david dean e friction refresh tunis ais 04jun15v3

Which Wheels to Grease? Reducing Friction in the Internet Economy

David R. Dean Africa Internet Summit Tunis, 4 June, 2015

ICANN e-friction Refresh AIS Tunis 04Jun15.pptx 1

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Africa: 300 million people online—10 per cent of the global Internet population

Source: www.internetworldstats.com

But: 20 per cent of world’s offline population is in Africa

0

10

20

30

40

50

60

70

80

90

100

N. America Oceania Europe LatAm/Carib. Middle East Asia Africa

Online population by continent (%)


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Some African countries are well penetrated

Source: www.internetworldstats.com

With over 800m non-users, what’s preventing further Internet penetration in Africa?

0

10

20

30

40

50

60

Morocco Seychelles Egypt S. Africa Tunisia Mauritius Cabo Verde Nigeria Kenya São Tomé and

Príncipe

Online population by country (%)


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e-Friction: The Global Perspective


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More users, traffic, and international capacity

Global Internet users (Bn) •  0.5 (2000) •  2.3 (2014) •  5.0 (2020)

Monthly Internet traffic per user •  10 MB (2000) •  5 GB (2013) •  14 GB (2018)

International bandwidth capacity •  14 Tbps (2008) •  137 Tbps (2014)

+12% p.a. +50% p.a.

+46% p.a.

Source: BCG Analysis


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The Internet is no longer discretionary

… to social …

… to commerce and entertainment …

… to ubiquity From

academia …


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The Internet is a pervasive, fast-growing economic force

0

+10.8%

Developing

Developed

2016

4.2

1.4

2.8

2010

2.3

0.5

1.7 1

2

5

G20 Internet economy (trillion $)

3

4

CAGR

8%

18%

Note: G20 countries only Source: EIU; Ovum; Gartner; Euromonitor; OECD; country-specific sources; BCG analysis

4.1% of GDP

5.3% of GDP


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Some digital economies growing much faster than others

G-20 average: 4.1%

0

5

10

15

20

25

0 2 4 6 8 10

2010–16 e-GDP CAGR (%)

e-GDP as % of GDP, 2010

Spain Netherlands

Denmark

Sweden

Belgium

Indonesia

Turkey

Russia

Argentina

Brazil

Mexico

India

China

Italy

KSA

France

Canada Germany

Australia USA

Japan S. Korea

UK EU27

RSA

350

e-GDP: Internet contribution to GDP (US$B)

Developing Developed

G-20 average: 11%

Powering ahead

Pioneers

Catching up

Lagging behind

Source: EIU; Ovum; Gartner; Euromonitor; OECD; BCG analysis


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Not for wider circulation beyond today's call

The Internet has multiple indirect impacts too

Consumer Surplus ca. €3-4k p.a. per user in many developed economies •  Ca. 8-10x what consumers pay for the Internet several European countries •  Ca. $3T in value globally

Research Online, Purchase Offline (ROPO), B2B, C2C •  ROPO over $1.5T in G20 •  ROPO up to 15-25% of retail sales in UK, USA, France and Germany

SMEs with heavy Internet use benefit significantly from the Internet •  Grow 1.5-2x faster •  Sell further afield, with ~50% higher exports – e.g. virtually all eBay sellers in Chile,

India and S. Africa export, vs. only 12-25% of offline sellers


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The Internet economy is not frictionless

"Is there network coverage?"

"I don't speak Thai!"

"No connectivity ….."

"Can it be delivered here?"

"Can I trust online payments?"

"How much is this going to cost me?"

"Do I have an access device?"

"Will my bid go through in time?"


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“e-Friction”: factors holding back the development of the Internet economy

Source: BCG e-Friction model

Infrastructure Weighted 3/6

Industry Weighted 1/6

Frictions holding back companies from adopting the Internet

Frictions related to the availability of content

Frictions deterring consumers from online activity

Frictions reducing opportunities to access the Internet


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Infrastructure Information Industry Individuals

Infra

stru

ctur

e

Number of Wikipedia pages in home language (Wikipedia)

Number of micro messages made in home language, messages/day (Twitter)

Freedom of the press index, 0-100 (Reporters Without Borders)

Freedom on the Net, score 0-100 (Freedom House)

ONI transparency rating, 1-15 (Open Net Initiative)

Commitment to open data, 0-1 (Open Knowledge Foundation)

Info

rmat

ion

Volu

me

Indu

stry

Infra

Te

ch

Labo

ur

Cap

ital

Eco

nom

y

Quality of transport infra for physical fulfilment, 0-7 (WEF)

