enabling a digital economy in africa...digital transformation part iii: measurement part i where are...

Enabling a Digital Economy in Africa

1

Enrico Calandro

PRIDA Meeting

AUC, 2 September 2019

@EnricoCalandro

@RIAnetwork

Part I:

Connectivity

Part II:

Digital

Transformation

Part III:

Measurement

PART I

Where are we in Africa with

regards to availability and

affordability?

Source: Steve Song, 2019 Open Telecom Data

The impact of coverage – e.g. SA

Urban vs Rural Connectivity - Kenya

Source: Intelecon, 2016

Source: Steve Song, 2019 Open Telecom Data

Urban–rural disparity in Internet use in the

Global South – Demand-side perspective

8784

77

70 6965

57

50 4845

42 40 40 40 38 3632

23

13 13

-60

25

50

75

100

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Leso

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Ind

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Se

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ar

Pe

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Ca

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Urban Rural Gap

Case Study: are data prices in South Africa high?

1.13

1.25

1.49

2.08

2.23

2.23

2.28

2.37

2.40

2.46

2.68

2.75

2.79

8.28

Egypt

Namibia

Mozambique

Tunisia

Tanzania

Guinea

Sudan

Rwanda

Brundi

Kenya

Ghana

Uganda

Nigeria

South africa

RAMP Index: benchmarking cheapest prepaid 1GB basket (USD) SA vs Africa’s Top Performers, 2018

Case Study: are data prices in South Africa high?

35th of out of 49 African countries in RAMP Index

Cheapest 1 GB prepaid mobile data: USD 8.28 (ZAR 99)

7 times higher the cost of 1 GB in Egypt (USD 1.13)

Nearly three times the cost of same data in Ghana, Kenya and

Nigeria

Pre-paid markets – very high value low cost products that

make ‘effective’ price much lower

Best value in >10GB products and post paid products that are

not affordable to majority of citizens

Affordability: SA benchmarked against Ghana, Kenya and Nigeria

What factors drive cost?

• exchange rates affect equipment import required for the constantupgrading of mobile networks

• increasing costs of key inputs: power, in particular, has inflationaryeffects on data prices

• some countries don’t release high-demand spectrum to operatorsfor 4G

• high bandwidth services are also not being deployed in the cost-effective manner, which further exacerbate the high cost of data

• regulatory issues: failure of regulators to undertake market reviewsto determine and address dominance in wholesale markets;wholesale facilities and IP transit costs result in high telecom inputcosts for service providers and corporates

• high secondary taxes excise duties prevent reinvestment innetworks; social networking taxes reduce use, revenues, profits andcompany taxes.

Price vs QoS

Comparing apples with oranges

In a regulated data environment a number of other important factors

have to be considered when comparing price:

Licensee obligations – coverage, quality of service

Progress towards policy objectives - policy outcomes

QoS – increasingly important in broadband environment (flip

side of price)

Penetration (access)

Usage (intensity of use)

Even price sensitive users choosing to pay premium for quality

services (or just to get signal in their area).

Throughput adjusted prices

PART II: Digital Transformation

What is the role of technologies?

Pre-conditions to adoption

Regulation – institutions – enabling environment for investment/sector development/new technologies and safe and trusted environment for users

• infostructure, or public key infrastructure - the roles, policies and procedures needed to secure the electronic transfer of information, secure the electronic transfer of information - necessary to use cryptographic tools

Supply side – infrastructure (public and private provisioning)

Demand side – users/citizens - knowledge and skills (human development) • capacity development -use of these multifaceted, complex tools and

management of end user private and public keys eg. Blockchain technology wallets and client software facilitate public key cryptography but users need to manage their private keys and safely store them somewhere.

Critical mass to enjoy networks effects associated with economic growth – improved information flows, reduction in transaction costs, productivity gains

How have the telecommunications market conditions changed?

• Saturated voice markets shifting to data

• Introduction of low-end smart phone driving data

• Declining revenue from traditional services

• Operators face becoming ‘dumb pipes’

• Multiple new business models emerging from data competition to retain and attract new customers

• Zero-rated services, social media bundles, blended bundles, build-your-own-bundle.

