Africa’s e-economy and the need to look beyond broadband

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Shola Taylor was appointed Secretary-General of the CTO in June 2015. Previously, he was Chief Executive Officer of Kemilinks International, an ICT consultancy firm based in Lagos. A telecommunications engineer by training, he brings to the CTO over 35 years of global experience in ICTs with government and the private sector. Previous positions held include regional director for Africa at Inmarsat, space technology coordinator for developing countries at the International Telecommunication Union and project director, also at the ITU. Early in his career, he worked in telecommunication engineering, including as senior engineer at Nigerian Telecommunications and spectrum engineer at Intelsat.
Published
10th August 2016
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Shola Taylor, Secretary-General, Commonwealth Telecommunications Organisation (CTO)

Over the past three decades, rarely have policymakers, industry leaders or opinion formers made accurate predictions about the ICT sector. Very few among them ever thought personal computers or mobile phones would ever be as essential, accessible or affordable as they are today, let alone this quickly. After all, these were very expensive hi-tech gadgets in the past and what else were we to believe?

 

Actually, some of the worst predictions came from the most successful in their fields. Bill Gates once said that “we will never make a 32-bit operating system”, or Ken Olson, founder of the then well-known mainframe computer maker Digital Equipment Corporation (owned today mostly by Hewlett-Packard) who believed in his time that there was “no reason anyone would want a computer in their home”.

 

Today, hundreds of millions of homes around the world have at least one computer, and billions of us carry smartphones, tablets or wearables with the data storage, processing power and connectivity capability of the most advanced computers of 20 years ago. And, thanks mostly to the Internet, half of the world’s population are benefitting from this information revolution.

 

Broadband and the e-commerce gap

 

Of course, developed economies also have a digital divide; but those largely excluded from benefiting from the information economy are more pronounced in Africa. By 2018, western Europe and North America are expected to account for over half of global business-to-consumer e-commerce (53%), followed by Asia and Oceania (37%) and Africa (2.5%), a difference due largely to the roll-out of fibre networks. Although fibre networks are also gradually being built in Africa, the e-commerce gap between these is barely reducing.

 

In Africa, the use of online social networks dwarfs the region’s e-commerce, which accounts for less than 3% of global e-commerce. As highlighted by UNCTAD in its 2015 Information Economy Report, major barriers to the growth of e-commerce in the region include:

 

• Inadequate ICT infrastructure and use;
• Unreliable and costly power supply;
• Low levels of ICT literacy;
• Limited use of credit cards and greater reliance on cash;
• Lack of purchasing power and underdeveloped financial systems;
• Weak legal and regulatory frameworks; and
• Cultural preferences for face-to-face interaction.

 

Despite these gaps, there are good reasons to be hopeful about the region’s e-commerce growth. In the same report, UNCTAD also identified gradual changes e-commerce will benefit from:

 

• Connectivity is improving, due partly to the deployment of national and international fibre-optic networks;
• New applications, platforms and services lowering barriers to entry;
• New payment solutions;
• Emergence of local e-commerce companies; and
• Growing willingness to conduct business online.

 

With the growth of ever more affordable smartphones and tablets, we can expect m-commerce to be a particularly strong driver for e-commerce, but also for online banking and e-government services. But broadband alone can hardly be a silver bullet to the region’s e-economy challenge.

 

Looking beyond broadband

 

The CTO is committed to promoting universal and affordable broadband, which was a priority for Commonwealth policymakers meeting at the recent Commonwealth ICT Ministers Forum held in London in June. As part of this effort, we share the recommendations by the Broadband Commission in the table below as they apply to Africa.

 

Measures needed to achieve universal broadband

Supply-side Measures
• Promote co-deployment and infrastructure sharing of telecom infrastructure and co-investment to reduce prices;
• Foster co-deployment with access to non-telecoms infrastructure (addressing key obstacles, such as limits on access and rights of way);
• Ensure sufficient availability of quality spectrum to deploy mobile broadband networks (e.g. via spectrum assignment and trading);
• Focus on expanding network coverage (e.g. via coverage obligations, rather than on spectrum proceeds);
• Develop effective technical standards to achieve economies of scale and enhance quality of services;
• Promote effective and functional wholesale and retail markets to lower prices.

 

Demand-side Measures
Ensure the availability and affordability of broadband-enabled devices and services for poor or at-risk households and other vulnerable groups;
• Enable the development of local and relevant broadband applications and content, including in multiple languages;
• Improve broadband availability mapping to increase consumer awareness about choice of services and service providers;
• Enhance transparency and control of market information to inform consumers about market prices and their rights to enable them to make informed decisions;
• Undertake communication campaigns to increase trust and security;
• Engage in ICT literacy campaigns and digital skills courses to boost user capacities, awareness and interest.
• Promote effective ICT skills through training and education at all levels, formal and informal, with a special focus on girls and women.
Source: The State of Broadband 2015, Broadband Commission.

 

Overall – and this is hopefully another prediction that will turn out to be wrong – we can expect fixed broadband penetration in the region to remain low for some years to come. With less than 5% of the region’s homes with Internet access, and less than 2% with fixed broadband, the burgeoning e-commerce industry of the region has to rely on a strengthened mobile infrastructure and a more competitive mobile industry.

 

All roads lead to Rome, and recent years suggest that the path to universal broadband in the region’s last mile will be predominantly mobile rather than fixed, perhaps even more so than the Asia-Pacific region where mobile broadband now represents 50% of all broadband subscriptions. It is therefore crucial that spectrum is optimised to take this inevitable scenario into account and enable the rapid expansion of broadband networks and services.

 

However, broadband for the sake of broadband alone will not make the difference the region’s e-economy needs. Not only does broadband require a “fertile ground” as Victor Mulas once said, there is a need for swiftly implemented broadband policies and programmes that closely reflect and align to the strengths and the long-term aspirations of each country in the region, supporting the application of technology in sectors that are critical to their development goals, like health and banking.

 

Indeed, for broadband to make a real difference in the region, many other areas of economic and social development also require policy shifts.

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