Quality of electricity and telephony infra, 0-7 (WEF)

ICT skills, 1-10 (IMD)

Quality of math and science education, 0-7 (WEF)

Availability of qualified engineers, 0-7 (WEF)

Capacity for innovation, 0-7 (WEF)

Firm-level technology absorption, 0-7 (WEF)

Business fixed broadband penetration, % (Pyramid Research)

Venture capital availability, 0-7 (WEF)

Financial market sophistication, 0-7 (WEF)

Financing through local equity market, 0-7 (WEF)

Ease of access to loans, 0-7 (WEF)

Foreign direct investment to GDP, ratio (WEF)

Strength of IP protection, 0-7 (WEF)

Burden of customs procedures, 0-7 (WEF)

Prevalence of trade barriers, 0-7 (WEF)

Number of days to set up a business (WEF)

Abi

lity

Ban

king

Quality of educational system, 0-7 (WEF)

Adult literacy rate, % (WEF)

ICT skills, 1-10 (IMD)

Consumer broadband penetration, % (Pyramid)

Availability of financial services, 0-7 (WEF)

Affordability of financial services, 0-7 (WEF)

Market penetration of bank accounts, % (WEF)

Acc

ess

Trus

t

Indi

vidu

als

Cyber security being adequately addressed, 1-10 (IMD)

Population using online personal finance, % (ComSc)

Debit card penetration, % (WEF)

Trust in privacy of credit card/financial data, survey score (BCG)

Trust in privacy of other personal data, survey score (BCG)

No. of domains registered to each ccTLD/cap (Google)

Obs

tacl

es

Atti

tude

s

Pay

men

ts

The components of e-Friction – 55 indicators S

peed

Peak fixed BB connection speed, Mbps (Akamai)

Peak mobile connection speed, Mbps (Akamai)

Average fixed BB connection speed, Mbps (Akamai)

Pric

e Fixed BB pricing, $/month at PPP (WEF) Mobile pricing, $/min local call off-net (peak) at PPP (IMD)

Arc

hite

ctur

e

Number of networks (ASNs)/cap (Potaroo)

Exchange points/capita (Euro-IX)

Existence of indep. regulator, 0-1 score (ITU)

Number of IPv4 registrations/capita (Potaroo) Number of IPv6 registrations/capita (Potaroo)

Traf

fic

International Internet bandwidth/cap (Telegeography)

International traffic volumes /capita, Mbps (Telegeography)

Traffic volumes/capita, Mbps (Cisco)

Average mobile connection speed, Mbps (Akamai)

Content registered to ccTLD hosted onshore, % (Pingdom)

Internet users, % of pop (World Bank)

Mobile Internet subscription penetration, % (Ovum)

Acc

ess

Internet bandwidth/capita (ITU)

Fraction of population using social networks, % (Comscore)

Source: BCG e-Friction model


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e-Friction Index includes 65 countries Covering 92% of global economy and 81% of global population

Country e-Friction score

Infra-structure Industry Individual Infor-

mation 1. Sweden 14 15 15 10 16 2. Finland 17 21 16 8 14 3. Denmark 21 21 37 15 11 4. Switzerland 21 22 21 13 27 5. Hong Kong 21 18 9 22 43 6. United States 22 23 26 28 11 7. Iceland 22 17 34 36 14 8. Norway 23 25 26 14 20 9. Netherlands 25 28 21 13 30 10. Canada 25 32 28 13 15 11. Germany 26 28 35 17 18 12. United Kingdom 28 29 27 29 25 13. Austria 29 27 40 25 29 14. Australia 30 38 26 27 15 15. Singapore 31 30 9 25 66 16. Belgium 32 34 27 23 42 17. New Zealand 33 42 30 27 17 18. Ireland 34 34 41 36 24 19. France 34 38 33 26 32 20. Estonia 35 35 47 43 19 21. Japan 39 33 32 50 53 22. Israel 39 37 39 39 48 23. Qatar 40 51 19 23 44 24. UAE 41 45 25 33 49 25. Korea, Rep. 41 28 45 47 69 26. Slovenia 44 34 58 56 47 27. Bahrain 44 41 42 36 60 28. Malaysia 44 52 28 42 40 29. Poland 45 45 65 42 31 30. Portugal 45 43 43 49 51 31. Romania 46 29 81 70 35 32. Czech Republic 46 38 62 47 54