• Multiple user strategies to access and use Internet – substituted voice and text data services, public wi-fi for updates, U-tube.

• More users, more devices, more services, more demand.

18

19

OTT impact of international voice traffic

Related evolving technologies with development potential (maybe):

• IoT

• Cloud services

• Artificial intelligence/machine learning

• Drones

• Blockchain

• Additive manufacturing (e.g. 3D printing)

© After Access. All Rights Reserved. Proprietary and Confidential

43%

23%

6%

36%

16% 18% 19%

8%12%

3%

15%

5% 7%3% 2% 3%

Argentina Colombia South Africa Peru Paraguay Guatemala India Nigeria Pakistan Bangladesh Ghana Cambodia Kenya Tanzania Rwanda Mozambique

Trading or E-commerce apps (selling and buying online e.g. ebay)

Use of trading & transport apps: Best performance from Latin American

countries. Ghana outl ier (good performance) in Afr ica

18

Q: Are you using these types of Mobile apps on your phone?

31%

15%8%

35%

10%

22%17%

5%

17%

2%10%

1%6%

3% 4% 4%


Mobile app usage (% of aged 15-65 feature or smartphone owners)

Transport apps (public transportation info, taxis, Uber)

Base Argentina Colombia South Africa Peru Paraguay Guatemala India Nigeria Pakistan Bangladesh Ghana Cambodia Kenya Tanzania Rwanda Mozambique

Feature or smartphone owners 982 1,020 1,552 972 809 846 1,397 795 571 936 458 878 1,074 789 660 667

© After Access. All Rights Reserved. Proprietary and Confidential

Overall, higher use of transport and trading apps in urban areas

19

Q: Are you using these types of Mobile apps on your phone?

30%33%

27%

11% 10%

4%

36%

28%

11%7%

24%20%

23%

11%6% 5%

20%

14%

4%2%

9% 11%

3%0%

16%

2%

8%

0%5% 3% 5% 3%

Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural


Mobile app usage (% of aged 15-65 feature or smartphone owners)

Transport apps (public transportation info, taxis, Uber)

BaseArgentina Colombia South Africa Peru Paraguay Guatemala India Nigeria Pakistan Bangladesh Ghana Cambodia Kenya Tanzania Rwanda Mozambique


Feature or

smartphone owners954 28 755 265 919 633 825 147 578 231 362 484 711 686 575 220 272 299 417 519 332 126 465 413 678 396 555 234 443 217 498 169

43%

26%

36%

19%

7%2%

39%

21% 20%

7%

22%

15%

24%

14%12%

4%9%

14%

4%2%

16%11% 12%

3%

17%

2%8%

0%5%

1%5%

2%



Trading or E-commerce apps (selling and buying online e.g. ebay)

PART III

Measuring readiness for the digital economy?

Research on Africa Digital Economy and Society to Inform Digital Policy

RAMP/Supply side admin data

Internet measurements

CMM for NationsIC

T

indic

ators

Policy

and

Reg

ula

tory

A

nal

ysi

s

C3SAUCT GCSCCNUPI

Africa Digital Policy Project (ADPP)

Policy papers

RANITP Technical assistance Capacity Building

Outp

uts

Policy briefs

Academic papers

Reports Op-ed Blogs

Outc

om

es

Broadened digital policy horizons, policy capacity, & policy regimes

LIRNEasia DIRSI

MicrosoftEU/AU

CAfDB WB

AfriNIC

UCTITU

Building public good data

Diagnostic framework for ICT sector performance

Source: RIA, 2018Cyber Maturity

7 SDG ICT indicators, 6 targets under SDG Goals 4, 5, 9,17

Target 4a: Proportion of schools with access to computers for pedagogical purposes

Target 4.4: Proportion of youth/adults with ICT skills, by type of skills

Target 5b: Proportion of individuals who own a mobile telephone, by sex (ITU)

Target 9c: Percentage of the population covered by a mobile network, broken down by technology (ITU)

