Africa - Untapped Land of the Next Billion Internet Users?

Africa, as a continent, has a total population of 1.3 billion people - a population that is almost as large as the population of China, the most populous nation on Earth. In China, the number of Internet users exceeded 850 million in 2019 and is expected to reach around 920 million (or 65% of population) in 2020. However, presently in Africa, only 28% of the population has access to the Internet.

In other words, close to a billion Africans do not currently have or can afford to have access to the Internet. Based on a World Bank report on Internet usage, for half of the countries in Africa, less than 2 persons for every 10 persons is able to access the Internet.

Among them, there are 14 countries where the Internet penetration rate is much lower at 9.8% or less, with the lowest rate being 1.31% (1.3 per every 100 persons with access to the Internet) for Eritrea - a country that has only recently resolved its longstanding conflict (1990-2019) with its larger neighbour, Ethiopia.

Today, the term "broadband" referred to high-speed communications networks that connected end users at a data transfer speed of 25 Mbps downstream and 3Mbps upstream. African governments generally recognize importance of broadband penetration and broadband quality as powerful drivers of economic growth.

Based on an ITU 2019 report, the bandwidth usage per Internet user in Africa stood at 31kbps, while that of an Internet user in Europe reached 211kbps. There are numerous factors that influence or hinder the growth of Internet usage in Africa - namely, human conflicts, education or lack thereof, survival issues like hunger, disease and poverty, as well as severe broadband infrastructure gaps.

Today, there are various modern technologies that can deliver broadband Internet to Africa, including ADSL (Asymmetric Digital Subscriber Line) over copper networks, 3G and 4G mobile networks, fibre optic networks and satellite networks. However, the limited availability of such services as well as the size of the fragmented markets lead to high Internet costs for consumers, which can be downright unaffordable when compared to the relatively lower incomes of the average African population.

According to the 2019 mobile broadband data from A4AI (Alliance for Affordable Internet), the Democratic Republic of the Congo has the least affordable mobile broadband, with 1GB of mobile data costing 26% of the monthly gross national income per capita, or the average monthly income, of the country.

In fact, about half of the African nations have 1GB of data costing more than 5% of average monthly income, with 11 countries having highly unaffordable prices at more than 10% of average monthly income. In comparison, 1GB of data typically cost less than 1% of the average monthly incomes in developed countries like the United States, South Korea and United Kingdom. Thus, at present, access to the Internet may not be an affordable proposition to the larger population in Africa.

Drawing from a World Bank study, it is estimated that every 10 per cent increase in broadband penetration could result in an increase of 1.38 per cent of GDP for African nations. To that end, in Oct 2019, the African Union launched a major initiative called the African Digital Transformation Strategy. One of the specific objectives of the African Digital Transformation Strategy is to ensure universal access to the Internet for all Africans by 2030, at speeds of at least 6mbps and at a price of no more than 1 cents USD per MB (US$10 per GB). Whether this rate will be considered affordable by 2030 will depend on the growth of the gross national income per capita of the African nations.

Aside from government and regional initiatives, tech giants, such as Facebook, Google, Amazon, Microsoft and others, have also invested heavily in Africa's Internet infrastructure and ecosystem. For example, Facebook and an alliance of international partners have backed a massive submarine cable project called the 2Africa cable project that will connect Europe to countries along the entire African coast with a capacity of 180Tbps. Facebook has also co-invested in the Shared Backhaul program that expands the fibre network for Uganda, South Africa and Nigeria, as well as the Free Basics program under its internet.org initiative.

Alphabet's Google invested in its own submarine cable that will provide a high-speed connection between Europe (via Lisbon, Portugal) and countries along the west coast of Africa. Loon, another subsidiary of Alphabet, has also launched a commercial service with Telkom Kenya to offer mobile Internet services via its stratospheric balloons.

Then, there are the satellite networks players who are providing commercial satellite Internet services in Africa, such as OneWeb, Intelsat and Quika (which has both free and paid Internet plans). This is an increasingly crowded market that may also see SpaceX's Starlink (currently on trial in North America and Canada), Amazon's Kuiper and Facebook's Athena joining in the near future.

Demographically, Africa has a young and large working population at its core that will serve as an engine of rapid economic growth in the next decade. By most official projections, Africa's population is expected to grow to 1.7 billion people in 2030 and reach 2.5 billion by 2050, accounting for more than half of the world's population growth.

Undeniably, these global tech giants have made deep investments in Africa with an eye towards the future and hopefully with a grip towards this last major market of the untapped billions.

Please also check out our 5-minute Insights video on Africa: Untapping The Next Billion Users. Thank you!