mation 33. Spain 47 46 52 43 51 34. Panama 48 42 39 57 65 35. Hungary 48 47 62 59 30 36. Italy 49 42 64 62 41 37. Bulgaria 53 39 71 76 55 38. Greece 53 49 65 65 43 39. Ukraine 54 45 77 74 33 40. Kuwait 56 55 73 53 47 41. Chile 57 60 44 55 61 42. Jordan 57 53 48 67 69 43. Russia 57 49 73 59 66 44. Saudi Arabia 58 54 36 54 92 45. Turkey 58 52 60 59 76 46. Kazakhstan 64 58 70 61 76 47. Philippines 64 71 61 65 43 48. Thailand 64 61 59 63 81 49. Argentina 67 61 91 76 53 50. South Africa 67 75 50 63 68 51. Mexico 68 66 69 79 59 52. Brazil 69 67 71 71 68 53. China 69 73 56 66 75 54. Morocco 70 72 58 76 73 55. Venezuela 71 66 88 80 58 56. Colombia 71 72 76 75 61 57. Kenya 71 80 71 68 51 58. India 73 79 52 71 77 59. Indonesia 74 78 56 75 78 60. Peru 75 79 71 84 55 61. Vietnam 75 69 73 82 87 62. Bangladesh 75 74 86 90 53 63. Egypt 76 78 77 92 55 64. Pakistan 82 79 72 89 92 65. Nigeria 82 89 77 86 59 Top Bottom - Quintiles

Note: Best e-Friction available is 0, worst is 100


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mation 1. Sweden 14 15 15 10 16 2. Finland 17 21 16 8 14 3. Denmark 21 21 37 15 11 4. Switzerland 21 22 21 13 27 5. Hong Kong 21 18 9 22 43 6. United States 22 23 26 28 11 7. Iceland 22 17 34 36 14 8. Norway 23 25 26 14 20 9. Netherlands 25 28 21 13 30 10. Canada 25 32 28 13 15 11. Germany 26 28 35 17 18 12. United Kingdom 28 29 27 29 25 13. Austria 29 27 40 25 29 14. Australia 30 38 26 27 15 15. Singapore 31 30 9 25 66 16. Belgium 32 34 27 23 42 17. New Zealand 33 42 30 27 17 18. Ireland 34 34 41 36 24 19. France 34 38 33 26 32 20. Estonia 35 35 47 43 19 21. Japan 39 33 32 50 53 22. Israel 39 37 39 39 48 23. Qatar 40 51 19 23 44 24. UAE 41 45 25 33 49 25. Korea, Rep. 41 28 45 47 69 26. Slovenia 44 34 58 56 47 27. Bahrain 44 41 42 36 60 28. Malaysia 44 52 28 42 40 29. Poland 45 45 65 42 31 30. Portugal 45 43 43 49 51 31. Romania 46 29 81 70 35 32. Czech Republic 46 38 62 47 54



mation 33. Spain 47 46 52 43 51 34. Panama 48 42 39 57 65 35. Hungary 48 47 62 59 30 36. Italy 49 42 64 62 41 37. Bulgaria 53 39 71 76 55 38. Greece 53 49 65 65 43 39. Ukraine 54 45 77 74 33 40. Kuwait 56 55 73 53 47 41. Chile 57 60 44 55 61 42. Jordan 57 53 48 67 69 43. Russia 57 49 73 59 66 44. Saudi Arabia 58 54 36 54 92 45. Turkey 58 52 60 59 76 46. Kazakhstan 64 58 70 61 76 47. Philippines 64 71 61 65 43 48. Thailand 64 61 59 63 81 49. Argentina 67 61 91 76 53 50. South Africa 67 75 50 63 68 51. Mexico 68 66 69 79 59 52. Brazil 69 67 71 71 68 53. China 69 73 56 66 75 54. Morocco 70 72 58 76 73 55. Venezuela 71 66 88 80 58 56. Colombia 71 72 76 75 61 57. Kenya 71 80 71 68 51 58. India 73 79 52 71 77 59. Indonesia 74 78 56 75 78 60. Peru 75 79 71 84 55 61. Vietnam 75 69 73 82 87 62. Bangladesh 75 74 86 90 53 63. Egypt 76 78 77 92 55 64. Pakistan 82 79 72 89 92 65. Nigeria 82 89 77 86 59 Top Bottom - Quintiles

Note: Best e-Friction available is 0, worst is 100

So how do African countries perform?


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Lower e-Friction – higher Internet penetration National Internet penetration vs. e-Friction score

Source: Digital, Social and Mobile 2015 – slide 17 – Quoted source: InternetLiveStats Q12015, InternetWorldStats Q12015. Wikipedia for population data.

