The mobile ecosystem makes a significant contribution to the economy in Sub-Saharan Africa, with an economic value added of $110 billion, equivalent to 7.1% of the region’s GDP in 2017. This includes the direct impact of the mobile ecosystem as well as the indirect impact and growth in productivity brought about by the increased use of mobile services and technologies.

The direct economic contribution of the mobile ecosystem

The mobile ecosystem in the region consists of mobile operators; infrastructure service providers; retailers and distributors of mobile products and services; mobile handset manufacturers; and mobile content, application and service providers. The direct economic contribution to GDP of these firms is estimated by measuring their value added to the economy, including employee compensation, business operating surplus and taxes. In 2017, the total value added generated by the mobile ecosystem in Sub-Saharan Africa was $40 billion (or 2.5% of GDP), with mobile network operators accounting for around 75% of this.

Direct contribution of the mobile ecosystem to GDP

$ billion, % 2017 GDP

Indirect and productivity impacts of mobile technology

In addition to their direct economic contribution, firms in the mobile ecosystem purchase inputs from their providers in the supply chain. For example, mobile operators purchase inputs from the energy sector; distributors and retailers require transport services; and mobile content providers require services from the broader IT sector. Furthermore, some of the profits and earnings generated by the mobile ecosystem are spent on other goods and services, stimulating further economic activity in those sectors. We estimate that in 2017, this additional economic activity generated a further $10 billion in value added in the region, equivalent to 0.7% of GDP.

The use of mobile technology also drives economic growth by improving the productivity of an economy. Mobile infrastructure lowers search and information costs, thereby allowing workers to be more productive, and enabling firms to use and organise their capital more efficiently. Mobile infrastructure can also encourage economic activity by creating more marketplaces, improving borrowing and lending, and spurring labour market opportunities.

Different types of mobile technology have different impacts on the productivity of the regional economy. Basic mobile voice and text services allow workers and firms to communicate more efficiently and effectively, for example reducing unproductive travel time. 3G and 4G technology allow workers and firms to use internet services. This improves their access to information and services, which in turn drives efficiency in business processes across many industries. The impact of mobile internet is particularly significant in developing countries, where fixed infrastructure is poor and mostly confined to large cities and
business/industrial districts.

Together, these productivity impacts generated $60 billion in 2017 (almost 4% of GDP). Overall, taking into account the direct, indirect and productivity impacts, in 2017 the mobile industry made a total contribution of $110 billion in value added terms, equivalent to 7.1% of the region’s GDP.

Total (direct, indirect and productivity) contribution to GDP

$ billion, % 2017 GDP

 

Employment

In 2017, mobile operators and the wider mobile ecosystem provided around 3 million direct and indirect jobs across Sub-Saharan Africa. As part of this, economic activity in the ecosystem generated jobs in other sectors. Firms that provide goods and services as production inputs for the mobile ecosystem, for example microchips or transport services, will employ more workers as a result of the demand generated by the mobile sector. Furthermore, the wages, public funding contributions and profits paid by the mobile industry are spent in other sectors, which provide additional jobs.

Employment impact

Jobs (thousands), 2017

Public funding

The mobile ecosystem also makes a significant contribution to the funding of the public sector. In most countries, this includes value added tax or sales tax, corporation tax, income tax and social security from the contributions of firms and employees. In some countries, besides general taxation, consumption of mobile services is also subject to levies specific to the industry. In 2017, two thirds of the countries in the region had excise taxes on airtime, SIM cards or mobile money transactions, or higher VAT rates on the usage of mobile services. Overall, these represented more than 20% of all mobile taxes directly supported by consumers in the region. Overall, we estimate that the mobile ecosystem made a contribution to the public finances of governments of almost $14 billion in 2017. This takes into account the general and sector-specific taxes directly paid by consumers when using mobile services and devices, as well as general taxes paid by firms in the ecosystem. It does not include further contributions made by mobile operators through
industry-specific taxes – for example, spectrum fees, revenue share taxes or universal service fund contributions.

Contribution to public funding by the mobile industry in Sub-Saharan Africa

2017 $ million

Outlook and trends for the next five years

We expect the economic contribution of the mobile ecosystem in Sub-Saharan Africa to continue to increase in both relative and absolute terms. In value-added terms, we estimate that mobile will contribute $150 billion to the Sub-Saharan Africa economy by 2022, up from $110 billion in 2017. Mobile will drive an impact of 7.9% of GDP by 2022, up from 7.1% in 2017. Most of this value added increase will be due to productivity gains, which will increase from $60 billion in 2017 to more than $90 billion by 2022. Productivity growth will be mostly driven by the adoption of mobile internet services; penetration is expected to reach 34% over the same period.

 

Source : gsmaintelligence.com