• Sub-Saharan Africa’s mobile industry could increase its contribution to the region’s GDP from $140bn (2023) to $170bn (2030), finds a new report 
• But only if governments and policymakers have suitable spectrum policies in place and implement “urgent” tax reform to lower affordability barriers
• It is projected that 4G will overtake 3G in the region as the dominant cellular technology by 2027
• 5G-Advanced technologies remain a “distant prospect” but non-standalone 5G, particularly via fixed wireless access, is expected to be a strong growth area

The mobile sector in sub-Saharan Africa has huge and untapped potential for growth but is hindered by onerous taxes, high import duties on handsets, lack of technology-neutral spectrum and underperforming universal service funds (USFs), according to a new mobile economy report from trade body the GSMA. 

According to the GSMA’s calculations, sub-Saharan Africa’s mobile industry drummed up a $140bn contribution to the region’s GDP in 2023, driven mainly by increased productivity ($90bn) and a significant direct contribution from the mobile ecosystem ($40bn). If regulators and stakeholders play their cards right, and key connectivity barriers are addressed, the GSMA believes the mobile industry could boost its GDP contribution to $170bn by 2030.

Aside from pricey smartphones – which are way out of reach for many in the region, particularly in rural areas – barriers to getting online include limited digital skills, illiteracy and safety concerns. There is also the challenge of high operating costs for mobile network operators, states the report, caused by inflationary pressures and energy price volatility.

How far sub-Saharan Africa has to go when it comes to mobile internet adoption was illustrated all too clearly in another GSMA report published last month, which found it the least connected region in the world.

Only 27% of the population are using mobile internet services, which translates into the world’s largest usage gap of 60%. A usage gap is calculated as a proportion of the population not using mobile internet services, even though they live within reach of a mobile broadband network that would enable them to do so. Another connectivity barrier in sub-Saharan Africa is lack of network coverage: A sizeable 13% of the region’s population live outside the reach of a mobile broadband signal, according to GSMA Intelligence, the trade body’s market research unit (see chart below, which is from the report).

On the flipside of low penetration rates, of course, is big potential for growth. “Our findings this year reveal both the extraordinary potential and the challenges facing sub-Saharan Africa’s mobile ecosystem,” said Angela Wamola, the GSMA’s head of sub-Saharan Africa. “To fully realise the benefits of connectivity, it is essential for operators, policymakers, and stakeholders to address affordability barriers, support infrastructure expansion, and foster collaborations that drive digital inclusion and economic impact.”

Political obstacles

The GSMA devoted a fair chunk of its sub-Saharan Africa report to calling on the region’s governments and policymakers for much greater political will when it comes to USF reform. USFs in the region are partly or entirely financed through contributions from telecoms service providers in order to close coverage and usage gaps, but the GSMA doesn’t find them effective tools for the task – at least in their current form.

“Insights from a GSMA study show that many USFs in Africa are underperforming and have become ineffective tools to close the connectivity gap,” states the report. “In view of the urgency to close the coverage and usage gaps, it has become imperative to reform structural and operational aspects of USFs across Africa to improve their effectiveness, or to discontinue the USF approach.”

It pointedly added that when USFs are used, “adequate mechanisms for monitoring and evaluation must be implemented to ensure visibility, transparency and accountability”.

The GSMA also paraded a raft of recommendations for what it sees as an “urgent need” for tax reform. In some cases, according to the association, the mobile sector’s contribution to government tax revenues surpasses its size in terms of GDP due to high levels of sector-specific taxation. An ITU survey of national regulatory authorities around the world was also cited by the GSMA, which found that the number of countries that apply taxes specific to the ICT sector is much higher in Africa than in the rest of the world.

Among the GSMA’s recommended tax reforms are: The elimination or decrease of industry-specific excise taxes applied to mobile services; the reduction or elimination of import duties on mobile handsets; avoiding the imposition of VAT rates higher than the standard rate; and to stop taxing mobile money services.

Keys to unlocking digital potential

The Mobile Economy sub-Saharan Africa 2024 report was at pains to persuade national regulators of the benefits of prioritising the release of more low-band spectrum, which can reduce the connectivity gap between rural and urban areas. Moreover, adding 600MHz frequencies, the GSMA noted, can raise download speeds by between 30% 50% in rural areas.

The GSMA also highlighted the need for the release of more mid-spectrum, particularly at 3.5GHz, to be incorporated into the long-term planning of regulators and governments to ensure better 5G experiences. The GSMA added the caveat, however, that the adoption of more advanced 5G technologies was a “distant prospect” in the region, and that operators need to prove the business case for their initial 5G investments (using non-standalone architecture) before committing to 5G-Advanced.

The GSMA pointed out that 5G fixed wireless access is a promising growth area and one already gaining traction in Angola, South Africa, Nigeria, Kenya, Zambia and Zimbabwe.

The contribution to the economy from 5G in sub-Saharan Africa is expected to reach $10bn in 2030, accounting for 6% of the overall economic impact of the mobile industry. Much of this will materialise over the next five years, said the GSMA, with 5G economic benefits levelling off towards the end of the period as the technology starts to achieve scale and widespread adoption. In terms of subscribers, 5G is projected to reach 17% of total connections by 2030, primarily in South Africa, Nigeria and Kenya.

However, 4G will be the region’s digital workhorse throughout this decade. By 2030, 4G adoption in sub-Saharan Africa is expected to reach 50%, making it the dominant technology. Although 3G currently accounts for the largest proportion of total connections, 4G is projected to overtake 3G by 2027.

Causes for optimism

The emergence of low-earth orbit (LEO) satellites and high-altitude platform systems (HAPS) has spurred interest in non-terrestrial networks across the region, says the GSMA, and will help boost connectivity. The report notes that SpaceX’s Starlink has been expanding rapidly across the region and is present in at least 14 markets as of September 2024. These include Benin, Botswana, Ghana, Kenya, Mozambique, Nigeria, Rwanda and Zambia.

The mood is upbeat, too, for generative AI (GenAI) as a way to improve customer service, network optimisation and drive greater operational efficiencies. The United Nations forecasts GenAI could contribute up to $1.5tn to the region’s economy by 2030.

The GSMA also flagged growing adoption of its GSMA Open Gateway in the region, where operator commitments are apparently beginning to translate into commercially available network application programmable interfaces (APIs). In February 2024, South Africa became the first country in sub-Saharan Africa to implement Open Gateway APIs when Cell C, MTN and Telkom launched the Number Verification and SIM Swap APIs, with applications in fraud detection and digital security.

- Ken Wieland, Contributing Editor, TelecomTV