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Mobile services add $140b to SSA economies

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By Usman Oladimeji

In 2021, mobile services generated about 8% GDP in Nigeria and other SSA.

Mobile technologies and services have become a transformational force with a more significant impact in Sub-Saharan African countries. It generated around 8 percent of the Gross Domestic Product (GDP) in Nigeria and other sub-Saharan Africa (SSA) countries in 2021, a contribution totaling roughly $140 billion of economic value added in the year. The mobile ecosystem also supported more than 3.2 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with $16 billion raised through taxes on the sector.

This was disclosed in the Global System for Mobile Telecommunications Association’s (GSMA) Mobile Economy Sub-Saharan Africa report 2022, released over the weekend. According to the report, by 2025, mobile services contribution would increase by $65 billion, as countries in the region benefit from productivity and efficiency improvements driven by the increasing mobile service adoption. GSMA also reported that at the end of 2021, 515 million people in SSA had subscribed to mobile services, accounting for 46% of the population, an increase of about 20 million people from the previous year.

Young subscribers are more interested in 4G and 5G connectivity.

Additionally, it stated that approximately 100 million new subscribers will enroll by 2025, bringing the total number of users to 613 million, 50% of the region’s population. According to the telecoms institution, the two most populous countries, Nigeria and Ethiopia, will account for nearly a third of new subscribers between now and 2025. With a substantial share of the population under 18, SSA’s demographics indicate that subscriber growth will stay high for the foreseeable future as young consumers reach adulthood and will be able to subscribe to mobile services.

GSMA asserts that young subscribers are more likely to be tech-savvy and interested in upgrading to faster mobile Internet speeds, such as 4G and 5G. This is one trend to watch, given the development and dissemination of digital services in the area have significant ramifications for the region’s progress toward ubiquitous 5G networks. These include 5G spectrum auctions, 5G pilots and commercial trials, and efforts to develop locally relevant 5G use cases. For instance, South Africa’s ICASA concluded the 700, 800, 2600, and 3500 MHz spectrum auction in May 2022; MTN Nigeria began a commercial 5G prototype in August 2022, and Vodacom launched a commercial 5G network in September 2022.

4G connection is projected to rise by 2025 as 3G uptakes drop.

Following the massive demand for connection caused by the COVID-19 pandemic, the GSMA saw an increase in interest in the role of 5G in the connectivity landscape. It emphasized that while the general consensus is that widespread 5G implementation in SSA is a long-term possibility, there is a compelling argument to utilize the technology in certain circumstances to meet specific connectivity needs for people and businesses. GSMA continues that, although 3G will continue to be the leading connectivity technology in SSA, accounting for over half of total connections by 2025, this year represents a watershed moment as 3G penetration starts to drop for the first time.

This underscores the growing movement to 4G as operators strive to transition consumers from outdated networks (2G and 3G). By 2025, 4G will account for one-third of mobile connections in the region, up from less than a fifth in 2021. According to the GSMA, policymakers can help propel inclusive development on all fronts, citing mobile connectivity’s potential to accelerate SSA’s digital transformation and drive socioeconomic advancement in healthcare, education, digital commerce, industrial automation, and smart city infrastructure. Harnessing this potential requires legislative actions to encourage network investments and increase consumer affordability of digital services.

Demand for 5G-enabled devices increases in the region.

GSMA claims that 5G adoption in SSA will be largely dependent on the accessibility and affordability of 5G devices, given that the slow uptake of 4G in the area is partly due to the high cost of devices compared to average income. In addition, it was disclosed that Smartphone shipment data for the region show rising demand for 5G devices. In the second quarter of 2022, 5G-enabled device shipments climbed by 26.9%, exceeding smartphone sales in the region. A youthful, tech-savvy populace with a demand for the newest technology and increased rivalry among mobile phone makers are driving the expansion.

Related Link

GSMA: Website

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