Target 17.6: Fixed Internet broadband subscriptions, broken down by speed (ITU)

Target 17.8: Proportion of individuals using the Internet (ITU)

We do not have the official data to know our progress

ICT indicators related to other indices’ rankings

Rankings ICT indicators

ADI 2017/61

3iIDI 2017

/176NRI -2017

/139MCI score

1GB Prepaid data USD

Active SIM cards per 100

Internet subscribers

per 100

Ghana 26 60 116 102 52,7 2.24 128 35

Kenya 30 57 138 86 51 2.94 82 26

Lesotho 133 115 44 5,07 107 27

Mozambique 45 80 150 123 31 2,01 40 18

Nigeria 13 56 143 119 45,9 2.80 83 26

Rwanda 21 76 153 80 40 2.39 75 20

Senegal 47 69 142 107 37,3 6,35 99 26

South Africa 22 39 92 65 59,9 7,84 162 54

Tanzania 39 67 165 126 39,4 2.25 72 13

Uganda 32 75 152 121 36,5 2.77 55 22

SourcesA4AI, 2017

EIU, 2018

ITU,2017

WEF,2016

GSMA, 2016RAMP Index (Q3

2017)ITU, 2016a ITU, 2016a

Supply vs Demand-side indicators: What’s the story?

29

86.9 83.873.9

63.358.5

48.239.7

80.4

147.1135.8

8372.1 74.9

52.1

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

0

20

40

60

80

100

120

140

160

Kenya South Africa Ghana Nigeria Tanzania Rwanda mozambique

RIA ITU Mean SIM card ownership

Supply-sideAdministrative Indicators

Mobile Market Share

16 15 1619

23 23

17 17

37 37 3735 34 34 35

31

1 2 2 2 3 3 4 5

47 4745 44

40 4044

47

2010 2011 2012 2013 2014 2015 2016 2017

Cell MTN Telkom Vodacom

Source: GSMA, 2017, in RIA, 2018

SA’s mobile operator average revenue per users (ARPUs)

5.79

4.925.30 5.21

6 6 6

7

10

7

8

7

2.75

5.5

8.25

11

2014 2015 2016 2017

Cell C MTN Telkom Vodacom

Pricing strategy and competition

90

112.5

135

157.5

180

202.5

Q2 2014 2015Q1 Q4 2015 2016Q3 Q2 2017 Q1 2018

Cell C MTN Vodacom Telkom

1GB prepaid mobile data prices for South African operators

Mobile operator investments

OPERATORS’ CAPITAL EXPENDITURES (ZAR BILLIONS)IN 2017/18

Source: Operators’ annual reports, 2017

11.508.90

3.40

MTN Vodacom Cell C

Mobile operators have made

significant network infrastructure

investment to be able to carry vast

volumes of data.

Vodacom coverage- 3G - 99.97%,

4G (80%)

MTN coverage- 3G - 98%, 4G (80%)

Competition in the mobile market is

no longer about pricing only, quality

is more critical especially in the data

market.

Big operators are likely to win this

battle as they are able to re-invest

revenues gained from their large

market shares

Demand-SideICT access and use

ICT: a central part of the everyday lives of people, firms and governments

As more people become connected (enjoy the benefits), is equality improving?

Connectivity: necessary condition for digital participation, but is it sufficient to transform African countries into digital economies and societies?

What challenges emerge after connectivity is achieved?

36

After Access?

