WHEN the World Health Organisation declared COVID-19 a pandemic in 2020, the world’s physical economy shut down. Since brick-and-mortar spaces are hotspots for the spread of the virus, business and productivity locations, such as shops, banks, schools and other physical spaces were closed. A COVID-19 report estimated an export loss of N2.27 trillion to Nigeria—due to closed borders, social distancing and lockdown in destination nations and Nigeria—with a resultant decline in revenue, profits, and economic value.
While some companies have responded tactically during this pandemic, this must be supplemented with a strategic business focus on improving resilience in operations, absorbing uncertainty, increasing agility, and incorporating lessons into the operating model quickly.
Due to a mixture of resilience, digitised operations and preparedness, many companies had unexpected growth especially because of the pandemic, including Amazon, Microsoft, Apple, Tencent, and Zoom in industries as varied as communications services, IT and healthcare and consumer discretionaries. These companies identified the opportunities COVID-19 provided to their businesses and took full advantage.
The music of business operations changed, no: forced to a less subtle form with digital. The pandemic hastened the global adoption of digital processes. Before the pandemic, digital processes were already in play but the pandemic brought them to the fore of economic survival.
The race to digitise global economic processes began. As economic processes adopted digital channels, social processes also had to. Humans are designed for community and since the pandemic ensured individuals couldn’t gather in crowds, they also had to find digital alternatives. Video conferencing became the new norm for gatherings, meetings and a lot of other human interactions. Many companies experienced unprecedented growth, even within the pandemic because they were better prepared, thanks to technology embrace and resilient operations. Amazon, Microsoft, Apple, Zoom and Tencent created more value for shareholders during the lockdowns than at any other time in their history.
Digitisation and digital processes rely on the internet. The internet is the infrastructure that enables digital processes to operate. Without the internet, digital processes are useless and impossible to scale.
Today’s global economy is driven by digital transformation across all sectors, which is manifesting in the increasing role digital technology is playing in people’s lives. Digital transformations play key roles in sectors such as health, agriculture, education and trade, among others, and support the needs of people, governments and the private sector. Globally, the internet is allowing individuals, businesses and governments access to extraordinary socioeconomic opportunities. As the door to new socio-economic opportunities is being explored by developed nations, developing countries continue to face a digital divide; obstacles that hinder their ability to access opportunities on the same scale as other continents.
Africa’s internet access is experiencing exponential growth, largely driven by mobile internet yet penetration stood at 28% in 2020. In Nigeria today, internet penetration is about 40% of the population, though this is largely mobile. The numbers for fixed internet reveal a significant broadband gap. The importance of broadband connectivity has been captured by the World Bank when it identified broadband internet connectivity as a vital means for economic growth with every 10% increase in connectivity enabling a 1.38% growth in Gross Domestic Product. Digital exclusion has significant outcomes for Africans and translates into clear consequences for employment, education, family and social life, and access to information. According to the World Wide Web Foundation, ensuring fast internet in Africa will enable billions more to come online and to take advantage of the life-changing socio-economic opportunities that access to the internet provides.
Internet access and affordability continue to be major concerns for Africans. While internet access has become more affordable on the continent, particularly through mobile phones, costs are still high and unaffordable in the regions. For example, sub-Saharan Africa has the least affordable mobile devices of any region. In low-and-middle-income countries, the median cost of the cheapest internet-enabled handset as a percentage of monthly GDP is 19% compared to 26.5% in sub-Saharan Africa. The ability of consumers to pay for a mobile device and cover the cost of a suitable Internet data bundle as a function of their income is still very low and discouraging in Africa. This presents a significant barrier as individuals in sub-Saharan Africa have to spend up to 100% of their monthly income on an entry-level phone and 15% of monthly income on a data plan.
Mobile data is the least affordable in sub-Saharan Africa, even though the median cost as a share of monthly GDP per capita has remained relatively flat at around 4%. Affordability is a significant barrier in Africa with its high level of poverty. There are 490 million people in Africa living under the poverty line of $1.90/day.
In a 2021 report, the Alliance for Affordable Internet said, “The dearth of policy action runs in contrast to the political priority that is expressed by governments about digital technologies. While ICTs have enjoyed political popularity as a means by which governments have chased dreams and cast visions of a better future, the reality remains that data and devices are unaffordable for millions of people around the world.” Affordable internet is imperative if Africa is to enjoy the benefits of the digital economy and its rapidly expanding businesses, including the new jobs that are likely to be created. To achieve affordable Internet access in Africa there is a need for a sustained and committed effort from all stakeholders.
To drive down the cost of internet access in Africa, African governments have to start rethinking broadband policies to build more centralised access to the internet. Nations need to start leveraging shared internet infrastructures to drop overhead costs of infrastructure developments and explore other channels of delivering access to the internet.
However, more needs to be done. Investments in fixed broadband should become priorities on the continent. It is time for the African Telecommunications Union to rise to its responsibility and build Internet synergy between African countries. This 2016 report notes that the World Bank Group initiated a regional program, the Digital Economy for Africa initiative, to digitally connect every African individual, business and government by 2030.
It said about 1.1 billion new unique users must get access to the internet to achieve universal, affordable and good quality broadband internet access by 2030, and about $100bn would be needed to reach this goal over the next decade. Stakeholders including the African Union and regional economic communities; African governments and respective public investment agencies; sector regulators; multilateral development banks and regional development banks; the United Nations and other development agencies; the private sector and civil society groups and nongovernmental organisations must synergise. African governments need to incentivise their private sector through proactive investment plans and a reimagination of their spectrum pricing policy to steer Africa towards internet affordability.
Efforts including partnerships that lower the price of internet-enabled devices, financing mechanisms to reduce the upfront cost to consumers such as this will ensure more Africans have access to the internet.
It may be difficult to reduce poverty at scale. However, it is easier to provide the enabling infrastructure for people to derive value online and contribute meaningfully to the digital economy. However, a more sustainable way to improve affordability is to reduce poverty and income disparities on the continent.
‘Data is Life’ is the campaign tagline for a telecommunications company in Nigeria. But data is life to people who can afford it. Everyone should have access to life, shouldn’t they?
- Osunrinde is the Vice President for Marketing at Tizeti
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