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Rising poverty, costs stall eSIM adoption

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By Abraham Adekunle

eSIM, may cut Nigeria’s SIM, ATM cards production by 60%.

The country’s conventional plastic Subscriber Identity Module (SIM) producers may have blossomed based on the discouraging number of people with access to smartphones as well as to the internet. Indications showing that it might take a longer period for embedded SIM (eSIM) to gain traction in the country. According to analysts, with early adoption, transition is expected to cut the locally produced cards by as much as 60 percent. These analysts also predicted that this transition will have an effect on contactless transactions in Nigeria because of production. This is seen as a challenge equally to payment cards.

Within the country, less than 50 percent of the population have been estimated to have access to smartphones and millions are multidimensionally poor. These as well as inflation have made Nigerians focus more on spending on basic needs than on gadgets. So, as the world gradually shifts from conventional plastic cards to eSIM, the possible impacts of the transition are being envisaged on Nigeria’s $75 billion telecommunications sector. Since the telecoms revolution, telecom operators in Nigeria have connected 325 million telephone lines. As of February 2023, there were about 227 million active lines.

Phone makers cram much value in increasingly thinner phones.

According to the Nigerian Communications Commission (NCC), Nigeria’s capacity to produce the cards, has risen to about 100 million conventional cards in the country in the last one year. Indigenous operators, including SecureID and PayPlus, have been at the forefront of producing the technology and other payment cards locally. The Federal Government claimed to have supported the industry with local content initiatives, which could even enable them to service other markets in Africa. Since phones have become smaller, SIM cards have followed suit. It has moved from mini to micro, to nano, and then to now electronic instead of plastic.

So, for many years, phone makers have been trying their best to cram as much value as possible in increasingly thinner phones. The smaller the better, the less space it requires and the more value phone makers can provide in terms of hardware. As a form of definition, eSIM is a digital network that allows users to activate their tariff plan from a carrier without having to use the conventional access. It uses a small chip to authenticate a user’s identity with their carrier, as part of a global specification developed by the telecoms trade body, the Global System for Mobile Telecoms Association (GSMA).

Ban on foreign SIM saved FG about $12m in import expenditure.

Global eSIM market was valued at around $7.6 billion in 2020. It is expected to reach $21.5 billion by 2027 with a Compound Annual Growth Rate (CAGR) of 16.1 percent over the forecast period. The new technology supports the entire ordinary network like 4G/5G, similar to the customary physical SIM. It discovers its applications in associated vehicles, wearables, tablets, cell phones, laptop M2M, and numerous others. At a technology forum in Lagos earlier in 2023, it was disclosed that the Federal Government saved about $12 million from the sale of locally developed cards used in the telecoms sector.

The Director of Public Affairs, Nigerian Communications Commission (NCC), Reuben Muoka, who disclosed this, said the commission has renewed its determination to promote local content development and to reduce expenditure on foreign goods. He said the $12 million was saved from August 2022 to January 2023, following the ban on foreign cards in the telecoms sector. According to him, the ban compelled telecom operators to patronize local SIM cards that are produced and sold in Nigeria, as against foreign cards that were imported at the rate of $3 per SIM card.

While with more benefits, eSIMs will impact plastic sector investment.

However, with the shift towards this new technology, there has been a fear, though not apparent yet, of what becomes of the investments that have gone into the plastic manufacturing in Nigeria and other parts of the world. The threat is also envisaged in contactless solutions, as the world gradually shifts towards emerging innovation, which plans to cut physical interactions. according to industry insiders, despite progress in the availability of eSIM devices, uptake of eSIM services remains sluggish as a result of several factors, especially lack of awareness and cost of switching to high-end mobile phones. However, they believed that the arrival of eSIMs gave the mobile ecosystem a new tool to help reduce Africa’s digital divide.

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