0% 20% 40% 60% 80% 100%

Germany Hong Kong

National Internet penetration (%)

United Kingdom

United States

e-Friction score

Canada

United Arab Emirates

Singapore

Korea, Rep. Japan

France Australia

Spain

Poland Malaysia Italy

Turkey

Thailand

South Africa

Russia Philippines

Brazil Argentina

Vietnam Nigeria

Indonesia India

Egypt

Top Bottom - Quintiles

0

100

20

40

60

80

R2 = 0.76


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Positive economic impact of lower e-Friction Relationship between size of digital economy and e-Friction

0%

8%

6%

70

4%

2%

50 0 10 20 30 40 80 60

Turkey

Sweden

South Africa Saudi Arabia Russia

Poland

Netherlands

Mexico

Korea, Rep. Japan

Italy

Indonesia

India

Hong Kong

Greece Germany

France

e-Friction score, 2013

Denmark

Czech Republic

China

Canada

Brazil Egypt

Australia

Argentina

2013 digital economy1 as % of GDP (est.)

United States

United Kingdom

Belgium

R2=0.60

Equivalent to 2.5 pts of the

overall economy

Bottom quintile e-Friction

Top quintile e-Friction

1. 2013 estimates interpolated from 2010 and 2011 actuals and 2016 forecasts; 2. in the 65 countries covered. Source: BCG e-GDP model, BCG e-Friction model

Significant impact "beyond GDP": "ROPO", consumer surplus, C2C, SME growth, etc.

>3.2 B unconnected people2


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Which wheels to grease?

Wealth ≠ Destiny ! Rural ≠ Unconnected !


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Richer countries tend to have lower e-Friction

10 100 1

e-Friction score

GDP per capita ('000 US$ - log scale)

0

100

20

40

60

80

GDP per capita vs. e-Friction score

Source: World Bank GDP per capita (current US$) year 2012; Bangladesh omitted on this chart as GDP per capita under $1,000

R2 = 0.63

But wealth is not necessarily destiny – widespread of e-Friction scores at each wealth level


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Wealth is important, but doesn’t alone explain e-Friction

e-Friction score vs. GDP per capita

Source: World Bank GDP per capita (current US$) year 2012; Bangladesh omitted on this chart as GDP per capita under $1,000

How to reduce e-Friction in Developing Rural countries?

100 10 1

Jordan

Japan

Italy

Israel

Ireland

Indonesia

Iceland

Hungary

HK

Greece

Germany

France

Finland

Estonia

Egypt

Denmark

Czech Qatar

China

Chile

Canada

Bulgaria

Brazil

Belgium

Bahrain

Austria

Australia

Argentina

Russia

Colombia

Romania

Portugal Poland

Philippines

Peru

Panama

Pakistan

Norway

Nigeria

NZ NL

Morocco Mexico

Malaysia

Kuwait

e-Friction score

GDP per capita ('000 US$ - log scale)

Korea

Kenya Kazakhstan

Vietnam Venezuela

US

India

UAE

Ukraine

Turkey

Thailand

Switzerland

Sweden

Spain

SA

Slovenia Singapore

Saudi

UK

Well-oiled

Developing Rural Middle-Income Rural

Middle-Income Urban Aspirants

High-Income Aspirants

All-rounders 0

100

20

40

60

80

High-Income Overachievers Middle-Income

Overachievers ë

ë ë

ë

DDI - Working Group discussion 4_15January_vff.pptx 19

Approach to building rural infra can be different based on degree of urbanization and wealth of the country

Urban Environment

Wealth

Moderate GDP per Capita ($5-15k)

Rural

Potential priorities: —  Leapfrog infrastructure (4G) —  Spur local app ecosystems to drive

demand —  Encourage enabling applications like

identity, payments Example case studies: —  Philippines

Potential priorities: —  Invest in enabling infrastructure (IXPs,

fiber-optics) —  Engage SMEs in digital economy —  Expand digital employment Example case studies: —  China: Balance of mobile/fixed

infrastructure investment

Potential priorities: —  Publicly fund basic infrastructure

access —  Reduce connectivity costs —  Provide remote eGov, eHealth,

eEducation services Example case studies: —  Rwanda

Potential priorities: —  Encourage private infrastructure

investment —  Prove value of internet to encourage

adoption

Example case studies: —  Malaysia PPP

Source: BCG Project “Delivering on Digital Infrastructure” for The World Economic Forum

Low GDP per Capita

(<$5k)

