commission’s target of 2% of monthly income.

Ecobank’s report also shows a link between the number of mobile network operators in a country and the local data prices with competition driving down prices, as seen in Nigeria.

While the price of one gigabyte of data is higher in countries with only two networks, it’s much lower in markets with more competing rival networks.

An obvious downside to the high prices is the barrier to access it represents for millions and the “digital divide” it breeds.

Beyond individuals, the impact of high internet costs can also be significant for millions of small businesses across the continent. Studies have shown that small businesses that use the internet grow twice as fast as those that do not.

But while high prices are an enduring problem, the speed of internet across the continent also remains underwhelming: internet speeds across Africa are still far below the global minimum standard. Source: Quartz Africa

 

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