Sub-Saharan Africa Missing Out on $2.2 Trillion 5G Economy

Sub-Saharan Africa Missing Out on $2.2 Trillion 5G Economy

The global mobile internet economy is booming in accord with the world’s population, and the US and developed Asia are leading the way. But with only 3, 795 million (49%) of the world’s population connected, there is still a big room for other regions to catch up.

The current population of internet users is disproportionately distributed globally, creating a usage gap of 3,288 million. Alas, Sub-Saharan Africa is sitting at the bottom of the future economic boom.

Current mobile internet economy has been based mainly on 3G and 4G networks but the future of mobile internet lies on the fifth generation etc.

According to GSMA Mobile Economy 2020 report, in 2019, 4G became the dominant mobile technology across the world with over 4 billion connections, accounting for 52% of total connections (excluding licensed cellular IoT).

The report indicated that 4G connections will continue to grow for the next few years, peaking at just under 60% of global connections by 2023. But 5G-based internet will hit 1.8 billion connections by 2025, covering a staggering number of the world’s population that could be evenly shared, if every region plays its card well.

Over the next five years, operators are expected to invest around $1.1 trillion in mobile capex globally, and about 80% of it will be in 5G networks.

IoT is expected to play an integral role in the future internet economy. The GSMA report said between 2019 and 2025, the global IoT connections will more than double to almost 25 billion, while global IoT revenue will more than triple to $1.1 trillion.

“IoT connections will reach almost 25 billion globally by 2025, up from 12 billion in 2019. The business case for IoT is shifting from just connecting devices to addressing specific problems or needs with solutions to collect, process and integrate data from multiple sources, which can then be analyzed to create value and provide actionable insight.

“Enterprise IoT connections will overtake consumer in 2024, and will almost triple between 2019 and 2025 to reach 13.3 billion. This will account for just over half of all IoT connections in 2025,” the GSMA report said.

Consumers are expected to embrace IoT and use it in new areas of everyday living such as; energy efficiency, home security and fitness and well-being monitoring. With the number of new activities expected to be powered by IoT, the connections are projected to double to 11.4 billion in the same time frame. The report noted that more and more devices include connectivity built in by default and interoperability within the ecosystem is increasing.

Unfortunately, in this great future of mobile internet, Sub-Saharan Africa is at the bottom of the economic chain.

Out of the 1.8 billion 5G connections expected by 2025, developed Asia is projected to have 50%, North America, 48%, Europe 34%, developing Asia, 22%, GCC Arab States 21%, Russia & CIS 12%, Latin America 7%, rest of Middle East and North Africa (MENA) 4% and Sub-Saharan Africa 3%.

“Sub-Saharan Africa will remain the fastest growing region, with a CAGR of 4.6% and an additional 167 million subscribers over the period to 2025. This will take the total subscribers over the period to over 600 million, representing around half the population,” the report said.

While Sub-Saharan Africa mobile internet subscription is expected to hit 600 million in five years, the internet connectivity will still be largely powered by 2G, 3G and 4G networks. This is due to insufficient 5G technology in the continent as many of the countries in the region are yet to start 5G roll outs or to build infrastructure in relation to that.

Considering other regions, developed Asia and North America have the highest percentage of the economic benefits because they are leading the charge of 5G deployment now. Though the US-China conflict is stymieing the Huawei-led 5G deployment that would have put Asia in clear leadership, developed Asia still leads North America.

Apparently, there is a global struggle with the 5G network technology that extends to its devices. But while the rest of the world is pushing to contain the challenge, Africa is still struggling with its 4G roll out. Apart from South Africa, the rest of the continent is yet to take the basic steps for 5G infrastructure.

While COVID-19 has created an excuse for the insouciant attitude of most countries in Africa regarding 5G roll out, it also gave reasons why it should be a priority. The new normal introduced by the pandemic is powered by the internet; the world went virtual as the crisis escalated, forcing people to stay at home and halting traditional economic activities. With the new normal, fast internet became key to successful online living.

However, in Sub-Saharan Africa, stable internet became a challenge as people try to adapt. With download speed of 1.56 megabytes per second (Mbps), existing 3G and 4G infrastructure became more inefficient as more people move their activities online.

Mobile connectivity requires continuous investment by operators to keep up with demand and provide businesses and consumers with the service they demand. And governments at all levels are expected to take steps to facilitate network deployment and expansion; simplifying and standardizing planning procedures and regulations for site acquisition, colocation and upgrades of base stations and small cells; and adopting policies that reduce costs for mobile operators while spurring investment.

5G

Africa has the most expensive internet data rate in the world, a situation that its telecom operators have attributed to poor economic policies that have characterized the continent’s telecom ecosystem for years. In Nigeria, the continent’s largest telecom market, some state governments charge as much as $11,600 for the laying of a kilometer of broadband cable. The situation has been complemented by the cost of maintaining basic network infrastructure that birthed poor service and exorbitant data.

Against this backdrop, the economic future of the 5G network in Sub-Saharan Africa is gloomy. GSMA made recommendations on how governments can take advantage of the economic opportunities that 5G offers.

“Government and regulators must play their part to help propel 5G into commercial use by implementing policies that encourage advanced technologies to be applied across all economic sectors,” part of the recommendations said. “To advance the mobile ecosystem and the digital economy overall, governments should strive, as much as possible, to lighten the regulatory load on the industry.”

When the business environment for mobile operators is less costly and more flexible, the performance and reach of mobile service expands, the pace of innovation increases and users’ confidence in the digital ecosystem is strengthened, the report said.

COVID-19’s disruption of the global economy took a toll on many sectors including the oil industry. But the tech industry is definitely adding value in the face of its horror. Sub-Saharan Africa is among the hardest hit economically, and its countries need to diversify their economy to survive the plague.

The 5G technologies are expected to provide jobs in key sectors such as Manufacturing/utilities and professional/financial services, contributing $2.2 trillion to the global economy between 2024 and 2034. It therefore presents an opportunity for Sub-Saharan Africa countries to create an internet-based economy.

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