Until recently the experience of the Internet in Africa has been like having to eat a three-course meal by sucking it through a straw: time-consuming, unreliable and expensive, writes Russell Southwood of Balancing Act in this expert guide to what “bandwidth” is, how it is being spread and what it can do for developing countries.
Put simply, bandwidth is what carries voice and data from one place to another. It is the petrol of the new, global economy and it must be affordable for any developing country to remain competitive in a changing world.
Arguably the use of bandwidth will increasingly substitute for tasks previously done by saying “send a driver” in many developing nations. In July 2008, the South Korean government, which almost completely depends on imports for its oil, ordered that all government vehicles be used only every other day to cut fuel costs. So there is an imperative to address the cost of things such as information collection and delivery, meeting people and gathering opinions, which were previously reliant on conventional means of transport.
Cheap and accessible bandwidth encourages information, ideas and money to flow quickly within a country and between countries. Despite the best efforts of backward-looking governments, it allows a country’s citizens to know what is happening in the world and what the world thinks about what is happening in their country.
The world’s tyrants may still be able to dominate their citizens, but they are that bit more vulnerable when faced with a freer flow of information about their deeds. Recent crises in places as diverse as Burma, Tibet and Zimbabwe attest to the power of information to influence those in power, even if it does not necessarily change who is in power.
There is a connection between the social and the economic. If it costs your country U.S. $7,000 to $10,000 per megabit per second (mbps) per month – one of the units used to price bandwidth – to communicate with the rest of the world, you are likely to do less of it than another country where the same bandwidth sells for below $1,000 per mbps per month. Those developing countries that have access to cheap bandwidth have some chance of staying ahead in the “dog-eat-dog” world of the new global economy. They can respond to new needs in the global economy and not simply rely on the changeable fortunes of selling agricultural produce, minerals and tourism.
Used strategically, bandwidth can create new “think work” industries such as business process outsourcing (BPO) and call centres. For example, a single company in Ghana (ACS) employs 1,200 people doing data processing. The Indian Ocean island of Mauritius employs more than 4,000 people in a combination of BPO and call centres. More than 10,000 people in the South African city of Cape Town work in these sectors.
If communications costs are not lowered, then the cost of financing trade and ultimately the prices of the goods themselves will be higher than necessary for everyone. Many African countries rely on goods traded between themselves and nearby neighbours. The goods traded are not simply luxury goods, but also essential foodstuffs that make up the daily diet of all citizens. Cheap and accessible bandwidth encourages regional trade integration that helps reduce air miles: the product grown to meet local demand is not one that needs to be imported or exported half way round the world.
But perhaps the most crucial impact that cheap bandwidth – taken together with competition – may have is on the cost of transferring money. There is considerable movement of people both between neighbouring countries and internationally.
Take the example of West Africa. According to a report by the Organisation for Economic Co-operation and Development (OECD) and the Sahel and West Africa Club, there are three waves of population movement in and from West Africa. Since the early 1960s, 80 million people have moved to the cities from rural areas. Populations also move from one country to another, representing 90 percent of inter-regional migration. Finally, West Africans represent three percent of migrants from non-OECD countries living in Europe.
Each of these people needs to be able to communicate with their family. The son who has gone overseas rings his mother back in West Africa. That same mother rings her grandmother in the village. Financial remittances flow all the way down this chain of communication and, according to the International Fund for Agricultural Development, in 2006 these were worth $10 billion to West African countries. These remittances exceed the amount of money spent by international donors.
But the cost of sending that money is around 12 percent of the total, whereas elsewhere in the world, such as Latin America, it has fallen to six percent. Cheaper communications and competition can bring cheaper transaction costs, and more of this money will arrive in developing countries.
The first wave of the communications revolution in Africa was the spread of mobile phones, which are now within reach of 60 to 70 percent of the continent’s population. By contrast, the Internet is only accessed by 12 to 15 percent of the population. Until recently, the experience of the Internet in Africa has been like having to eat a three-course meal by sucking it through a straw: time-consuming, unreliable and expensive.
