Mobile sector could become a key driver of Africa’s economy – fact or myth? | Insights from Angela Wamoli of GSMA

In today’s TechAfrica NewsTechTalk Thursday, we had the honour of hosting Angela Wamola, Head of Sub-Saharan Africa at GSMA, who delved into the findings and implications of the groundbreaking report titled “T“The Role of Mobile Technology in Driving the Digital Economy in Nigeria.” The report, published by GSMA on 9 May 2024, provides an in-depth analysis of the impact of the mobile sector on the Nigerian economy and the key steps needed to realise its full potential.

While Nigeria was used as a model in the published report, its findings and recommendations are equally relevant to other African countries. The mobile sector has the potential to become a significant enabler of Africa’s economic transformation. However, a major challenge is the tendency of governments in the region to burden the sector with taxes and regulations that stifle its growth and expansion, hindering its development.

The governments of these countries urgently need to change their perspective and start treating this sector not just as a source of income, but as a key enabler of the broader economic development of their countries.

Economic Context: Urgent Need for Innovation

Nigeria, often considered Africa’s largest economy, has faced significant economic challenges in recent years. During our conversation, Wamola provided a comprehensive overview of the macroeconomic challenges Nigeria faces, particularly in the context of its digital economy. She emphasized that despite Nigeria’s status as one of Africa’s largest economies, it faces significant headwinds. She noted that Nigeria is losing its leadership position, now ranking fourth in Africa.

Wamola emphasised the crucial role that the mobile sector can play in increasing productivity and solving the problems of the inefficient Nigerian economy.

“Nigeria has been Africa’s largest economy for several years now, with a GDP of around $472 billion. However, it will face serious headwinds in terms of economic development in the future. This is simply because the inflationary trend in the country has really picked up, making it difficult for small and large businesses to implement their plans in the country. As we look ahead, we are trying to understand the role that the telecommunications sector can play in enabling Nigeria and other African countries to overcome these challenges by leveraging what technology can do to increase productivity or reduce inefficiencies created over the years.”

—Angela Wamola, Head of Sub-Saharan Africa, GSMA

In 2023, the mobile sector was expected to contribute 13.5% to Nigeria’s GDP, which is about 33 trillion naira and 2.4 trillion naira in taxes. The GSMA predicts that if 15 million new mobile internet users are added by 2030, we can expect a 2.5% increase in Nigeria’s GDP. To achieve this growth, Wamola emphasized the importance of creating an enabling political and regulatory environment. “We will need to look at the different policy and regulatory levers that can be used to encourage and incentivize these 15 million customers to become mobile Internet users over the next three to four years,”“- she explained.

Tax burden: a major barrier to affordable mobile internet access

One of the main barriers to the widespread use of mobile Internet, as indicated in the report, is the high costs associated with data transmission services and devices. The high costs can be directly linked to the impact of taxes on the mobile sector. The sector continues to be taxed, both through sectoral taxes and general taxes, which tend to limit the availability of data transmission devices and services. Reducing the financial burden on both telecom operators and consumers can pave the way for more affordable and accessible digital services.

During the panel discussion to launch the report, several challenges that need to be addressed to strengthen Nigeria’s digital economy were highlighted, including;

1. Security of telecommunications infrastructure: There is a need for better protection against vandalism and inefficiency that increases the cost of providing services.
2. Rights of way for fiber optic networks:Inconsistencies in right-of-way charges across Nigerian states are hampering the implementation of key infrastructure, discouraging investment and hampering sector development.
3. Tax policy:High levels of taxation in the mobile sector increase the cost of services and hinder the broader development of the Internet.
4. Infrastructure costs:Since energy accounts for a significant portion of operational expenses, reducing these costs is key to making mobile services more affordable.

The Way Forward: Policy and Tax Reforms and Strategic Partnerships

The path to a digitally empowered Nigeria lies in policy reform. A harmonious and predictable policy environment is key to fostering investment and innovation. African countries need to urgently take action to reduce their tax burden. Standardising policies and reducing bureaucratic hurdles allows African countries to create a more attractive landscape for local and foreign investors.

Furthermore, by reducing the tax burden, governments can enable more accessible and affordable digital services, which will ultimately play a significant role in driving economic growth, increasing digital inclusion and building a more robust digital ecosystem across the continent.

Beyond Connectivity: The Sector’s Wider Impact

The potential of mobile technology goes beyond just improving connectivity. It promises to transform other key sectors, such as agriculture, manufacturing, and trade. For example, increased digitalization in agriculture could significantly increase productivity and generate significant economic value, potentially adding trillions to GDP and creating millions of jobs. Furthermore, a digitally connected economy is more resilient and adaptive, and better equipped to cope with the challenges of a rapidly changing global landscape.

“In Nigeria, the biggest opportunity lies in sectors like agriculture, where increasing digitalization could add 3.3 trillion naira to the GDP, which is about 2.8% of GDP and 1.1 million jobs in the sector. I believe that if you can go deeper and build capacity in understanding how the sector itself delivers value and its cost structure, towards enabling users to directly use the mobile internet, because that’s where the value of digitalization comes in.”

—Angela Wamola, Head of Sub-Saharan Africa, GSMA

Looking Ahead: GSMA’s Commitment to Africa’s Digital Future

Wamola expressed confidence in the potential for significant outcomes from discussions with government and other stakeholders. She stressed the need for ongoing dialogue and capacity building to ensure decision-makers 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. Expect significant results in the near future” she concluded.

As we anticipate these positive changes, it is clear that mobile technology is the key to unlocking Africa’s digital future. As Angela Wamola aptly puts it, “The time for action is now.” Nigeria and other African countries must embrace the digital revolution and leverage their mobile technology sector to build a future that is not only prosperous, but also inclusive and resilient. With the support of a government that is actively working to see the mobile sector as an economic driver rather than just a source of income for the country, it is possible to make a transformational change that will benefit all entities involved 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 building capacity for fiscal decision-makers. She invited everyone to join GSMA at the Mobile World Congress in Kigali from 29 to 31 October 2024, where these issues will be discussed in more detail.

Stay tuned for more interesting conversations

Our conversation with Angela Wamola provided valuable insights into the challenges and opportunities facing Nigeria’s digital economy. Her focus on collaboration, policy reforms, and strategic investments highlights the key steps needed to drive digital transformation not only in Nigeria, but across the African continent.

Stay tuned for more interesting conversations in our TechTalk Thursday Series. And don’t forget to watch the full recording of our discussion with Angela Wamola.