Rural connectivity

DIA - working session- Oct 514_v03.pptx 20

Choosing the right tech critical from a cost and service quality perspective

Urban area with backbone

Source: BCG Analysis, Filiago, Google, Facebook, BCG Project “Delivering on Digital Infrastructure” for The World Economic Forum

Rural area

Facebook Drone

Google Loon

Node

•  Geo-stationary orbit •  Middle earth orbit •  Lower earth orbit

Satellite connectivity

Mobile/Fixed wireless

•  Line of sight unit •  Indoor unit

Fiber

•  FTTN •  FTTP

Fixe

d gr

ound

W

irele

ss

1k-3

6k k

m

Mob

ile/F

ixed

w

irele

ss, <

1km

Fiber

Copper

Legend Experimental Operational

Affordability, quality High Medium

Low Unknown

DIA - working session- Oct 514_v03.pptx 21

4G3

4G 4G1 4G2 4G1

2G 2G 2G 2G 2G 2G 2G 2G 2G/3G 2G

4G 4G 4G 4G 4G 4G 4G

2G/3G/ 4G 2G 2G 2G/3G

4G2

4G 4G 4G

2G 2G 2G/4G 2G/4G 2G 2G/3G 2G/4G 2G/4G 2G 2G/4G

3G/4G 3G 3G 3G 3G 3G 3G 4G3 4G 3G 3G/4G 3G 3G

2G/3G 2G/3G 2G/3G 2G/3G

4G 4G 4G

4G

3G

3G

3G/4G

3G/4G

4G

2G

4G

583 447 n/a 605 n/a 459 314 240 279 390 n/a n/a 190

Current spectrum snapshot shows potential for higher allocation and utilization across countries

Spectrum

"Coverage" frequencies (sub 1GHz)

"Capacity" frequencies

USA China Singap. India

Asia

S. Arabia U.A.E. Qatar

Middle East

Bolivia Colombia Brazil

Latin America

Angola S. Africa

Total mobile spectrum

700MHz

450MHz

900MHz

2.5GHz

1.9GHz

2.3GHz

Nigeria

Africa

3.5GHz

1.8GHz

2.1GHz

850MHz

800MHz

Refarming potential to increase network

capacity where spectrum becomes scarce resource

Ineffective roll out of allocated spectrum: US MNO have more

than 583MHz but only about 192MHz are in use. Thereof about

90% are used for 2G, 3G and 3.5G

Allocation and clearance of established mobile spectrum has high potential in

emerging markets (mostly locked in military and analog TV)

Spectrum allocated to high speed Spectrum allocated to low speed Spectrum not allocated to mobile

1. Announced to be auctioned 2. Partial coverage only (i.e., large cities) 3. Allocated to mobile but not deployed Note: 2.6GHz included in 2.5GHz; 1.7GHz included in 2.1GHz; For some countries total spectrum varies strongly by region or n/a Source: GSM Arena; BCG analysis, BCG Project “Delivering on Digital Infrastructure” for The World Economic Forum


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Which wheels to grease beyond infrastructure?

Literacy

Local Content

ICT Skills


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Higher literacy – lower e-Friction


Illiteracy and e-Friction score by e-Friction quintile

0

100

20

40

60

80

Source: WEF GCI http://www.weforum.org/issues/competitiveness-0/gci2012-data-platform/ - 01/10/2013 - 2011 data

0.1 100 10 1

Sweden

Vietnam

Venezuela Peru

Pakistan Nigeria

Morocco Kenya

Indonesia

India

Egypt Colombia China

Norway

Japan Israel

Ireland France

Estonia Belgium

Malaysia

Italy Hungary

Greece

Czech Bulgaria

Bangladesh

US

NL Iceland

Germany

Finland Denmark

Canada

e-Friction score

Illiteracy (%) – log scale

UK

Switzerland

Austria

UAE Slovenia

Singapore

Qatar

NZ

Korea, Rep.

Bahrain

Turkey

Thailand

SA

Saudi Russia Philippines Mexico

Kuwait

Kazakhstan

Jordan Chile

Brazil Argentina

Australia

Ukraine

Spain Romania

Portugal

Poland Panama

Over 98 percent of illiterate people can be found in countries with high or very high e-Friction – with over 800 million in predominantly rural countries


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Most illiterate people live in predominantly rural countries

20%

40%

60%

80%

100%

10 100 1 0.1

Switzerland

Israel

Ireland

France

Estonia

Belgium

Ukraine

Spain

Romania

Portugal Poland

Panama Malaysia

Italy

Hungary

Urban population (%)

