By: Gustav Brink - Dr Brink is an associate director at XA International Trade Advisors.
I have uncapped Internet access at home. Or so I thought until recently. Suddenly, it turned out that my ‘uncapped’ MWeb Internet access was subject to a ‘reason- able usage’ policy, despite my paying for uncapped Internet access every month.
It is much worse than being limited to 120 km/h in a car that can do 250 km/h. It is more like trying to drive between Pretoria and Johannesburg, but being forced to stop every 100 m and never getting out of first gear. This capping of ‘uncapped’ Internet access raises serious questions about the role of the Internet in South African business.
The Internet has a profound impact on business and the way the world works. It directly affects everything from the way we do business, communicate, shop, conduct research, educate and interact. Whether you want to set up an inter- national conference call, buy over Amazon or buy your groceries online, or whether you merely want to ‘WhatsApp’ your friends, constant Internet access is vital.
South Africa has the twenty-fifth-fastest Internet. This does not sound too bad – until you realise this is twenty-fifth-fastest in Africa. We only rank as 120th-fastest (or probably under the slowest quartile) in the world. The average peak Internet connection speed worldwide was recently measured at 16.6Mbps, with Hong Kong topping the list, boasting an average connection speed of well over 50 Mbps.
In comparison, South Africa’s average is a paltry 2.1 Mbps (and that was before enforcing ‘reasonable usage’). Even countries such as Angola, Burundi, Cape Verde and Djibouti have significantly faster and cheaper Internet access than South Africa. I can video-skype with clients in the European Union (EU) or the US without any problems from countries such as Bangladesh, Egypt, Indonesia, Kenya and Vanuatu, but not from South Africa.
South Africa has around eight-million Internet users, compared with nearly 13- million in Kenya, yet Kenya has only 43-million citizens, compared with more than 50-million in South Africa. Nigeria has almost 50-million users, while Egypt, with 80-million citizens, has over 30-million users. The average Internet penetration in Africa is just over 16%, with South Africa being right in the median. On the other hand, Egypt, Kenya, Morocco and Nigeria combined have an average Internet penetration rate of more than 32%. In the EU, the rate is more than 70% and in Canada, the US and Japan it is more than 80%. China has nearly 600-million users, indicating a penetration rate fast approaching 50%.
In China, the Internet is regarded as being prohibitively expensive at around RMB80 (less than R120) per 1 MB of bandwidth. This is four times the price in the US and nearly 500 times as expensive as in Hong Kong. I cannot even get 1 MB for double that amount, making South African Internet access arguably the most expen- sive in the world, especially when the narrow bandwidth and ‘reasonably usage’ are added thereto.
Research has shown that, for every 10% increase in Internet penetration, per capita gross domestic product (GDP) increases by between 1% and 1.5%. Thus, increasing Internet penetration to the level of Egypt and Kenya could double our growth and reduce poverty. Internet directly contributes upwards of 5% of GDP in Sweden and the UK. Among the Brazil, Russia, India and South Africa, or Brics, group of countries, the lowest contribution other than in South Africa is 0.8%, in Russia. In South Africa the Internet contributes only 0.3% of GDP.
Small, medium-sized and micro- enterprises (SMMEs) making use of the Internet grow significantly faster than those that do not. Despite this, and government’s emphasis on the role of SMMEs in job creation, it appears that government does not realise the importance of the Internet for all.
It is time that government stepped in and ensure Internet access for all as a matter of urgency and as a catalyst for economic growth. Some countries are now contemplating legislation declar- ing Internet access a basic human right. Is it not time that South Africa followed suit?
- Dr Brink is an associate director at XA International Trade Advisors.