By Chinenye Anuforo, [email protected]
Despite being sub-Saharan Africa’s largest economy, a significant share of Nigeria’s population lives without internet access that is fast, reliable and of good quality.
While entry-level data bundles meet affordability criteria set by the Broadband Commission, Nigeria’s 3G and 4G coverage are underdeveloped relative to regional peers such as Ghana or Cameroon. Likewise, Nigeria’s mobile data coverage is low when compared to South Africa and Kenya – sub-Saharan Africa’s second and third largest economies.
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Relatively low mobile broadband coverage hinders internet access and the realisation of Nigeria’s digital potential.
Although Nigeria possesses relatively strong first-mile infrastructure with six submarine cables installed, as well as terrestrial links with its neighbours, its middle- and last-mile infrastructure constitute major hurdles to improved nationwide connectivity.
Existing networks tend to be concentrated in major urban areas including Lagos, Abuja and Port Harcourt, as well as along inter-city routes.
A complex regulatory landscape and high Right of Way (RoW) fees are among the key challenges hindering infrastructural development. According to the Association of
Licensed Telecommunications Operators of Nigeria (ALTON), RoW fees represent 70% of the costs related to terrestrial infrastructure deployment.
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In addition to these infrastructural constraints, limited digital skills development in the education system hinder the uptake of digital technologies. Likewise, the high costs of internet enabled devices in relation to local incomes frustrate the development of the digital economy.
Last week, Google and cable landing partner WIOCC announced the landing in Lagos, Nigeria, of the state-of-the-art Equiano subsea cable, which will become a critical element in meeting Nigeria’s current and future international connectivity demands.
Named after Nigerian-born writer and abolitionist, Olaudah Equiano, the Equiano cable will help support further digital transformation in Nigeria, a country which has produced five start-up unicorns (companies now valued at more than $1 billion) in the past five years.
Equiano will have a direct impact on connectivity in Nigeria following its landing, resulting in faster internet speeds, improved user experience, and reduced internet prices. Internet speeds in the country are expected to grow almost sixfold from 11 Mbps in 2021 to 65 Mbps in 2025, while retail internet prices are forecast to decline by 21% over the same period. Improved speeds and lower prices are expected to boost penetration by 6 percentage points over this period.
By increasing international bandwidth, Equiano will indirectly broaden access to the internet in Nigeria, thus contributing to narrowing the digital divide within the country, as well as between it and other regions that currently have more developed connectivity infrastructure.
Africa’s digital transformation and its internet economy – projected to grow from USD 115 billion in 2020 to USD 180 billion in 2025 and USD 712 billion by 2050 depend on well-developed connectivity infrastructure.
Strong connectivity and more affordable and reliable internet access can help Nigeria diversify its economy away from oil, unlocking new pathways to collective prosperity.
For Nigeria’s population, businesses, and government, the digital economy can be a gamechanger and a key lever to accelerate growth, industrialise, innovate and improve people’s lives.
Between 2022 and 2025, average year-on-year real growth in Nigeria is expected to increase by 0.52 percentage points due to Equiano.
By 2025, real GDP in the country is forecast to be higher by USD 10.1 than it otherwise would have been without the cable. Between 2022 and 2025, Equiano is expected to lead to an additional USD 25.3 billion in total economic output in Nigeria.
Improved connectivity also accelerates job creation. Between 2022 and 2025, Equiano should indirectly create 1.6 million new jobs – equivalent to 330,000 per year over the assessment period – driven by the expansion of the digital economy and peripheral sectors. It is important to note that Equiano is expected to result in indirect job creation, via the growth of the digital economy, rather than jobs that are directly attributable to the submarine cable.
The increase in international bandwidth capacity following Equiano’s landing is expected to have an immediate impact on average IP transit prices, speeds and latency. For end users in Nigeria, this will translate to cheaper and more reliable internet access, leading to a substantial growth in traffic and internet penetration.
Making the internet more affordable
While internet access in Nigeria is comparatively affordable and prices for entry-level services meet the affordability target of 2% of monthly GNI per capita set by the Broadband Commission, there is still scope for prices to drop further. The cost of long-haul transmission of data is a major determinant of local IP transit prices. Equiano’s landing in Nigeria will create a new, high-capacity route for international data transmission.
The cable’s lower installation cost relative to design capacity, as well as increased competition for the long-haul transmission of data, will lead to lower IP transit prices. In turn, lower IP transit prices could be passed on to customers through decreases in internet prices, or indirectly – through the provision of more data, uncapped data limits or higher speeds at the same price.
Individual benefit
At the individual level, broadband access plays a crucial role in developing human capital, which is essential for economic growth and competitiveness.
It helps people acquire new skills and knowledge that are key to identifying and unlocking new employment opportunities. Improved connectivity also means better access to public services, as well as more affordable products and services from the private sector.
For businesses, broadband access lowers costs, raises productivity, drives innovation, introduces new processes and extends commercial links.
Broadband also lowers the cost of international communications, thereby benefiting export-oriented firms. For information-intensive companies in the service sector (the knowledge economy), broadband is an integral part of business models. A wide range of sectors – such as fintech, e-commerce, healthtech, media and entertainment, local transportation, food delivery and business-to-business (B2B) e-logistics – are leveraging internet access and adoption to innovate and lead the way in the continent’s digital transformation.
For governments, digital transformation can fundamentally improve the way the public sector operates – leading to more efficient service delivery in areas such as health, education or public administration. This, in turn, contributes to a more productive and efficient economy
For Nigeria, attracting investments that boost connectivity and pivoting towards a digital first economy offers an opportunity to diversify the economy away from oil, which accounted for over 80% of total export revenues in 2019 and half of government revenues. Diversifying Nigeria’s economy will reduce its vulnerability to movements in international oil prices, which have historically fluctuated significantly, limiting the country’s ability to implement longterm poverty reduction and growth strategies. Leveraging ICT can unlock new pathways to collective prosperity, increasing government revenues and creating much-needed economic opportunities.
Equiano – a next-generation subsea internet cable spearheaded by Google – will run from Portugal to South Africa, along Africa’s Atlantic Ocean coastline.
In 2022, it is expected to land in Lomé (Togo), Lagos (Nigeria), Swakopmund (Namibia) and Cape Town (South Africa), with branching units in place for further phases of the project. Last year, the cable landed in Rupert’s Bay (Saint Helena).