Sweden Norway

Netherlands

Germany

Denmark

Austria

United Arab Emirates

Slovenia

Singapore

Qatar Japan

Greece

Czech Republic Bulgaria

Bahrain

Turkey

Thailand

South Africa

Saudi Arabia

Russia

Philippines

Mexico

Illiteracy (%-log scale)

Kazakhstan

Jordan Chile

Brazil

Argentina

Vietnam

Venezuela

Peru

Pakistan

Kuwait

Morocco

Kenya

Indonesia

India

Egypt

Colombia

China

Bangladesh

United Kingdom

Nigeria


Illiteracy rate (log scale) vs Urban population (%)

Sources: e-Friction component scores from BCG e-Friction model Literacy rate from: WEF GCI http://www.weforum.org/issues/competitiveness-0/gci2012-data-platform/ - 01/10/2013 - 2011 data Urban population %: from Euromonitor and are 2012 numbers

Over 800m illiterate people


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Is English proficiency a pre-requisite for low e-Friction?

35 40 45 50 55 60 65 70

Poland

Peru

Portugal

Qatar Romania

Panama

Russia

Indonesia India

Hungary

Germany

France

Norway Netherlands

Morocco Mexico

Malaysia

English Proficiency1

e-Friction score

Vietnam

Venezuela

Ukraine

Turkey

Thailand

Switzerland

Sweden

Kuwait

Kazakhstan

Jordan

Japan

Italy

Slovenia

Saudi

Spain

Singapore

Finland

Estonia

Egypt

Denmark

Czech

Colombia

Argentina China

Chile

Brazil

Belgium Austria


English proficiency and e-Friction score

0

20

40

60

80

Source: 1. EF English Proficiency Index 2014

R2 = 0.53

Two interventions possible: creation of more local language content, and/or development of English-language skills


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Key messages so far

A high share of the global population is in countries with above average e-Friction •  80 percent of the global population, but over 90 percent of the global offline

population

Countries in the top quintile have digital economies that are, on average, 2.5 percentage points larger than those in the bottom quintile •  A conservative indication of the Internet’s impact, given that much impact is “beyond

GDP”

Some countries “get it right” on all components of e-Friction •  Most have quite variable performance across the four components of e-Friction

Important to recognize that there is no “silver bullet” for capturing the Internet’s impact •  Many levers need addressing simultaneously and in a coordinated manner


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e-Friction: The SME Perspective


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Greasing the wheels to get SMEs online

Sonitus Engenharia: Brazilian automotive engineering company: Growth through

online tools–Flavio Quintela

Dowhile: S. African graphics company: Online marketing & training

–Dennis Ngwepe


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+7%

-30369121518212427303336394245%

The Internet helps SMEs grow their revenues

Higher e-Friction

Lower e-Friction

Average

Past three years Cumulative revenue growth

Heavy web use

+18%

Med / light web use

+11%

Source: BCG SME Internet e-Friction survey 2013

In addition, extended geographical reach of sales – Higher domestic coverage and higher international sales


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0

25

50

75

100

City

93% 97%

Neighbour- hood

Med/light web use

Heavy web use

World

13%

22%

Country

48%

58%

Region

71%

81%

% of SMEs +6%

+17%

+34%

+49%

0

25

50

75

100

Heavy web use

Region

65%

77%

City

90% 96%

% of SMEs

Neighbour- hood

World

12% 18%

Country

40%

53%

Med/light web use

The Internet helps SMEs extend their geographical reach

Geographical reach of sales Geographical reach of purchases

+5%

+14%

+23%

+63%



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Reducing e-Friction essential to help SMEs do more online

Indu

stry

In

divi

dual

s In

fras

truc

ture

35%36%

47%48%43%46%

30%28%31%30%

36%33%31%

42%45%

38%52%

57%23%

31%39%40%

44%57%

42%43%40%

48%54%Difficulty to obtain a website domain 22%

Cost to obtain a website domain 26% Choice of online tools providers 27%

Complexity to set up and maintain a website 29% Cost to set up and maintain a website 30%

Customers interest to interact via website 23% Customers’ skills to be online 28%

Customers ownership of tools to be online 30% Safety to store our data or sell online 31%

Consumer trust in online payment systems 38% Belief in safety of personal data online 51%

Employees access to computers 23% Belief in Internet’s contribution to the business 25%

Willingness to buy online due to return policy 30% Staff preparedness for online activities 30%

Company’s fund to further develop the online offer 30% Reliability of intellectual property rights online 33%

Offline infrastructure to support online sales 34% Hiring of managers for online activities 35%

Availability of market funding for online offer 36% Availability of industry support group 37%

Supportive regulations to encourage online sales 37% Process to start a new business 41%

Reliability of Internet service providers 24% Choice of internet providers 27%

Cost of internet access 27% Quality of internet connection 28% Regulations to operate online 31%

Cost of access to tools to be online 32%

Info

r-m

atio

n

SMEs' view on e-Frictions within their country

Problem Neutral No problem



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Multi-stakeholder approach necessary to reduce e-Friction

The starting point: the metrics!