Not shown in slides: Sri Lanka, Senegal, Uganda & Ecuador Surveys just completed/surveys about to start/data being analyzed Watch www.afteraccess.net

After Access Surveys

Nationally representative surveys of ICT access and use by households & individuals aged 15-65

18 developing countries; Data represents 30% of the global population; 28,900 face-to-face interviews; +/-3 margin of error

86%

73%

53%

73%

63% 65%

19%

30%

17%

26%

13%

36%

26%

15%9% 10%

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Internet use GNI per capita

Internet use vs GNI PP

91%

75%

83% 84%

89% 88%

61%63%

57%

74% 74%

79%

68%

87%

78%

61%

49% 48%

40%

86%

73%

53%

73%

63%65%

19%

29%

17%

28%

13%

32%36%

27%31%

14% 14%

9% 10%

0%

25%

50%

75%

100%

0

5000

10000

15000

20000

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Mobile phone ownership

Internet use

GNI per capita, PPP (constant 2011 international USD)

Smartphone penetration aligned with Internet penetration

40

Smartphones are the major drivers of Internet in Africa

Countries that have high GNI per capita have high smartphone penetration

Rwanda has the least smartphone penetration and Internet use

Major barrier to adoption in rest of Africa

Barriers to Internet use

No access devices

Don’t know what the

Internet is

Don’t know how to use the

Internet

No interest/not

usefulToo expensive

Ghana 22% 43% 14% 9% 2%

Kenya 21% 27% 12% 26% 4%

Lesotho 13% 53% 13% 13% 1%

Mozambique 76%-

14% 3% 1%

Nigeria 13% 40% 22% 10% 4%

Rwanda 42% 9% 3% 4% 33%

Senegal 16% 50% 13% 9% 1%

South Africa 36% - 9% 16% 15%

Tanzania 64% 1% 13% 15% 2%

Uganda 51% 23% 12% 4%

Affordability is the main obstacle to South Africans trying to get online

Ownership and use of ICTs by income: Zoom into South Africa

Significant gender gaps:Rwanda and Mozambique significant gender gap of 37% in mobile phone

ownership and 60% and 50% respectively for internet useSouth Africa’s gender gap: 12% in internet use and -4% in mobile phone

ownership

Mobile ownership, smart phone ownership and internet use gender difference

(Digital) inequalities

Gender

Location

Source: 2017 #AfterAcces surveys

Barriers by gender and by location

Rural Urban

National Male Female National Male Female

Do you own a mobile phone?

59 65 53 80 85 76

Is your mobile phone a

smartphone?19 22 15 43 45 41

Do you know what the Internet is?

41 49 33 67 74 61

Have you ever used the Internet?

17 22 12 43 52 35

Do you use social media?

15 20 11 40 49 33

In Africa the cost of devices is the primary barrier for those who are not connected, while for those who are connected the reason for low usage or being offline, even if they have

Internet-enabled devices, is the price of data services.

2017 #AfterAccess survey data

Cyber-incidents

0

710

1215

34

54

Level of education of cyber-incidents victims (%)

10

11 11

14

15 15

Have you ever experience cyber-incidents? (% of Internet users)

Broadband performance measurements

Macroscopic view of the network topology

Routing table, RouteViews, Routing stability, Traceroute

Performance Measurements

Reachability and latency

Identify bottlenecks

Application level measurements

Usage and Quality of Experience (QoE)

National regulatory requirements (FCC and Ofcom)

African regulators?

Data sources

Country level latency

Median–country level delays

Download speed in ZA vs Rest of the Continent (Speedchecker)

Challenges

Methodological

Data availabilityResearch capacity

While there is a huge potential for digital impact in Africa, the foundations for digital economy need to be put in place in many countries.

Supply-side indicators/indices such as the ADI, NRI and MCI which base on supply side measurement are more likely to be misleading and therefore policy makers should invest in demand-side indicators to get the up to date and unbiased estimates on Africa’s readiness to participate in the digital economy

In Africa, where the majority of people use multiple SIM cards and devices it is impossible to get unbiased estimates from supply side indicators

The 2017 Research ICT Africa After Access Survey shows that Internet penetration in Africa is very low (28%) for the continent to fully benefit from the digital economy.

Other than focusing on developing and rolling infrastructure, the findings of 2017 RIA After Access Survey show that it is critical for policy makers to develop policies which aim at improving socio-economic factors such as affordability, digital skills, awareness and education

Recommendations

This research is made possible with the support

of

57

Visit https://afteraccess.net or www.researchictafrica.net for more information

enabling a digital economy in africa...digital transformation part iii: measurement part i where are...

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