ICT Africa Writer
April 28, 2013
According to the World Economic Forum (WEF) 2013 Global Information Technology Report released on April 10, South Africa’s cellular mobile prices are among the highest in the world. Our own comparison of mobile broadband costs of South Africa and selected African countries shows South Africa’s costs significantly higher. We believe that the South African pricing structure for mobile services and many other ICT services may be impacted by the Apartheid legacy.
The Global Information Technology Report ranked South Africa 117 out of 144 countries accounting for 98% of the world’s GDP. The report used the average per-minute cost of a variety of mobile cellular calls to determine the affordability of mobile cellular tariffs. In plain English, making mobile calls in South Africa is more expensive than in many countries of the world.
We also reviewed the cost of South Africa’s mobile broadband services against Nigeria, Kenya and Tanzania and found that South Africa’s costs were significantly higher. In each country we identified the leading mobile operators and calculated the average cost of a 3Gbit monthly data cost. Operators used for this evaluation were MTN, Vodacom, Cell C and 8ta in South Africa; Safaricom, Telkom Kenya Orange and Airtel Africa in Kenya; MTN, Globacom, Airtel and Etisalat in Nigeria and Airtel, Vodacom, Tigo and ZANTEL in Tanzania. Our analysis shows that the South African average mobile broadband cost is 37% higher than that of Nigeria, 51% higher than that of Kenya and 67% higher than that of Tanzania.
Ironically, the same Global Information Technology Report that ranked South Africa very poorly on cellular mobile affordability, ranked the same country very high on the Networked Readiness Index. South Africa was ranked 72 out of 144 countries.
The Networked Readiness Index (NRI) is a measure of the preparedness of a country to use ICT to boost competitiveness and the well-being of its people. We take this to mean that South Africans have the infrastructure and the means to use ICTs for the development of their country.
That South Africa scored high on the NRI does not come as a surprise to us. South Africa has one of the best, if not the best, telecommunication infrastructure in Africa. Telkom South Africa started rolling out optical fibre in South Africa long before any other country in Africa. Besides, South Africa has the highest GDP on the African continent and therefore they are better placed to deploy ICT infrastructure than any other country in Africa.
What is counter-intuitive is that a country that has the most developed ICT infrastructure in Africa is among the most expensive country in voice and broadband in the continent. Most regions in the world with well-developed infrastructures, such as North America and Western Europe tend to have low voice and broadband rates.
The whole pricing structure for ICT services in South Africa may be to blame. Pricing structures of many services were inherited from the past where certain services were intended for the privileged few who could afford the elevated costs, by International standards. While South Africa’s GDP is the highest in Africa, income inequality persists, with 80% of the population earning an income which is one sixth the average income of 20% of the population, according to the latest census. Also, according to data from All Media Products (AMP), about 35% of the population, or about 18 million South Africans are below the poverty datum line of R422 (~$50) per month. Obviously, most South Africans cannot take full advantage of ICTs at the current pricing levels, such as $43 per month for a 3Gbit data plan.
South Africa’s Networked Readiness will be rendered useless if the price of ICT services can only be afforded by a small percentage of the population. This is an opportunity for the Department of Communications (DOC) and the Independent Communication Authority of South Africa (ICASA) to step up and review the pricing structure of ICT services in South Africa.