Recently, the GSMA released The Mobile Economy West Africa 2018 report. According to the report, the mobile industry in West Africa is forecast to contribute more than $50 billion annually to the region’s economy by 2022.
GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with more than 300 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors.
The report evaluates that the region’s mobile ecosystem contributed $37 billion in worth in 2017 which is equivalent to 6.5 per cent of GDP, and will grow to $51 billion (7.7 per cent of GDP) within five years. The report shows that the economic influence over this period will be stimulated by durable subscriber progression and the move to mobile broadband networks and services.
Also, the report states that at the end of 2017, there were 176 million unique mobile subscribers across the West Africa sub-region, which comprises the 15 members of the Economic Community of West African States (ECOWAS).
This growth in subscribers is motivated by the region’s huge youthful inhabitants and is projected to grow to 72 million subscribers by 2025 as more than 40 per cent of the population in many countries across Sub-Saharan Africa are below the age of 16.
“This report demonstrates the vital role West Africa’s mobile ecosystem is playing in driving economic growth and empowering citizens across the region, as well as in delivering against many of the targets of the UN’s Sustainable Development Goals,” said John Giusti, Chief Regulatory Officer at the GSMA. “However, further work is required as more than half of West Africa’s citizens are not yet connected to a mobile service, excluding them from the socio-economic benefits that mobile delivers.”
In the report, it was stated that the transition to mobile broadband in West Africa is being driven by the expansion of 3G and 4G networks, lower data tariffs and the increasing affordability of smartphones. 3G networks now cover two-thirds of the regions population and 4G adoption is also rising rapidly.
As of March 2018, there were 29 live 4G (LTE) networks in nine countries across West Africa, six of which have launched in the last year. 3G and 4G together accounted for 36 per cent of West African mobile connections in 2017 and are forecast to rise to 94 per cent of the total by 2025. Local operators are expected to spend $8 billion (capex) over the next two years building out and upgrading their networks.
Speaking exclusively to BusinessDay on Nigeria’s involvement in the $50 billion projection, Head of Sub-Saharan Africa, GSMA, Akinwale Goodluck said “Given the size of the Nigerian economy and the revenues of the Nigerian operators, we estimate that approximately over 50% of the impacts calculated for West Africa are attributed to Nigeria.”
Speaking further on how they arrived at the figures, Akinwale said “Three elements contribute to the overall economic impact of the mobile industry: direct, indirect and productivity impacts. Direct impact considers the contribution of the mobile ecosystem to the economy. Indirect effect is generated, producing sales and value added in other sectors and industries. The third, productivity, refers to businesses allowing more efficient ways to access information, accelerate processes and communications, thereby allowing greater productivity and boosting GDP,” he said.
Akinwale identified three ways in which the earlier listed three elements take effect. In his words, “The first is the use of basic mobile voice and text services, which allows workers and firms to communicate more efficiently and effectively. The second is the use of 3G and 4G technology, which allows workers and firms to use mobile data and internet services and the third is the next generation of mobile services, in particular M2M and the ‘Internet of Things’.
This will allow firms to improve equipment maintenance and operations (e.g. using sensors to monitor the health of machinery), optimise inventory (e.g. tracking real-time inventory so it can be replenished when needed) and save on energy costs (e.g. using intelligent energy management systems to reduce unnecessary energy use). It also has the potential to improve public services such as health and utilities,” he revealed.
Given that such services are still in the early stages of development, this impact was limited in 2017 but it is expected to grow in the coming years.
Speaking Exclusively to BusinessDay, Director, Business Process and Technology, Prime Atlantic Group and Co-Founder, 8191 Solutions, Foluso Gbadamosi, shared her view on how the Nigerian market will be part of the projected $50 billion, being the largest country by population in W/Africa and Africa as a whole.
Giving her opinion, Foluso said “The mobile ecosystem consists of the devices (phones, tablets etc…), Networks, Operators, Services, Operating Systems, Platforms, Applications and so on. Mobile Internet is a key driver in the Nigerian market and the Mobile Internet Subscribers are expected to grow from 19.4 million in 2015 to 75.9 million by 2020.
According to the 7th Annual Edition of the PWC report on Entertainment & Media Outlook (2016 – 2020) in Africa, ‘Nigeria will have the fastest growth in Internet access revenue in the world. Nigeria’s CAGR of 16.1% for Internet access revenue means that it is the world’s fastest-growing country for that area, making Nigeria a very appealing growth market,” She stated.
Furthermore, Foluso added that “Nigeria will be a huge contributor in various ways. A major one will be in the development of apps, software applications and platforms. With the likes of Andela who are churning out developers, Google’s support of developers and the huge growth in the Mobile industry, it is clear that Nigeria will be the largest contributor to the Mobile Ecosystem. I expect that we will see more operators, more payment platforms, a lot more investors focusing on Nigeria because we are the fastest growing market!” Foluso said.
Giusti, is of the view that “Connecting a new generation of mobile subscribers across West Africa requires a new era of collaboration between industry and governments in order to implement policies that encourage network expansion, innovation and affordability,”.
Bringing it down to Nigeria, Akinwale believes the mobile industry and government can collaborate to implement policies that encourage expansion, innovation and affordability. According to him, “Affordability is crucial if we must connect everyone and everything ultimately in Africa. Low purchasing power coupled with high total cost of mobile ownership presents a challenge for all players and an opportunity for innovation, a paradigm shift by all stakeholders and a commitment to universal access and mobile broadband services”.
In addition, for Akinwale, “Infrastructure cost is driven by high spectrum prices, prohibitive excise duty, significant import taxes on devices and telecommunications equipment, expensive bureaucratic permitting regimes and a skewed front loaded cost structure for roll out of services which is further accelerated in the rural areas.
There is therefore a need for governments in Africa to make spectrum but most importantly, the lower bands (700Mz and 800MHz) available to MNOs at a fair cost and with less restrictions regarding how or what technology it employs. This is the trade-off between treasury receivables / budget deficits and the overarching objective to connect everyone. Spectrum must be made available on time, in a predictable manner and artificial scarcity must be avoided. ” He said.
In some countries, the compounded tax burden on the mobile industry exceeds 50% and reaches 35% of the cost of owning a mobile phone and using internet when every 10% more of mobile broadband penetration today just under 30% across Africa on average raises from 1 to 2% national productivity and adds 0.1 to 0.2% of growth.
Kemi Ajumobi
