BusinessDay

Nigeria’s 18.17% inflation is bad news for internet affordability

At an 18.17 percent inflation rate, Nigeria is among the top 12 countries with the most inflation in the world.

That is a problem for internet affordability, financial inclusion and, by extension, the country’s efforts towards attaining a digital economy.

According to the latest data from the National Bureau of Statistics (NBS), Nigerians now buy food at higher prices than they did in February. Food prices surged by 22.95 percent in March compared to 21.79 percent in February. This means that more Nigerians now have to prioritise feeding before buying internet data.

BusinessDay reported that it now costs on average of N7,400, a quarter of Nigeria’s minimum wage, to prepare a pot of Jollof rice, a popular food in Nigeria, almost double what it cost five years ago.

“90 percent of Nigeria’s working population spends ~60 percent of their income on food/food-related expenses. And Nigerians who earn less than minimum wage spend 95 percent on food,” Odun Eweniyi, co-founder and COO of Piggyvest, said in a tweet.

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“Across the country, the average household spends 65 percent of its income on food expenditure,” Eweniyi said.

One of the reasons many people do not yet access and use ICT services is the high cost of connectivity relative to income. The UN Broadband Commission’s affordability target is 1GB of mobile data priced at no more than 2 percent of monthly Gross National Income (GNI) per capita.

“Internet access gives people the tools to earn a living and start a business. It offers them ways to build skills and achieve their ambitions. And it provides them access to information to support their families and be active citizens in their communities,” Sonia Jorge, executive director at Alliance for Affordable Internet, said in a statement sent to BusinessDay.

“The billions of people still unconnected are missing these opportunities and so are societies where digital exclusion remains the norm,” Jorge said.

1GB of data costs Nigerians 1.7 percent of their monthly income, on average, compared with 7.1 percent for Africa and 2 percent average for the rest of the world, according to a report by Alliance for Affordable Internet (A4AI).

Nigeria’s competitive broadband market and cheap data plans notwithstanding, more than 42 percent of the country’s entire population are still offline. Many people offline cite mobile data affordability as one of the reasons they do not go online and it is critical to an efficient and sustainable financial inclusion drive.

In February, Surfshark, a private network service provider, released a report which found that the average Nigerian will need to work 27 minutes 55 seconds for 1 gigabit (GB) internet data. The global average is 10 minutes.

The same report showed Nigeria at the bottom of countries with affordable internet. Nigeria ranks 85th out of 85 indexed countries. People in Africa’s most populous country have to work 33 hours 42 minutes to afford the cheapest broadband internet in a month. The global average is three hours 48 minutes a month.

The COVID-19 pandemic has contributed to the drop in income levels and this, in turn, has affected individuals’ decisions to consume internet services. The extent of the impact was recently made evident in the report of the big players in financial services. Nigeria’s tier one banks earned only N6.8 billion from electronic transactions in 2020 compared to N61 billion they received in 2019.

Gbenga Sesan, director of Paradigm Initiative, said the new inflation figures take the attention to what is a priority to a lot of people. For some people, being connected on the internet has become a necessity, hence they are always going to consume internet data. The International Telecommunication Union (ITU) puts the number of Nigerians actively connected to the internet between 49 to 50 percent of the mobile population.

However, there are millions of people who may not see the internet as critical to their survival and whose low income may require them to pay more attention to ensuring they have food to eat.

The implication for digital equality is even dire.

Olusola Teniola, Nigerian national coordinator for A4AI, sees a correlation between internet affordability and internet penetration or access.

For one, without affordable internet and reliable power, broadband internet access will remain out of reach for many low-income Nigerians living in rural areas. That ultimately means the digital divide increases. Already, most internet infrastructure is concentrated in urban areas because operators have to consider the cost of deploying the infrastructure and the ability of the users to pay for the internet services.

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