Intelligence Brief: Can mobile broadband reduce poverty? - Mobile World Live

Intelligence Brief: Can mobile broadband reduce poverty?

15 DEC 2020

For those of us that have been sitting at home and working remotely for months during the Covid-19 (coronavirus) pandemic it may seem almost unthinkable that millions of people today remain completely disconnected from the digital world.

Mobile broadband plays a particularly key role in Africa, where it constitutes the primary, and often only, method of digital access for many individuals: for example, ITU statistics showed there were 34 active mobile broadband subscriptions compared with 0.4 fixed per 100 people in the region in 2017. Yet, while the number of people living outside mobile broadband coverage continues to fall (to 7 per cent of the global population in 2019), the GSMA’s State of Mobile Internet Connectivity 2020 report showed it is still at 25 per cent in Sub-Saharan Africa.

Despite the recent push to close the digital divide in terms of mobile broadband coverage, we actually know very little about how mobile broadband helps people in terms of improving their welfare and lifting them out of poverty. Most studies that exist today focus on the impact of mobile phones (2G technology), such as on agricultural markets and mobile money.

While such research has been useful to prove positive impacts of mobile phones, it seldom investigates mobile internet and whether it has a causal impact on welfare and poverty reduction. There are several reasons behind this omission. Lack of high-quality, lengthy and sufficiently granular data is one of them. Another is that correlation is not the same as causation. The link between mobile broadband and poverty can work in both directions: individuals who use mobile broadband may have higher levels of welfare than those that don’t use it. And the operators in charge of deploying networks are likely to favour higher-income areas with higher expected returns. Disentangling the direction of effect can thus be complex.

It was these issues which were top of mind for a joint team from the World Bank and GSMA when we recently developed an innovative study looking at the impact of mobile broadband on poverty reduction in Nigeria, the largest mobile market and economy in Africa.

And what did we find?

Mobile broadband improves welfare. More than that, its effects were larger for those households which were exposed for a longer period of time to areas with a broadband signal. Specifically, after a year or more of mobile broadband coverage, the total consumption of households studied increased by about 6 per cent. After two years of coverage, this rate increases to 8 percent (see figure 1, below, click to enlarge).

The results are similar regarding poverty reduction. Extreme poverty for these households declined by about 4 percentage points after one year of gaining mobile broadband coverage (see figure 2, above, click to enlarge) and about 7 percentage points after two or more years of coverage (at the $1.90 per day poverty line).

This corresponds to lifting approximately 2.5 million people out of extreme poverty in the country. The welfare effects were particularly pronounced for rural households. These results attest to the critical role that mobile broadband plays in poverty reduction in Nigeria and possibly Africa more broadly.

The Covid-19 pandemic has obviously stressed the importance of the internet to support access to education, work, healthcare, social networks, goods and services. But it has also shown digital divides could exacerbate existing inequalities across countries and along demographic and socioeconomic groups.

Beyond the known benefits improved access to broadband has at macroeconomic level, our work demonstrates the tangible microeconomic benefits of digital inclusion by reducing poverty and increasing welfare for vulnerable populations.

The call to action is clear: promoting access to and use of broadband internet offers a clear pathway for governments looking to increase equality and drive inclusive and sustainable economic development.

The findings presented in this blog are based on the report The poverty reduction effects of mobile broadband in Africa: Evidence from Nigeria. This initiative has been funded by UK aid from the UK government. The views expressed do not necessarily reflect the UK government’s official policies.

 

– Pau Castells – head of economic analysis, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

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