Tuesday, September 23, 2008

Low internet penetration in Ghana is due to high cost

By Emmanuel K. Dogbevi


About a year ago, precisely on September 10, 2007 I wrote an article on the above subject drawing attention to the issue of high cost of the internet in Ghana, which was published elsewhere.

In that article I emphasized on the need for government to act in concert with stakeholders in the internet industry to reduce the cost of internet services, and make it affordable so that many more Ghanaians can access the technology.

On Monday September 22, 2008, in a GNA report, Mr. Eric Akumiah, Secretary of the Internet Society, Ghana was quoted as saying that internet usage in Ghana is a mere 2.7 per cent as compared to 5.3 per cent in Africa.

And according to statistics, only 1.5 million Ghanaians have access to the internet.

Again a 2007 World Bank Report on internet usage in the world cited Ghana as one of the African countries with the lowest record of internet patronage, coming behind South Africa, Nigeria, Morocco, Algeria, Zimbabwe, Kenya and Senegal.

And Mr. Akumiah attributes the low penetration of internet in Ghana to some policies and called on government to recognize the importance of a multi-stakeholder model of decision making especially on Internet Policy Development.

Mr. Akumiah’s concern has compelled me to revisit the subject.

Cost is certainly one of the major factors in hindering the growth of the sector.

Cost as a major factor has hindered most Ghanaians access to the internet, and this, in spite of the proliferation of Information Technology Communication (ICT) in the country.

Many more Ghanaians have access to mobile telephony than they have access to the internet.

Ghana’s ICT policy

A cursory glance at Ghana’s ICT policy document shows an optimistic and encouraging picture of the future of the industry, but cost still remains a hindering factor.

While the government of Ghana through this document has factored ICT into national development and is doing what it can to accelerate growth in that sector, not many Ghanaians have access to ICT, particularly the internet.

And for ICT industry players, it is a motivating document that is obviously meant to oil the wheels of the industry and propel it into its rightful place in the overall scheme of development processes in the country.

It is a known fact that the entire world today is ICT driven. ICT is the tool that drives the major economies of the world. ICT is also transforming societies and economies of developing countries including Ghana, even though at a slower pace.

The reality and importance of ICT in development, both personal and national is widely accepted in Ghana and this importance to Ghana’s development is seen in the Government’s determination to make ICT the driving force behind the society and economy.

To drive home this point the government has set up a Ghana ICT Policy Plan Committee and given it the task of developing an ICT-led socio-economic Development Policy and Plan for the country.

This policy is intended to move the economy and the society towards a knowledge based information society and economy. And this is to be achieved within the shortest possible time.

According to the document, the government of Ghana believes that ICT has the potential to accelerate socio-economic development and the government is vigorously pursuing a multi-faceted policy in the direction of engendering growth in the sector. The government is therefore, implementing the ICT for Accelerated Development policy (ICT4AD).

The main aim of the policy is to develop an integrated ICT-led socio-economic development framework for Ghana. The policy is to induce the massive laying of infrastructure for ICT, initiate and pursue consensus building with all stakeholders as well as create the enabling environment for the accelerated growth of a knowledge based information society.

Growth trends in ICT

This policy, with government’s commitment has significantly led to a tangible growth in the ICT sector, particularly the mobile telephony sector. There is however, more room for improvement.

While the mobile telephony sector has seen a massive growth and expansion within a relatively short period, the internet sector has rather witnessed a slow growth.

Available statistics indicate that as at the end of 2007 the number of mobile phone subscribers in Ghana had hit above 7.5 million culminating in a total teledensity of about 25 per cent.

Only a very small number of Ghanaians are internet broadband customers.

Statistics from the NCA shows that as at the end of the fourth quarter of 2007 there were 376, 509 fixed telephone line users, while the number of payphones dropped from 10, 824 to 9,551 and mobile telephony hit 7,604,053.

And as at March 31st 2006, there were 3,620 internet broadband customers representing a mere 0.016% of the population of Ghana.

Obviously, this low figure is due to the inability of most Ghanaians to access internet services and products because they are expensive.

Cost of internet

The high cost of internet services and products is leaving majority of Ghanaians out of the enormous opportunities and benefits that the technology offers in education, governance, commerce and research. The production, packaging and manner of distribution of internet services make the technology expensive.

And internet services are expensive because Ghana has no nation-wide telecommunication backbone for data network which makes accessing and broadcasting bandwidth for the industry a big challenge.

National ICT backbone

Thankfully, a $70m national communications backbone project was expected to be completed in August 2008. The project is funded by the Japanese government.

