Crossing the Digital Desert in Sub‐Saharan Africa: Does Policy Matter?

Abstract

The last decade has seen a rapid growth of Internet access across Africa, although it has not been evenly distributed. It is therefore important for policymakers to ask how policy can bridge this inequality of Internet access. This article addresses the dearth of research assessing the interplay between policy and Internet penetration by identifying Internet penetration‐related policy variables and institutional constructs in Sub‐Saharan Africa. Based on a literature review and data availability, four variables are suggested: (i) free flow of information; (ii) market concentration; (iii) the activity level of the Universal Service Fund (USF); and (iv) total tax on computer equipment. The results show that only the activity level of the USF and low total tax on computer equipment are significantly positively related to Internet penetration in Sub‐Saharan Africa. Free flow of information and market concentration do not show any impact on Internet penetration. The latter could be attributed to underdeveloped competition in most Sub‐Saharan countries. We recommend that policymakers promote the policy instrument of Universal Service and USF and consider substituting tax on computer equipment with other tax revenues, and not to blindly trust the market's invisible hand to fix inequality in Internet diffusion.

Digital oases and digital deserts in Sub-Saharan Africa

“…One conventional policy measure would be to impose tax incentives both to stimulate online usage and to stimulate local online service production. As shown in Wentrup, Xu, Nakamura, and Ström (2016), lowered tax on import of computer equipment is positively related to Internet penetration in Sub-Saharan Africa; hence, by lowering such tax one could expect to spur more online usage and, eventually, online production on emerging markets. Furthermore, a fair tax regime for international OSPs in local markets is an urgent policy to put in place (OECD, 2015).…”

“…Online presence of large OSPs in international markets should be balanced with either financial compensation or offline presence in order to foster a more regionally diversified OSP economy. Wentrup, Xu, Nakamura, and Ström (2016) found that the universal service policy and its fund are efficient measures to stimulate online usage in Sub-Saharan Africa. Such measures directly address the inequalities of online usage between regions or social groups and are a good example of how to drive towards a more inclusive online economy.…”

“…For example, Kenya and Rwanda have put a lot of focus in adapting the Internet and developing digital policies, e.g., Universal Service Funds, while neighbouring countries have done less so. For example, Wentrup, Xu, Nakamura, and Ström (2016) found that countries that had active Universal Service Funds had more likelihood to have high Internet penetration.…”

Digital Economy Policy in Developing Countries

“…For example, infrastructural weaknesses are identified as a major barrier to digital entrepreneurship in the global South (Quinones et al 2015; see also Damarillo 2011), and as a major differentiator of digital economies in developed and developing economies. These must be overcome in order for the promise of digital economies to be fully realised and to avoid the current situation of what Wentrup et al (2016) call "black holes of information capitalism". This becomes all the more imperative due to other trends; for example, the growing urbanisation of developing country populations (it is anticipated that by 2030 urban populations will have grown to around five billion people (Marcus et al 2015)); and the increasing data-intensity of economic processes alongside the affordances of cloud computing and the Internet of Things (Greengard 2010, Hilbert 2016.…”

The Contextual Dynamics of Internet of Things Applications in Smart Public Bike Sharing Services

“…For example, Wentrup et al (2016) discovered that digital policy instruments such as the active level of using universal service funds and low level of tax on computer equipment are significantly correlated with internet access in the 46 countries in SubSaharan Africa. Particularly in developing public services, the involvement of the government and public authorities is self-evident.…”