Complexities of Tech Accessibility and Affordability will Derail Digitalization

The digital divide in Ethiopia is becoming increasingly pronounced, with only approximately 30.1 million people (25% of the population) having internet access at the end of 2022, compared to the global average of 67%. While this disparity in of itself signifies the lack of substantial efforts to address these issues, other metrics indicate that socioeconomic and cultural factors, negatively impact the population’s ability to embrace the digital revolution.

Ethiopia’s Widening Digital Divide and the Role of Soaring Tech Prices

The digital divide in Ethiopia is becoming increasingly pronounced, with only approximately 30.1 million people (25% of the population) having internet access at the end of 2022, compared to the global average of 67%. While this disparity in of itself signifies the lack of substantial efforts to address these issues, other metrics indicate that socioeconomic and cultural factors, negatively impact the population’s ability to embrace the digital revolution.

According to Ethiotelecom’s 2022/23 first half-year performance report, mobile phone subscriptions reached 70 million, out of which only 31.3 million are active mobile data users. This highlights the gap between mobile phone ownership and active data usage in the country. Additionally, smartphone penetration remains low, with only 8.5 million devices registered within the network during the reporting period.

These numbers illustrate the nature of the digital divide in Ethiopia, reflecting the challenges in affordability and accessibility of tech devices and services that compound citizens’ inability to develop skills for digital development. 

Ethiopia’s ranking at 149th in the GSMA Mobile Connectivity Index, which measures the performance of 170 countries in key enablers of mobile internet connectivity, is another indicator of the policy, infrastructure, and educational deficiencies regarding digital growth in the country. The country’s overall Mobile Connectivity Index (MCI) score stood at 34.0 out of 100, illustrating the significant digital divide that persists in the country. Sub-index scores further emphasize this divide, with the infrastructure sub-index score at a mere 35, the consumer readiness sub-index score at an even lower 29.3 and the content and services sub-index score of 26.4.0, highlighting the importance of enhancing digital literacy and developing local and relevant content to foster widespread digital adoption.

Skyrocketing inflation which has remained above 30% since September 2021 and the depreciation of birr against the dollar (25% annual average over the past four years), has directly impacted the affordability of essential tech devices for many Ethiopians. This disparity in access exacerbates existing social and economic inequalities, hindering Ethiopia’s ability to achieve digital inclusivity and global competitiveness.

Rising tech prices also impact Ethiopia’s education system and workforce as digital learning gains prominence worldwide. This limitation impedes the development of a digitally skilled workforce and perpetuates a cycle of poverty and underdevelopment due to the lack of a skilled workforce. Moreover, this shortage impedes the development of tech entrepreneurship. 

International Commitments, Tech Giants’ Influence on Price, and Excessive Taxation

The ambitious development goals established by the United Nations (UN) and African Union (AU), such as the Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063, have largely fallen short in addressing the rising cost of technology in Africa, including Ethiopia. The influence of international tech giants and their monopolistic practices, such as the software limitations on earlier models that force users to purchase later models, directly impacts the affordability and accessibility of technology for the average Ethiopian. Experts estimate that the average time period before the price of devices begins to decline ranges from 18 to 30 months (1.5 to 2.5 years) with device life expectancy estimated to reach four years for cheaper brands and between 6 and 8 years for more expensive brands.

Replacing devices that are already heavily marked up every 3 to 4 years (the majority of devices that are affordable to Ethiopians, unfortunately are also devices with shorter life spans) is an unmanageable strain for most households that are already struggling to make ends meet; the purchase of one device is already a considerable strain. 

For context, a Samsung A35 model device has a price tag exceeding $1,000 while in neighboring Kenya and Sudan the same device is sold for less than $500; this discrepancy only grows as the quality and sophistication of the device increases. An iPhone 14 ProMax, the most expensive Apple smartphone on the market, billed at $1,200 in the USA, costs a whopping $2,990 in Ethiopia, $1,690 in Kenya, and $1,290 in Sudan

High taxation by the Ethiopian government, while one of the main factors that have contributed to the unaffordability of tech devices, is now also a principal culprit for the further exacerbation of the issue. According to the Ministry of Finance, import duties on tech devices can reach up to 35%. This high taxation rate contributes significantly to the unaffordability of essential technology for the general population, especially when considering that the prices of tech devices still put pressure on the pockets of low-income consumers. Avoiding taxation costs by sellers has also led to a full-scale contraband market. 

Addressing this issue requires concerted efforts from both national and international stakeholders to promote fair market competition, reduce excessive taxation (maybe even lower taxation imposed on tech devices), and ensure that the benefits of the digital revolution are accessible to all. On a larger scale, confronting the complex dynamics of global economic structures that encumber the ability of developing countries to participate in the market rather than simply being suppliers to it is essential for fostering a system that champions the principles of digital sovereignty.

Paving the Way for an Inclusive Digital Future

To effectively tackle the challenges posed by rising tech prices, innovative solutions and partnerships must also be explored. Harnessing the potential of locally produced, affordable technologies can not only reduce dependence on international tech giants but also stimulate domestic economic growth and job creation.

While this was recognised about a decade ago and efforts had been implemented that began to bear fruition around 2016, an unmanageable challenge emerged to stall the progress in its tracks; the black market. That year, locally manufactured electronic devices and cables generated Ethiopia a revenue of 44 million dollars; revenue from textile exports was 90 million dollars during the same year. However, even during this peak of locally manufactured goods, contraband smartphones accounted for 60% of the market. Compounded with the foreign currency and raw material shortage that the country has been facing in the last five years, and especially in the past two years, the manufacturers that were seemingly heralds of Ethiopia’s manufacturing revolution are struggling to stay afloat.

Although major macroeconomic challenges will undoubtedly have an impact on the determination to make tech devices affordable for all, given the ambitious digitalization agenda, collaboration between the public and private sectors to deliver solutions is critical.

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