Today’s indicator figure is 4.90
4.90 of what?
4.90 USD is the average price of one gigabyte (GB) of internet data service in East African Community (EAC) countries according to the most recent figures from the Alliance for Affordable Internet. A gigabyte is equal to 1024 megabytes (MB), equivalent to 500 views of an average web page or 2000 pages of search results on Google.
Which EAC country has the highest and which the lowest prices for one GB of mobile data?
Uganda has the highest average reported price at 8.10 USD per GB. Kenya and Tanzania have similar prices at 4.81 and 4.40 USD per GB respectively. Rwanda has the lowest reported average price at 2.32 USD per GB. The prices in the EAC vary greatly and we expect to see less variability as more internet penetration occurs.
How do internet prices in the EAC compare to other regions of the world?
Many of the EAC prices seem to be comparable to other nations in Africa. Ghana has an average price of 4.42 and Nigeria’s average price is 2.76. The EAC prices are very similar to other emerging economies. However, they are still higher than emerging economies in Asia and Latin America where the island nations of Sri Lanka and Haiti are paying 1.29 and 3.89 USD per GB respectively.
Are the prices for one GB of the internet in the EAC rising or falling?
The prices are falling slowly. Last year the price of one GB fell by 0.5% relative to average income. In the previous year, the price of one GB had fallen by 3% relative to average income. So the pattern of descending prices has slowed but as more efficient technology and more competitors enter these markets we expect the prices to fall more significantly.
How can the EAC most benefit from the current state of the market?
In this global economy, where information is essential to every sector, small businesses grow faster and work more effectively with unobstructed internet access. Some studies show that small businesses grow twice as fast with strong internet access due to having more current information, finding consumers and suppliers faster, and tracking their market more easily among many other reasons.
High tech, medical, and research-related industries are prestigious and rely upon large networks of information to work optimally. Any barrier to internet access will not only drag down their workers’ productivity but will incentivize them to consider working abroad.
EAC countries can benefit by implementing policies that encourage competition. Mozambique and Nigeria provide examples for policy paths forward. With only one or two providers and little competition, the price of a GB of internet access is more than double the price in a market with four providers. A country with one or two providers in Sub-Saharan Africa has an average price of 13.03 USD per GB while the average price descends to 5.25 USD per GB when four or more providers are present in the market.
What is being done to adapt to this changing environment?
Tanzania and Kenya are planning to implement public WiFi systems. Rwanda has an established free WiFi system in certain locations. By offering basic service governments are incentivizing private providers to offer a higher quality internet access to the market.
What investment opportunities are growing with this phenomenon?
It is highly likely that as more youngsters reach teenage years, there will be a higher demand for internet data to provide communications, sports, music, videos, gaming, and gambling all delivered via internet data service providers. Investors are encouraged to look more closely into companies in the following areas:
- Lowest-cost reliable infrastructure providers – new technologies and power systems enabling internet to be delivered at a fraction of the cost offered by the large telecom operators to both urban and rural consumers will likely gain significant traction in East Africa in the coming months and years.
- Sports and other online gambling – as costs go down people will be seeking to watch and also wager on their favourite sports and other games which will offer significant upside if access to this entertainment content becomes more affordable.
- Technology startups – hundreds of companies throughout East Africa are building apps and seeking to grow to meet the diverse needs of consumers. As data prices decrease the number of potential customers grows dramatically.
- Social media savvy SMEs – with more people online small companies can grow into large ones that leverage the communication and marketing powers of a rapidly growing internet accessible user base.
How can I learn more?
Study of broadband pricing in 196 countries – https://www.cable.co.uk/broadband/deals/worldwide-price-comparison/
Mobile Broadband Data Costs – https://a4ai.org/mobile-broadband-pricing-data/
About the authors:
David L. Ross is the Managing Director at Statera Capital, Distinguished Professor of Practice at Carnegie Mellon University-Africa, and US Ambassador to the Open University of Tanzania. David is active in growing companies in Eastern and Southern Africa through angel investment, investment advisory, strategic partnerships, and executive education. Connect on LinkedIn at http://tz.linkedin.com/in/davidlross1 or at [email protected]