KIGALI: When Google laid 800 kilometeres of fibre optic cable in Kampala, Uganda, recently, there was a 3,000% increase in the absorption of internet. This highlights just how much access holds back the continent’s digital economy despite recent gains, the World Economic Forum on Africa heard.
Millions on the continent have in recent years come online, including though its much highlighted mobile revolution, but it is not nearly enough, as the still-high cost of access conflates with the region’s low earning power, Google’s country manager for Kenya said in the Rwandan capital.
With some 400 million new users expected to come online by 2020, and e-commerce currently worth $300 billion to the global economy annually with an equal impact on productivity, the opportunity for the continent was huge, Charles Murito said.
Former UK prime minister Tony Blair (R), Rwanda president Kagame (C) and and Howard Buffett, Chairman and Chief Executive Officer, Howard G. Buffett Foundation, at WEF Kigali May 11, 2016. (Photo/WEF Benedikt von Loebell).
“We need to figure out how as a continent we can take advantage of these opportunities,” he said.
“Every single business is actually a digital business, and must think of itself as such, even if it sells t-shirts by the roadside.”
The role of big business in reducing barriers to entry and increasing the rate of filtration of lower-cost internet to end users was also highlighted.
The cost of internet access globally is on average 1.2% of budgets annually, but in Africa this rises to 12%, with studies showing that many on the continent would rather spend their money on airtime than on food.
“Competition is still very much in infrastructure. Sharing it instead is what brings real competition,” South Africa’s telecommunications minister Siyabonga Cwele said.
But even if the continent’s basic bottlenecks around infrastructure were resolved, there was still the major challenge of how to exploit it.
“Access is critical, but skills are very crucial to that, they drive everything else that comes with access,” Murito said. His company is currently training one million Africans in a bid to upgrade their digital skills through a free-to-access online portal.
An additional challenge was the different standards adopted in many African countries, leading to difficulties in achieving economies of scale that would be an incentive to lower costs of access.
“Countries must agree to a common approach to build infrastructure, and also invite private partners. Let’s look more at building volumes,” Cwele said.
Ivory Coast, South Africa and Ghana were singled out as countries that had made notable progress in working with the private sector.
The digital divide in Africa should also be considered, with rural users driving the adoption of the internet through the demand for government services and social media.
Business models that work in rural areas should be part of the conversation in building digital economies, experts said.
Improving access to electricity was one path to this, Tobias Becker, the Africa director of energy and automation conglomerate ABB said, adding that there were efficiency gains to be had all round in doing this.