News Column

Low incomes hamper mobile Internet usage

June 21, 2014

ALEX NGARAMBE Rwanda Today -1

Rwanda and other small economies in sub-Saharan Africa will struggle to achieve set mobile Internet usage and penetration targets because of the size of their economies and their citizen's low disposable incomes.

According to an Ericsson mobility report released this year, mobile Internet use is doubling year-on-year, with usage expected to increase 20 times in the next five years in sub-Saharan Africa.

By 2017, 3G technology will outstrip 2G to become the region's dominant form of mobile connection.

Ericsson also predicts 930 million mobile subscriptions in sub-Saharan Africa by the end of 2019 and 557 million smartphones and 710 million broadband subscriptions.

Blanket projections

However, the targets in the report are based on blanket projections for sub-Saharan Africa with different economic dynamics for different countries.

In an effort to increase mobile Internet usage in Africa, Ericsson is introducing "cheap smartphones" ranging between Rwf27,000 to Rwf33,000 ($40-$50) for low-end users in rural Africa.

With Rwanda being one of the smaller economies but fastest growing in sub-Saharan Africa, it is not clear how many people in rural Rwanda can afford to spend Rwf33,000 on a smartphone.

Rwanda's GDP per capita rose to $644 in 2012 increasing from $593 in 2011, placing it in the low income category although the target is to achieve $1,200 by 2018.

Although the country is fast becoming an ICT hub in the region given investments in infrastructure, Rwandans are still among the least spenders on telecom products in the continent and this could affect Ericsson's ambitious plans in the country.

Currently, six million Rwandans out of 11 million own mobile phones and a huge majority possess manual handsets, which limit mobile Internet usage.

"The government needs to prioritise ICT products and make them key essentials for consumers like it is for other products in others sectors," said Shiletsi Makhofane, head of marketing and strategy at Ericsson.

Rwanda's average revenue per user (ARPU) is $2 per month the lowest in the region, while Kenya leads with $6.2; Tanzania is at $4.4 and Uganda is at $3.5.

Low-end subscribers

The low ARPU means that the majority of mobile phone users in Rwanda are low-end subscribers, whose propensity to spend on mobile value added solutions is low; thereby depressing the effective rate of revenue realisation per minute for operators.

READ: Low ARPU hurting Rwandan telecom firms

"The economy of the country relates to the ARPU in terms of the disposable income of an individual and although the average GDP per capita is almost the same across the region, the cost of living is higher in Rwanda," said Tongai Maramba the chief executive officer of Tigo in an earlier interview.

The Ericsson report shows that in 2014, phone users accessed 76,000 terabyte (TB) of data per month, double the 2013 figure of 37,500TB per month. In 2015 the figures are expected to double again with mobile phone users accessing 147,000TB per month.

The rise of social media, content-rich apps and video content accessed from a new range of cheaper smartphones has prompted the rise. Consumers in Kenya, South Africa and Nigeria are also increasingly using video TV and media services from their smartphones.

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Source: East African, The

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