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Reducing e-Friction across Africa can deliver enormous potential

An Internet economy of 5 per cent of GDP •  An additional $100B for the continent’s economy •  Many indirect benefits too

Another 500 million people online

•  $150-250B in consumer surplus Investment in skills

•  ca. 20 million jobs created for each percentage point increase in the size of the Internet economy

Social benefits

•  Access to health, education, financial services, etc. Trade

•  Increasingly, the Internet drives cross-border and international trade


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“Which Wheels to Grease?” An Agenda for policy makers

§  Do not see "wealth as destiny": many levers exist to reduce e-Friction, whatever the level of GDP

§  Innovate in infrastructure deployment: affordable infrastructure for low population density areas requires new technologies, business models and policies

§  Drive for literacy: basic literacy, English-language skills and ICT skills all help reduce e-Friction

§  Encourage local relevance: local content in local languages drives usage, requiring encouragement of local ecosystems, including e-government services

§  Get companies online: SMEs that use the Internet intensively grow faster, employ more people than those that don’t, and trade more internationally

§  Encourage “joined-up” policy making: drive for multi-stakeholder involvement from across the ecosystem and learnings from relevant peers

1

2

3

4

5

6


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Where to find the reports

BCG’s website: http://tinyurl.com/o65xoob http://tinyurl.com/pe3gjc5 ICANN’s website: http://tinyurl.com/n9lw5kg

Thank you

bcg.com | bcgperspectives.com


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E-Friction scorecard: Egypt

Infrastructure

Overall 78

Indicator friction score

Acc

ess

Internet bandwidth per capita 92 International Internet bandwidth per capita 89 Consumer broadband penetration (%) 91 Business fixed broadband penetration (%) 89 Mobile internet subscription penetration (%) 88 Number of IPv4 registrations per capita 84 Number of IPv6 registrations per capita 92

Spe

ed

Peak fixed broaband connection speed 96 Average fixed broadband connection speed 100 Peak mobile connection speed 90 Average mobile connection speed 100

Pric

e Fixed broadband pricing ($ per month at PPP) 10 Mobile pricing ($ per min local call off-net (peak) at PPP) NA

Traf

fic

Traffic volumes per capita NA International traffic vols per capita NA

Arc

hite

ctur

e Exchange points per capita 86 Number of networks (ASNs) per capita 91 Content registered to cc'TLD hosted onshore (%) 58 Existence of independent regulator* 1

Industry

Overall 77


Infra

Quality of transport infrastructure for physical fulfillment 78 Quality of electricity and telephony infrastructure 91

Labo

ur

ICT skills NA Quality of maths & science education 98

Availability of qualified engineers 58

Capacity for innovation 92

Cap

ital

Financial market sophistication* 81 Financing through local equity market 53

Ease of access to loans 78

FDI to GDP ratio NA

Venture capital availability 52

Eco

nom

y

Strength IP protection 80

Burden of customs procedures 78

Prevalence of trade barriers 97 Number of days to set up a business 47

Tech

Company-level technology absorption 86

Individual

Overall 92


Abi

lity

Quality of educational system 98

Adult literacy rate (%) 92

ICT skills NA

Acc

ss

Internet users (%) 76

Ban

king

Availability of financial services 95

Affordability of financial services 88

Market penetration of bank accounts (%) 100

Pay

men

ts

Population using online personal finance (%) NA

Debit card penetration (%) 96 Tr

ust

Cyber security being adequately addressed NA

Trust in privacy of credit card/financial data NA

Trust in privacy of other personal data NA

Information

Overall 55


Site

s Number of domains registered to each ccTLD per capita

81

Con

tent

Number of online open encyclopaedia pages in local language

31

Number of micro messages made in home language* 8

Share of population using social networks (%) NA

Dat

a

Commitment to open data 83

Obj

ectiv

ity

Press freedom index 91

Freedom on the net 81

Obs

tcls

Filtering score* 1

e-Friction Score: 76

Notes: the best e-Friction score a country can achieve on any given indicator is 0 while the worse is 100, * some variables are in a discrete scale with several countries sharing an equal ranking Source: BCG e-Friction model. Found in BCG Perspectives "Greasing the Wheels of the Internet Economy: a Country by Country e-Friction Analysis"

