Over the last 15 years, the expansion of mobile technology into Sub-Saharan Africa (SSA) has been unprecedented.

Recent data by the International Telecommunication Union (ITU) shows that cellular telephone subscriptions are now almost eight times higher in the entire African continent than in the year 2000, reaching about 700 million subscribers. Africa is today one of the fastest growing information and communication technology (ICT) markets, with many countries ‘leapfrogging’ landline telephony to mobile connectivity.

The mobile technology revolution is widely regarded to have had a positive economic and social impact in many developing countries and least developed countries (LDCs). The new Sustainable Development Goals (SDGs) adopted in September 2015 now include the goal of providing universal and affordable access to the internet in LDCs by 2020 (SDG 9c). Being home to the world’s most LDCs, extending such access could help to place the African continent on to a new development trajectory, including trade performance and competitiveness.

This issue of Commonwealth Trade Hot Topics examines the growth of mobile technology in SSA, and the resultant implications and prospects for strengthening trade and regional integration. Given low levels of African exports, a key question is whether mobile technology can become an enabler or driver of improved trade performance for SSA countries in the future.

Trade and ‘disruptive technologies’

Technology has historically been one of the major drivers of globalisation. Today, technological advancements and more recently ‘disruptive digital technologies’ – including the cloud and digitisation, electronic commerce (e-commerce), 3D printing, big data, holograms, Internet of Everything, and virtual currencies – are impacting profoundly on how goods and services are produced, transacted, traded and consumed. The ICT revolution has led to the growing fragmentation of production processes and greater trade interconnectedness through global value chains (GVCs). GVCs are fundamentally changing the traditional concept of an entire production process taking place in one country, to products now ‘Made in the World’. This geographic separation of the various production processes from research and design to manufacturing (where data is often an important input into mechanised or automated production processes), marketing and other services presents opportunities for many countries, since it requires specialisation in a relatively limited number of tasks. Affordable and reliable access to ICTs is important for developing country enterprises to plug into these GVCs, and to reduce the costs of global business-to-business (B2B) matchmaking and transactions.

There is also a key role for ICTs in enabling global trade. In particular, the electronic ‘single window’ approach is seen as one way to reduce transaction costs and time by permitting traders to lodge standardised customs information and documents with a single entry point.

The rise of e-commerce as part of the broader digital trade revolution is rapidly transforming the marketplace from mortar ‘bricks’ to hyperlinked ‘clicks’. In one estimate, 40 per cent of worldwide internet users have bought products or services online via desktop, mobile, tablet, or other online devices. This amounts to more than one billion online buyers and is projected to continuously grow. The value of global B2B e-commerce in 2013 exceeded US$15 trillion, while global business-toconsumer (B2C) e-commerce accounted for an estimated US$1.2 trillion in the same year. However, Africa remains the region with the lowest penetration of e-commerce. Egypt consistently leads with B2C e-commerce sales of US$3.9 billion in 2012, followed by South Africa with US$1.2 billion and Nigeria with US$800 million.

Trade benefits of mobile connectivity

After decades as ‘technology-takers’ in the global digital divide between North and South, many African countries are today prioritising investments in science, technology, research and innovation. The African Union’s ‘Agenda 2063’, which sets the developmental vision and pathway for Africa over the next five decades, recognises the importance of technology as a catalyst for the continent’s structural transformation, economic development and social progress.

International partnerships have played a critical role in expanding available bandwidth on the eastern and southern sides of the continent. These projects include the laying of new undersea fibre optic cables along the African coast or the development of new broadband networks. According to the World Bank, investment commitments in telecommunications infrastructure projects with private participation between 2006 and 2013 exceeded US$75 billion. This is more than three times the figure for the previous five years.

The liberalisation of the communications sector in many African countries has also enabled leading global telecoms providers to expand their brands and compete for market share. Their strategies have included partnering with smaller manufacturers to develop more affordable mobile devices. Microsoft and Huawei, for example, have released an affordable smartphone custom developed specifically for the African market and preloaded with select applications (‘apps’) designed for Africa, called the ‘Huawei 4Afrika’.

Regulatory reform and liberalisation have also benefited local mobile operators, with countries such as Ghana, Nigeria or the United Republic of Tanzania having more than five local operators. Growing competition for the mobile market has also led to a drop in the price of handsets (smartphones retail for as little as US$25) and the cost of broadband connections.

Affordable prices for handsets and cheaper and better broadband connections are the two main drivers of this transformation, which has seen African countries ‘leapfrogging’ landline telephony to mobile connectivity. Over the decade since 2005, the African continent has been the trailblazer in the cellular telephone market, growing by nearly 700 per cent. Mobile technology allows farmers, small and medium enterprises (SMEs), businesses and consumers in remote villages or cities to benefit from this technological revolution in a number of important ways.

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Commonwealth Trade Hot Topics is a peer-reviewed publication which provides concise and informative analyses on trade and related issues, prepared both by Commonwealth Secretariat and international experts.