Nigeria’s broadband target years behind SA, Egypt’s rapid rollout

Nigeria’s National Broadband Plan set a supposedly ambitious target for the country to attain 70 percent broadband penetration by 2025. However, African peers – South Africa and Egypt – currently record 113 percent and 74 percent penetration rates, respectively, according to data from the International Telecommunication Union (ITU).

Broadband penetration in Nigeria has been on a free fall in the past seven months, falling from a peak of 45.93 percent recorded in October 2020 to 39.79 percent in July 2021. Experts say this is largely due to the temporary suspension of SIM card sales in order to achieve the National Identification Number (NIN) registration exercise.

“The drop mirrors the downward trend in the number of active mobile lines, as a result of the regulator’s temporary halt of SIM card sales, and the National Identification Number (NIN) and SIM card integration exercise,” analysts at FBNQuest note in a report.

Nigeria is not only behind South Africa and Egypt; it also trails Kenya, which has achieved 48 percent so far. At 39 percent, Nigeria accounts for less than 40 percent of South Africa’s broadband penetration and about 55 percent of Egypt’s penetration numbers. Importantly, it means that almost 60 percent of the population in Nigeria lacks broadband connectivity.

Mobile internet connections account for over 99 percent of Nigeria’s broadband base, according to the Nigerian Communications Commission (NCC). The country has largely neglected investment in high speed broadband that has remained below 1 percent for many years.

It is not the best place to be for a country with the largest number of people in Africa and an ambition to become a full-fledged digital economy.

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The difference between Nigeria, South Africa, Egypt, and Kenya is that while Africa’s largest economy talks so much about boosting penetration, the other countries are putting their money where their mouth is.

The Information and Communications Technology (ICT) sector in Egypt is very robust, with a growth rate higher than Egypt’s overall level of GDP growth, equivalent to 15.2 percent in fiscal year 2019/2020. Its contribution to the GDP has increased to 4.4 percent in fiscal year 2019/2020 compared with 3.5 percent in 2018/2019. Total investments in the sector increased by 35 percent in 2019/2020 and reached $3.5 billion.

In contrast, Nigeria has seen a decline of about 20 percent in investment in the telecoms industry in the past 3 to 4 years. Experts say to achieve quality broadband access will require an estimated investment of about $5 billion (~N2.3trn).

During the COVID-19 pandemic when businesses were migrating to digital platforms and upgrading their digital infrastructure, little attention was paid to upgrading telecoms infrastructure in Nigeria. A full-year report by the NCC found that capital inflow into the telecoms industry in 2020 declined to approximately $417 million compared with $942.8 million in 2019.

On the other hand, operators in South Africa made good use of the pandemic to deepen investment in high-speed internet infrastructure. Apart from deploying fibre-to-home infrastructure, companies like Vodacom and MTN switched on 5G mobile networks in three cities – Johannesburg, Pretoria and Cape Town, with further rollout plans to other parts of the country. MTN launched with 100 sites covering areas of Johannesburg, Cape Town, Bloemfontein, and Port Elizabeth.

The Kenyan government has also intensified infrastructure rollout in recent years. As of March 2021, the country has completed the backbone section of the project and fibre installed in all 47 counties. Metropolitan fibre civil works have also been completed in 35 of the 47 counties. The available international bandwidth for 2018/19 stood at 4707.46Gbps and the number of broadband subscriptions has grown strongly, rising from 5,327,859 in 2015 to 22,198,610 in 2019. This indicates continuous growth in the sector with the potential for more expansion.

Although MTN is also interested in pushing the 5G network in Nigeria, the largest network in Africa is still struggling with losses incurred from the SIM card suspension. As a result, 5G rollout in Nigeria remains at developmental stage.

FBNQuest notes that MTN Nigeria accounted for about 45 percent (about 6.7m) of the total share of internet disconnections, a reflection of its dominance in market share terms. Airtel, Glo, and 9Mobile were responsible for 36 percent, 11 percent, and 8 percent of the lost internet subscribers, respectively.

“Studies by the ITU suggest that a 10 percent increase in broadband penetration is likely to translate to increases of 2 percent and 1.8 percent in GDP for low-income and middle-income countries. On this basis, we estimate the benefit of such investments to the economy at almost c.6.0 percent of GDP. Broadband subscriptions (millions) and penetration rate,” says FBNQuest.

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