Lowering import tariffs on devices could boost internet adoption in Africa
Handsets could become more affordable
Governments in Africa should consider lowering import tariffs on handsets to make them more affordable and to boost internet adoption, MTN CEO Rob Shuter says.
According to the World Bank, a 10% increase in broadband penetration brings a 1.4% increase in GDP growth in emerging markets.
Slightly more than a fifth of Africa’s population used the internet in 2017, according to the International Telecommunication Union (ITU). In Europe, that number was as high as 80%.
Shuter said that of MTN’s 223-million subscribers across the Middle East and Africa, only about 70-million were active data users, despite the mobile operator’s efforts to increase coverage.
“I think the bigger problem now, rather than coverage, is the affordability of devices,” Shuter said at the ITU Telecom World conference in Durban this week.
He was addressing a crowd that included SA’s minister of telecommunications and postal services, Siyabonga Cwele.
Shuter said many African markets had “very high” import duties on handsets, which meant phones were usually sold through informal channels. In SA, smartphones attract an effective import duty of 9.9%.
"And let’s be honest, you are not going to have a vibrant smartphone manufacturing industry in most of these countries, so I think there’s space for potentially a policy intervention."
If tariffs were lowered, handsets could be sold through formal distribution channels, including mobile operators’ stores.
“Right now, the handset market and the connectivity markets are quite split.”
Shuter said MTN planned to increase its 3G population coverage, which currently averaged 60% across its markets. However, this was difficult in many countries given the lack of basic infrastructure such as power transmission and roads, which meant new approaches were needed.
He also said entry-level data costs needed to be lowered.
“And it’s not just the cost, it’s also the complexity of the tariffs. We’re trying to bring in people in rural areas who are not that used to how it all works, and we expect them to make a recharge, then buy a bundle and select this and that… It’s too complicated, so this is a big focus for MTN.”
The average cost of data across MTN’s markets was “arguably very low” compared to Europe and the US. However, the “pricing curve is wrong”, whereby those who used less data were charged far more per gigabyte than heavy users.
“This is a commercial incentive I think for the operators to recognise that to bring the next 100-million to 200-million people into the data world, we need to work on the entry-level cost of data.”
MTN also planned to promote internet adoption with content and services such as “eGovernment” portals, which let consumers buy prepaid electricity with their phones.
MTN previously said it aimed to have 200-million data subscribers by 2022, and 60-million mobile money users.