Rank: 63 of 65


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E-Friction scorecard: Kenya

Infrastructure

Overall 80


Acc

ess

Internet bandwidth per capita 74 International Internet bandwidth per capita 94 Consumer broadband penetration (%) NA Business fixed broadband penetration (%) NA Mobile internet subscription penetration (%) 94 Number of IPv4 registrations per capita 92 Number of IPv6 registrations per capita NA

Spe

ed

Peak fixed broaband connection speed NA Average fixed broadband connection speed NA Peak mobile connection speed NA Average mobile connection speed NA

Pric


Traf

fic


Arc

hite

ctur


Industry

Overall 71


Infra


Labo

ur




Cap

ital



FDI to GDP ratio NA


Eco

nom

y




Tech


Individual

Overall 68


Abi

lity



ICT skills NA

Acc

ss


Ban

king




Pay

men

ts



ust




Information

Overall 51


Site


75

Con

tent


27



Dat

a


Obj

ectiv

ity



Obs

tcls

Filtering score* NA



Rank: 57 of 65


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E-Friction scorecard: Morocco

Infrastructure

Overall 72


Acc

ess

Internet bandwidth per capita 72 International Internet bandwidth per capita 81 Consumer broadband penetration (%) 89 Business fixed broadband penetration (%) 98 Mobile internet subscription penetration (%) NA Number of IPv4 registrations per capita 86 Number of IPv6 registrations per capita NA

Spe

ed

Peak fixed broaband connection speed NA Average fixed broadband connection speed NA Peak mobile connection speed 62 Average mobile connection speed 83

Pric


Traf

fic

Traffic volumes per capita NA International traffic vols per capita 82

Arc

hite

ctur

e Exchange points per capita NA Number of networks (ASNs) per capita 100 Content registered to cc'TLD hosted onshore (%) 88 Existence of independent regulator* 1

Industry

Overall 58


Infra


Labo

ur




Cap

ital



FDI to GDP ratio 53


Eco

nom

y




Tech


Individual

Overall 76


Abi

lity



ICT skills NA

Acc

ss


Ban

king




Pay

men

ts



ust




Information

Overall 73


Site


53

Con

tent


52



Dat

a


Obj

ectiv

ity



Obs

tcls

Filtering score* 68



Rank: 54 of 65


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E-Friction scorecard: Nigeria

Infrastructure

Overall 89


Acc

ess


Spe

ed

Peak fixed broaband connection speed NA Average fixed broadband connection speed NA Peak mobile connection speed NA Average mobile connection speed NA

Pric


Traf

fic


Arc

hite

ctur


Industry

Overall 77


Infra


Labo

ur




Cap

ital



FDI to GDP ratio 34


Eco

nom

y




Tech


Individual

Overall 86


Abi

lity



ICT skills NA

Acc

ss


Ban

king




Pay

men

ts



ust




Information

Overall 59


Site


97

Con

tent


100

Number of micro messages made in home language* NA


Dat

a


Obj

ectiv

ity



Obs

tcls

Filtering score* 1



Rank: 65 of 65


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E-Friction scorecard: South Africa

Infrastructure

Overall 75


Acc

ess


Spe

ed

Peak fixed broaband connection speed 100 Average fixed broadband connection speed 85 Peak mobile connection speed 100 Average mobile connection speed 75

Pric

e Fixed broadband pricing ($ per month at PPP) 86 Mobile pricing ($ per min local call off-net (peak) at PPP) 38

Traf

fic

Traffic volumes per capita 89 International traffic vols per capita NA

Arc

hite

ctur


Industry

Overall 50


Infra


Labo

ur

ICT skills 98 Quality of maths & science education 100



Cap

ital



FDI to GDP ratio 89


Eco

nom

y




Tech


Individual

Overall 63


Abi

lity



ICT skills 98

Acc

ss


Ban

king




Pay

men

ts

Population using online personal finance (%) 92


ust

Cyber security being adequately addressed 58



Information

Overall 68


Site


74

Con

tent


97

Number of micro messages made in home language* NA

Share of population using social networks (%) 92

Dat

a


Obj

ectiv

ity



Obs

tcls

Filtering score* NA



Rank: 50 of 65

Thank you

bcg.com | bcgperspectives.com

david dean e friction refresh tunis ais 04jun15v3

Government & Nonprofit

egdp cagr

internet contribution

internet penetration

g20 internet economy

internet economy david

monthly internet traffic

gdp us

penetrated source