The Digital Desert: Opportunities and Challenges in Sub-Saharan Africa

The Digital Desert: Opportunities and Challenges in Sub-Saharan Africa

. 6 min read

Home to a market of nearly 1.2 billion people and the world’s largest free trade area, sub-Saharan Africa has vast untapped economic growth potential and extensive natural resources. Yet, even as the rest of the world has benefited from the advances of the Internet and digital technology in the last decade, growth in sub-Saharan Africa has actually slowed down in the last 10 years. It is this odd juxtaposition of circumstances that begs the question: what is the role of the Internet in sub-Saharan African growth?

The Internet’s contribution to economic development is undeniable. A report from the McKinsey Institute found that digital development facilitated 21 percent of all global GDP growth in mature economies from 2006 through 2011 was facilitated by digital development. In almost all aspects of the economy, the Internet provides reduced transaction costs, increased management efficiency, and greater consumer choice, leading to further efficiency and growth within established market sectors and the creation of new business models. Furthermore, the Internet directly creates greater access to information, education, and human capital, uplifting the quality of life for individuals with access

Moreover, technologically-minded Western liberal democracies who have been the primary actors within the global economy have largely shaped the rules of trade, especially in the transition to the digital era. As the world transitions to Internet-based logistics and industries old and new increasingly rely upon the Internet to function, developing nations will have to buy into this game as well to access the largest international markets. In the United States, digital goods and services compromised 6.5 percent of GDP, meaning that without meaningful Internet access, developing countries lose out on this entire segment of the economy.

However, sub-Saharan Internet access rates are among the worst in the world. In 2017, only one in five people in sub-Saharan Africa were able to access the Internet, compared to the 48 percent across all countries worldwide and the 41 percent rate for developing countries. Part of this disparity results from the lack of critical infrastructure for Internet access within these regions.

As a result of extensive networks of undersea Internet cables, physical Internet infrastructure is much more expensive in landlocked regions than in coastal ones. Access for landlocked countries largely results from the existing infrastructure of neighboring countries, leading to large disparities in access within sub-Saharan Africa. South Africa, with ample access to international cabling on the ocean bed, has an Internet penetration rate of 50 percent, while West Africa’s 30 percent is still much higher than the 10 percent in Central Africa.

A further examination of who obtains access to the Internet in these countries is also particularly revealing. Market surveys of six sub-Saharan countries, Benin, Kenya, Mauritius, Namibia, Rwanda, and Uganda, present a relatively coherent overview across low-income, middle-income, and upper-middle income countries in sub-Saharan Africa. Although it is to be expected that wealthier individuals will have more access to the Internet, the extent of the disparity is alarming. In Kenya, only 5 percent of individuals in the lowest income decile had access to Internet of any kind, while two-thirds of those in the highest decile did. Without meaningfully equal access, any gains made by Internet access will continue to be unequally distributed, further perpetuating the divide between rich and poor in these countries.

Finally, Internet access in sub-Saharan Africa also exhibits a rural-urban divide. In most of these countries, there is already a large trend towards disproportionate economic development in cities, known as the “urban bias.” This is no exception when it comes to the Internet. Internet providers are often disincentivized to build infrastructure in rural areas, as lower population density, lack of existing infrastructure, and less profitable market create  suboptimal business operating conditions. In comparison, the average individual in a city is wealthier and better educated, providing an ideal market.

The combination of the three disparities in Internet access is alarming. Low-income, rural individuals in landlocked sub-Saharan countries have the lowest rates of access to the Internet. Without addressing these barriers, development of digital access in these countries will only reinforce existing divides. In almost all sub-Saharan African states, the percentage of rural individuals in poverty is far greater than in cities, and economic mobility is almost always greater in urban areas.

Some steps have been taken to bridge this urban-rural digital divide. Mobile Internet, which does not require as extensive digital infrastructure as wired Internet, has rapidly expanded in the last few years. By the end of 2017, nearly 33 percent of the residents of sub-Saharan Africa owned a  mobile phone, more than double the percentage in 2014. However, prices are still relatively high, with a 500MB data plan coming in at around 15 percent gross national income per capita, as compared to the global average of 10 percent GNI per capita, meaning that many individuals still lack the financial means to afford mobile internet access. However, due to large-scale infrastructure improvements and investment, some sources estimate that another 300 million users, or double the current amount, will come online by 2025.

New business models for rural infrastructure also aim to fill market demand. Smaller cell network operations, solar powered base stations, and wholesale network distribution are three central goals of Vanu, an Africa-based mobile network provider that explicitly aims to provide rural Internet infrastructure. Dr. Vanu Bose, the former UN High Commissioner for Broadband for Sustainable Development and founder of Vanu, implemented the low-cost technology first in Rwanda, where it is expected to bring another 1 million people online.

As long as governments and private companies can innovate to address the lack of rural Internet infrastructure, the opportunities for the citizens of the counties and the countries themselves will exponentially increase. According to an international report done in 2016 by the GSM Network, for every 10 percent increase in consumer base into the mobile market, the GDP of a country rises .81 percent. This is partially explained by growth in mobile and digital transactions and goods. In 2017, the mobile economy contributed $40 billion to the sub-Saharan African economy, making up 2.5 percent of GDP. Expanding Internet access thus boosts the demand for services in this sector, fueling jobs and innovation in the region.

However, of even larger scale is the impact of connectivity on individuals and businesses. In sub-Saharan Africa, it is estimated that 90 percent of all businesses are medium- or small-sized. Despite the broad benefits of digitizing, only 20 percent of small firms and 45 percent of medium firms have their own websites. Furthermore, only 60 percent of small firms and 80 percent of medium firms use email to communicate with their clients and suppliers, representing a large potential for growth in supply chain efficiency.

There seems to be large untapped potential here: Internet access removes the need for businesses to be situated close to their customers, allowing them to expand past their geographical base. A larger Internet base boosts direct online sales, and marketing and advertising costs fall in comparison to traditional media. Businesses can increase their structural efficiency and make better decisions with access to information, leading to large growth potential in a region with a rise of small and medium-sized businesses.

The political culture of countries, especially ones in a region with a long history of military dictatorship and other forms of government oppression, sees great strides forward with the Internet as a tool. Since the Internet facilitates easy and rapid exchange of information, it allows individuals to break up the  state monopoly on information and political culture. By empowering individuals to produce and circulate their own information and ideas, the Internet creates new spaces of public political participation. This in turn leads to a greater democratic culture, where individuals are emboldened to share their perspectives.

But perhaps most important of all is the impact of the Internet on the most marginalized individuals in societies. Financial services can move online, providing more competition to the local institutions. Social connectivity increases with the advent of social media and other communication technology, especially as 85 percent of sub-Saharan Africans who have access to the Internet use it as a vehicle of communication with friends and family. Educational attainment rises due to the new possibilities of e-learning and online open courses. On another front, too, the Internet facilitates basic skills such as information literacy.

Rural Africa has much to gain from increased Internet access. With impacts ranging from economic to personal to political development, the internet is going to be a great equalizer in societies that are seeing increasing rural-urban divides. By being able to reach out to these rural areas with much-needed infrastructure, much of which is already under development, sub-Saharan Africa just might gain a tool critical to achieving the growth it needs.