Uneven Playing Fields Nigeria and the Digital Divide

Earlier this year, the Nigerian Communications Commission (NCC), among its efforts to bridge Nigeria’s current digital divide, granted a permit to Avanti Communications Group, a UK-based satellite firm, to provide commercial satellite communication services in Nigeria. Austin Nwaulune, the Commission’s Director of Spectrum Administration, explained that Avanti’s services would encourage local operators to provide Internet services to unserved and underserved areas of the country and mitigate the effects of unequal access to information and communication technology (ICT).

In Nigeria, this unequal access to information and technology is a multifaceted issue that hinders human productivity and stifles macroeconomic growth. The division that ensues as a result of this inequality of access requires unique policymaking and strategic government intervention to bridge. The NCC categorizes ICTs into four groups. These are: Mobile (GSM), Mobile (CDMA), Fixed/Wireless and Voice over Internet Protocol (VoIP). Although subscription to telecommunication services has been on the rise, access to communication technologies remains unequal. According to the NCC, in December 2018, telecommunication subscriptions in Nigeria stood at nearly 173 million, a 19 per cent increase from the year before. In comparison to this high teledensity, broadband penetration stood at a meagre 31.48 per cent as of December 2018. While these trends may not directly highlight unequal access to broadband, they are indicative of an infrastructural challenge that makes broadband connectivity more accessible to some Nigerians over others.

There are multiple issues that can explain the disparity in access to communication technologies. These include the cost barrier of purchasing digital hardware and subscribing to the Internet, as well as the location of consumers (urban or rural). Unequal access, as later sections show, could also be linked to local attitudes and responsiveness to digital technology. Ultimately, high costs and insufficient capacity have eliminated millions of consumers from participating in the knowledge economy.

Factor One: A Cost Barrier to Entry

One of the factors contributing to the fractured adoption of telecommunications services in Nigeria is affordability. For the majority of Nigerians, affordability not only varies across the types of communication technologies but also across individual income levels. For instance, while the average price of smartphones on Jumia (arguably Nigeria’s biggest consumer goods e-commerce retail platform) has dropped by 43 per cent from $216 in 2014 to $95 in 2018, the average cost of one gigabyte of mobile data is estimated at $2.22. And when indexed against Nigeria’s new minimum wage of N30,000 per month, the average cost of data represents roughly 2.6 per cent of monthly income; a figure higher than the Alliance for Affordable Internet (A4AI)’s affordability target of one gigabyte of data not costing more than 2 per cent of average income.

The role of the NCC is notable in this regard. Their role as a regulator allows them the ability to set price floors; a regulatory tool they define as a safeguard put in place by the telecommunications regulator to check anti-competitive practices by dominant operators. Considering that this market relationship has effects on the price to consumers, and while noting the NCCs use of its regulatory tool in the last few years, the current prices of mobile data to Nigeria are indicative of the efforts of the commission to promote universal access of telecommunication services. However, the digital divide is also exacerbated by cost barriers to accessing computer hardware. Noting that Nigeria’s original equipment manufacturers can only meet about 20 per cent of the local demand for computer hardware, with the United States of America being Nigeria’s chief supplier of computer hardware, the costs to purchasing computer hardware on a wholesale level are passed on to Nigerians on a retail level.

Factor Two: An Infrastructural Deficit

It is important to note the unique nature of the infrastructure of the telecommunications sector in Nigeria. While costs contribute towards the uneven distribution of access, ineffective distribution and transmission of available bandwidth create barriers to access and use of ICTs. Digital technology has evolved, such that there are more ways than one to connect to the Internet. Considering this evolution, which has seen cell towers provide Internet access to mobile phone networks (such as CDMA, GSM, 3G, 3.5G or 4G LTE), one could argue that barriers to Internet access have lowered. But an increase in access to the Internet would depend on the coverage available for users.  An especially notable caveat when we examine the distribution (location and quantity) of cell towers and fibre optic cables across the country.

Of the 52,160 base stations across Nigeria, Lagos State, Ogun State, Rivers State, and the FCT account for around 18 per cent. Yobe, Zamfara, Gombe, Jigawa, and Kebbi account for the lowest number of base stations, at roughly 2.5 per cent. Therefore, it is not shocking that the more densely populated South West region accounted for the greatest number of active voice subscriptions per region in 2018 with the less densely populated North East accounting for the least. Interestingly, as of December 2018, the South West region had the highest number of Internet users per region, accounting for 76 per cent of the total subscriptions while the North East and North West regions jointly accounted for 0.62 per cent.  The dispersion of base stations across the country is important because while mobile communication has become ubiquitous in Nigeria, the mediums used to connect Nigerians to the Internet are not efficiently operated and distributed.

These infrastructural disparities only reflect Nigeria’s urban-rural divide. The development of fibre-optic backbone networks has occurred predominantly within state capitals and on interstate routes with vast expanses of rural areas left out. In December 2018, Nigeria had a fibre optic deployment shortfall of nearly 35,413km. However, the country needs more than 120,000km of metropolitan fibre networks interconnected across the country to achieve its goal of pervasive broadband penetration. This implies that the broadband network across Nigeria is set up in a manner that puts rural areas at a disadvantage. Due to the liberalization of the industry in 2000, the costs of providing broadband services to rural areas in Nigeria largely rests on private telecom operators. For these operators, there is little incentive to provide broadband services to areas of the country where fibre-optic capacities may exist but at higher-than-average costs of deployment.

Factor Three: Attitudes to Digital Technology in Nigeria

Alongside affordability, attitudes towards digital technology also determine the extent of digital inclusion in Nigeria. The Lagos Business School (LBS)’s Customer Segmentation Framework report provides valuable insights into technological development in Nigeria by profiling the Nigerian demographic along six categories. These categories are listed as Vulnerable Believers, Resilient Savers, Dependent Individualists, Digital Youth, Confident Optimists, and Skeptical Cultivators.

