Monday, 29th May 2023

Mobile services add $140 billion to Nigeria, other SSA economies

By Adeyemi Adepetun
02 November 2022   |   3:52 am
In 2021, mobile technologies and services generated around eight per cent of Gross Domestic Product (GDP) in Nigeria and other sub-Saharan (SSA) Africa countries, a contribution that amounted to almost $140 billion...

• 515m people in Africa now subscribe to telephony services
•3G begins decline as 5G activities gather momentum

In 2021, mobile technologies and services generated around eight per cent of Gross Domestic Product (GDP) in Nigeria and other sub-Saharan (SSA) Africa countries, a contribution that amounted to almost $140 billion of economic value added in 2021.

The mobile ecosystem also supported more than 3.2 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with $16 billion raised through taxes on the sector.

In the Mobile Economy sub-Saharan Africa report 2022, which disclosed this and released by the Global System for Mobile telecommunications Association (GSMA) at the weekend, the report disclosed that by 2025, mobile services contribution will grow by $65 billion (to almost $155 billion), as the countries in the region increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services.

GSMA reported that at the end of 2021, 515 million people subscribed to mobile services in SSA, representing 46 per cent of the population – an increase of almost 20 million in 2020. It noted that there would be nearly 100 million new subscribers by 2025, taking the total number of subscribers to 613 million (50 per cent of the region’s population).

According to the telecoms advocacy body, the two most populated countries – Nigeria and Ethiopia – will account for almost a third of new subscribers in the period to 2025.

It noted that SSA’s demography, with a sizable proportion of the population under the age of 18, means that subscriber growth will remain strong for the foreseeable future as young consumers move into adulthood and are able to subscribe to mobile services.

According to GSMA, young subscribers are more likely to be tech-savvy and keen on adopting mobile Internet services, particularly more advanced 4G and, where available, 5G services. This is one trend to watch, given the implications for high-speed connectivity and the creation and distribution of digital services in the region.

GSMA said 5G-related activities are beginning to pick up across the region. These include 5G spectrum auctions, 5G pilots and commercial trials, and efforts to develop locally relevant 5G use cases. For example, South Africa’s ICASA completed the spectrum auction for frequencies in the 700, 800, 2600 and 3500 MHz bands in May 2022; MTN Nigeria launched a commercial pilot for its 5G network in August 2022; and Vodacom launched a commercial 5G network in September 2022.

GSMA observed that following the huge demand for connectivity in the wake of the COVID-19 pandemic, there is growing interest in the role of 5G in the connectivity landscape. It stressed that while the general consensus remains that a widespread 5G rollout is more of a long-term prospect in SSA, there is a strong case to utilise the technology in some scenarios to serve certain connectivity requirements for individuals and enterprises.

The telecoms body said though 3G will remain the dominant connectivity technology in SSA, accounting for over half of total connections by 2025, this year marks a turning point as 3G adoption begins to decline for the first time. This reflects the growing shift towards 4G as operators take steps to migrate customers from legacy networks (2G and 3G). By 2025, 4G will account for a third of mobile connections in the region, compared to under a fifth of connections in 2021.

GSMA said policymakers could help spur inclusive development across all fronts. It noted that mobile connectivity has the potential to accelerate SSA’s digital transformation and drive socioeconomic advancement in areas such as healthcare, education, digital commerce, industrial automation and smart city infrastructure.

According to the body, realising this potential requires policy measures to support network investments and improve the affordability of digital services for consumers.

It said governments and regulators in the region should therefore adopt forward-looking spectrum management and fiscal policies, which includes: creating a spectrum roadmap to ensure there is enough spectrum to meet surging demand for mobile services in both the short and long term; ensuring access to mid-band spectrum, in particular 3.5 GHz, given its importance to the future of 5G; accelerating access to sub-1 GHz spectrum to provide widespread rural mobile broadband services and applying best-practice principles of taxation as recommended by international organisations such as the World Bank and the IMF.

GSMA said the availability of 5G devices and at affordable prices, will be crucial to 5G adoption in SSA, stressing that this is especially true given that the sluggish uptake of 4G across the region is, in large part, attributable to the high cost of devices relative to average income levels.

Also, the report said smartphone shipment data for the region suggests growing demand for 5G-enabled devices. For example, in the second quarter of 2022, the shipment of 5G-enabled devices increased by 26.9 per cent, significantly outpacing the overall growth of smartphone shipments to the region.

It noted that growth is being driven by a number of factors, including a young and tech-savvy population with a taste for the latest technology and increasing competition among handset-makers to bring the most advanced but affordable models to market.

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