The Mobile Sector Can Become Africa’s Key Economic Driver —Fact or Myth? | Insights with GSMA’s Angela Wamola
In today’s TechTalk Thursday session, we had the privilege of hosting Angela Wamola, Head of Sub-Saharan Africa at GSMA, to delve into the findings and implications of the landmark report titled “The Role of Mobile Technology in Driving the Digital Economy in Nigeria.” The report, released by GSMA on May 9, 2024, provides an in-depth analysis of the mobile sector’s impact on Nigeria’s economy and the critical steps needed to harness its full potential.
Although Nigeria has been used as a blueprint in the released report, its findings and recommendations are equally applicable to other African countries. The mobile sector has the potential to be a significant enabler for Africa’s economic transformation. However, a major challenge lies in the tendency of governments in the region to burden the sector with taxes and regulations that stifle its growth and expansion, making it difficult for it to thrive.
There is a pressing need for these governments to shift their perspective, viewing the sector not as a mere revenue stream but as a key enabler of broader economic development across their nations.
The Economic Context: An Urgent Need for Innovation
Nigeria, often celebrated as Africa’s largest economy, has faced significant economic challenges in recent years. During our conversation, Wamola offered a comprehensive overview of the macroeconomic challenges facing Nigeria, particularly in the context of its digital economy. She highlighted that despite Nigeria’s status as one of Africa’s largest economies, it is grappling with significant headwinds. She pointed out that Nigeria has been slipping in its leadership position, currently ranking as the fourth largest economy in Africa.
Wamola emphasized the crucial role that the mobile telecom sector can play in driving productivity and addressing inefficiencies within the Nigerian economy.
“Nigeria has been for a couple of years Africa’s largest economy, with a GDP of about $472 billion. However, it is facing major headwinds in the future in terms of economic development. This is simply because the inflationary trend has really increased in the country, making it difficult for small and large businesses to deliver on their agenda in the country. Looking ahead, we try to understand the role the telecom sector can provide in enabling Nigeria and other African countries to overcome these challenges by leveraging what technology can do to increase productivity or decrease inefficiencies created over the years.”
—Angela Wamola, Head of Sub-Saharan Africa, GSMA
In 2023, the mobile sector contributed 13.5% of Nigeria’s GDP, equivalent to about 33 trillion Naira, and 2.4 trillion Naira in taxes. The GSMA projects that if 15 million new mobile internet users can be added by 2030, we can anticipate a 2.5% increase in Nigeria’s GDP. To achieve this growth, Wamola emphasized the importance of creating an enabling policy and regulatory environment. “We’ll have to look at various policy and regulatory levers that can be employed to encourage and promote these 15 million customers to become mobile internet users in the next three to four years”, she explained.
Tax Burden: A Major Barrier to Affordable Mobile Internet Access
One of the key barriers to greater mobile internet adoption, as identified in the report, is the high cost associated with data services and devices. This high cost can be directly associated with the impact of taxes on the mobile sector. The taxation of the sector continues both in terms of sector-specific taxes as well as general taxes, which tend to inhibit the affordability of devices and data services. Reducing the financial burden on telecom operators and consumers alike could pave the way for more affordable and accessible digital services.
During a roundtable discussion for the launch of this report, several challenges that need to be addressed to strengthen Nigeria’s digital economy were highlighted, including;
- Security of Telecoms Infrastructure: There is a need for better protection against vandalism and inefficiencies that increase the cost of service delivery.
- Rights of Way for Fiber Networks: The inconsistencies in rights of way fees across different states in Nigeria complicate the deployment of critical infrastructure, deterring investment and hampering the sector’s growth.
- Tax Policies: The high level of taxation on the mobile sector increases the cost of services and hinders broader internet adoption.
- Infrastructure Costs: With a significant portion of operational expenses going towards energy, reducing these costs is crucial for making mobile services more affordable.
A Path Forward: Policy & Taxation Reforms and Strategic Partnerships
The path to a digitally empowered Nigeria lies in policy reform. A harmonized and predictable policy environment is crucial for fostering investment and innovation. There is an urgent need for African countries to work on reducing the tax burden. By standardizing policies and reducing bureaucratic hurdles, African countries can create a more attractive landscape for both local and foreign investors.
Also, by lowering these tax burdens, governments can enable more accessible and affordable digital services, ultimately playing a significant role in boosting economic growth, enhancing digital inclusion, and fostering a more robust digital ecosystem across the continent.
Beyond Connectivity: The Broader Impact of the Sector
The potential of mobile technology extends beyond just improving connectivity. It holds the promise of transforming other key sectors such as agriculture, manufacturing, and trade. For instance, increased digitalization in agriculture could significantly boost productivity and generate substantial economic value, potentially adding trillions to the GDP and creating millions of jobs. Moreover, a digitally integrated economy is more resilient and adaptive, and better equipped to navigate the challenges of a rapidly changing global landscape.
“In Nigeria, the biggest opportunity lies in sectors like agriculture, where increasing digitalization could add up to 3.3 trillion Naira to the GDP, which is about an equivalent of 2.8% to the GDP and 1.1 million employment to the sector. I believe if you’re able to go deeper and build capacity in understanding how the sector in itself delivers value and its cost structure towards empowering users directly to engage with the mobile internet because that’s where the value of digitalization comes.”
—Angela Wamola, Head of Sub-Saharan Africa, GSMA
Looking Ahead: GSMA’s Commitment to Africa’s Digital Future
Wamola expressed her belief in the potential for impactful outcomes from the discussions with the government and other stakeholders. She stressed the need for continuous dialogue and capacity building to ensure that policymakers understand the value of the mobile sector and its critical role in driving the digital economy. “We had a good discussion with the government and stakeholders in Nigeria. Look out for impactful outcomes in the near future,” she concluded.
As we anticipate these positive changes, it’s clear that mobile technology holds the key to unlocking Africa’s digital future. As Angela Wamola aptly put it, “The time for action is now.” Nigeria and other African countries must embrace the digital revolution and leverage its mobile technology sector to build a future that is not only prosperous but also inclusive and resilient. With the help of the government, actively working towards a better perspective of the mobile sector as an economic driver rather than merely a source of revenue for the nation, a transformative change can be achieved that benefits all stakeholders in the digital economy.
Wamola also outlined GSMA’s ongoing efforts to support the mobile sector in Africa, including initiatives focused on green energy transitions and capacity building for fiscal policymakers. She invited everyone to join the GSMA at the Mobile World Congress in Kigali from the 29th to the 31st of October, 2024, where these issues will be discussed further.
Stay Tuned For More Insightful Conversations
Our discussion with Angela Wamola provided valuable insights into the challenges and opportunities facing Nigeria’s digital economy. Her emphasis on collaboration, policy reforms, and strategic investment highlights the critical steps needed to drive the digital transformation of not only Nigeria but the entire African continent.
Stay tuned for more engaging conversations on our TechTalk Thursday Series, and don’t forget to check out the full video of our discussion with Angela Wamola.