The authors of this report examined the behaviour of Nigerians along five dimensions: how they deliberately shape their incomes, build their reserves and raise funds to achieve their priorities; how they build their reserves by balancing their needs for financial liquidity, security and returns; how they manage the size and timing of their expenses; how they invest in social safety nets and how they manage their earnings. These dimensions serve as yardsticks to segment the six separate but related groups.

According to the report, only 49 per cent of Nigerians have a bank account, another 8 per cent use a mobile money account and 36 per cent use informal financial tools. Translating these percentages to an estimated total population of 198 million people, it is alarming to uncover that more than 100 million Nigerians are unbanked, and only a small fraction of the population is technologically adept. Concerning stats, especially as vendors and service providers move gradually from cash-only transactions to Point of Service (POS) payment machines.

The report identified Digital Youth: estimated at 19 per cent of the population with 60 per cent living in urban areas as having the highest of overall phone and digital technology usage; Confident Optimists: estimated at 14 per cent of the population with 64 per cent living in urban areas being the most likely segment to own smartphones. In contrast, the report identified 12 per cent of the population as Vulnerable Believers, who are lower-middle-class to poor, predominantly rural population are mostly lower-middle-class to poor rural women who have low levels of education and use digital technology infrequently.

While there was no empirical research done into causative factors, the report drew correlations between age brackets, geographic dispersions, financial statuses and the joint effects on attitudes to technology. The report identified the possibility that higher education and openness to new concepts; for example, are contributing factors to Digital Youth being technology enthusiasts and more likely to own smartphones than basic phones without Internet connectivity in comparison to Skeptical Cultivators who are more likely to own basic phones and are not major users of digital technology overall.

An Unfortunate Reality

Jean-Jacques Rousseau’s Discourse on the Basis of Inequality among Men provides some insight into the repercussions of the perils of the digital divide. Although the Genevan philosopher did not speak directly to the effects of technology and globalization on man and his society, his Discourse touches upon the ideas of institutionalized inequality and the inequality of opportunity. Rousseau highlights that ‘most of our ills are self-created and would not exist if we had stuck to the simple, unchanging and solitary way of life that nature ordained for us’. This is not to say that there are no benefits to globalization and technological developments; basic improvements in technology help to save time and improve efficiencies for everyday activities. Nevertheless, Rousseau’s position holds true when one also realizes that the technological divide, which causes a majority of the population to distrust commercial banking and fall to the margins of the connected digital society are the results of man-made inequalities.

Levelling the Uneven Playing Field

Unfortunately, the digital divide worsens an already grossly uneven playing field. For a country already suffering from grave socio-economic inequalities, harnessing technology for its use as a social agent may not translate positively for Nigeria’s future if we do not take active steps to address the digital divide. If Nigeria intends to become a competitive player in the international market, the government needs to make efforts to make digital technology more affordable, accessible, and useful to Nigerians. Government intervention is necessary to correct the market failures that result from the lack of competition within the telecommunications sector. As a result of the limited state of competition due to a concentration of ownership of fibre-optics deployment by MTN, GLO, Airtel, and EMTS, there is upward pressure on price that disfavours consumers. The NCC can use its regulatory power as a tool to make mobile data more affordable for Nigerians.

Government intervention is also necessary to increase infrastructural capacity especially to improve rollout in underserved areas of the country. Indeed, currently, regulatory enforcement efforts are underway to refurbish or remove 693 telecommunication towers across the country with a goal to improve telecommunication service delivery. These towers are operated by private companies, who are aware of the high cost of operating and maintaining the necessary infrastructure, and can be expected to act in line with current regulatory efforts.

Towards a More Inclusive Knowledge Economy

The role of the government in effectively enabling the Nigerian knowledge economy cannot be understated. The suggestions proffered in the 2013 Nigerian National Broadband Plan for the improvement of broadband services, for instance, still hold true today. More so, the National Broadband Council has since approved more fibre optic cable landing points in four coastal states to ensure widespread penetration of high-capacity Internet bandwidth in the country.

Notable challenges to operators include high costs of laying fibre and procuring sites for base stations, and due to the nature of the infrastructure of international cable landings, excessive up-front charges to operators have hampered efforts to extend these capacities inland to reach all parts of the country. Other challenges include multiple levels of taxation at federal, state, and local government levels, damage to fibre infrastructure during road works, and lack of reliable electricity supply. Admittedly, while these challenges may be easy to identify, the solutions required to address them requires multi-pronged approaches across different departments and tiers of government.

One of such approaches includes spending on programmes such as the Universal Service Provision Fund to help extend services to rural and underserved areas. Other forms of subsidies could be used to lower user costs for non-residential uses. This is useful because the 2018 Subscriber/Network Data Report suggests under usage of Internet capabilities by NGOs, schools and research institutions, hospitals and medical research, private businesses, public libraries, and Cybercafes. In comparison to residential and individual use (which accounts for 89.94 per cent of total Internet use), the former cluster accounts for 3.6 per cent of that total. Considering the macroeconomic value that could be derived from investment in education and research capabilities, it is necessary for the government to raise broadband awareness, encourage the use of broadband education in schools and other voluntary organizations. Therefore, providing broadband devices and equipment to educational institutions through subsidies or tax credits can improve affordability.

The responsibility of investing in infrastructure, public institutions and literacy rests with the Nigerian government because if there is anything history has shown, it is that Nigerians are resourceful and adaptable, and the developmental issue lies in the barrier to access to technology and not the inability of Nigerians to learn and develop⎈