It is hoped that this project when fully operational would improve mobile telephony and the quality of internet services. But it is not clear yet if it would lead to price cuts.

Start-up cost of ISP

The financial capital required to set up an Internet Service Provider (ISP) business is huge. The cost of the lowest range of Access Unit (AU) equipment required to set up a small ISP is around US$10,000 to US$15,000. The cost of renting office premises can cost the range of US$2000 monthly and so on.

Licensing fees are also high for dedicated spectrums or frequencies and even for the universal unlicensed 2.4GHz and 5GHz spectrum a service provider is required to pay a fee to the National Communications Authority (NCA) in the ranges of US$500 or US$300.

The cost of purchasing bandwidth is another prohibiting factor. It would cost a small ISP about US$7000 to acquire 2MB of bandwidth for rebroadcast and redistribution to its customers and often in some cases, fiber is unavailable for termination on the location of the ISP.

Some ISPs have to depend on satellite services which cost higher than fiber.

Customer access equipment also cost a fortune for many Ghanaians. Equipment for connecting to the internet at home or even the office costs between US$120 and US$500, excluding installation charges. And monthly charges are quite high for most Ghanaians.

Apart from the cost of hiring IT professionals and other staff to run an ISP, there are not many qualified for the field. All these factors contribute to make the production cost of internet services expensive and beyond the reach of a large number of the population.

Indeed, no business can thrive and grow if its production cost is higher than how much it sells the finished product, and to survive, ISPs have to price their products in ranges that would help them stay in business.

The picture can be better

The picture we have just seen is the very reason why majority of Ghanaians cannot access the internet as much as they ought to for the purposes of personal development and subsequently national development.

The situation as it stands today is slowing the pace of national growth through the use of ICT, particularly the internet.

It is no surprise that, while a great volume of business and governance issues are carried out on the internet in developed countries including some developing countries like Rwanda, the case is not the same in Ghana, because prices in these countries are even cheaper than what pertains in Ghana. In some developed countries one can easily get internet access at home for less than US$40.

National payment platform

I am aware of a number of e-commerce websites that have collapsed because Ghanaians simply do not use the platform.

Fact is, while the e-commerce platform is supposed to make business cheaper and convenient, it rather makes it expensive and irrelevant to use in Ghana.

Some of the contributing factors though include a lack of a national electronic payment platform which would facilitate e-commerce. There is also lack of faith in the electronic payment system as a result of fraud.

This challenge is however been addressed with the introduction of the E-Zwich system.

In the meantime, though, some financial institutions, and software developers are working hard to resolve the issue of an electronic payment system for the country. When realized, this will change the face of transaction on the internet in Ghana.

Some benefits of the internet

All these challenges notwithstanding, there have been some examples of the economic and social benefits of ICT that I have been aware of in this country.

I know of a young man who after he had completed Senior Secondary School (SSS), spent time at home conducting research on the internet. His research led him to find a university in the US that was offering scholarships to African students. This scholarship included a roundtrip air ticket, tuition and boarding and lodging.

This opportunity came at a time when his father was scratching his head over how to raise the money for him to attend one of our universities here in Ghana. He is currently in the US studying for a degree. That is the benefit of the internet. But that became possible because, his father could afford the service at home.

I know someone else who used the internet at the work place to procure a training programme elsewhere to enhance his performance at work.

Even the internet cafes don’t come cheap. One has to travel from home to the cafes, and in the cafes, one is confronted with lots of inconveniences and lack of privacy. Some cafes are not fitted with cooling systems and where some are, they are often not functioning properly, making the use of these cafes uncomfortable.

If we should consider the cost of traveling to and from the cafes and the accompanying inconveniences, then that makes internet services expensive to most people.

I am also aware that most graduate students of our universities do not have to go through the hassles they used to go through in the past to work on their theses because of the availability of the internet. The internet has expanded the worldview of quite a number of people. The news comes faster and easier to access and communication links have been strengthened via the internet.

Students and pupils can do their homework on the internet, because such services and facilities do exist on the internet. The internet can also facilitate high quality teaching in the classroom as well as enrich the teaching skills of teachers.

People’s lives have been enriched through internet social networking communities and some others have gained global presence through the internet, on networks like Hi5, Myspace and Facebook.

Government must join forces

Government must work at a comprehensive programme within the framework of the ICT4D to facilitate a reduction in the cost of running ISPs to make the internet cheaper and affordable for most Ghanaians.

Government should join forces with some of the private sector players in the industry who are willing to provide their expertise and in some cases platforms to accelerate the completion of the national backbone.

It is also necessary to work together with other stakeholders towards the goal of reducing cost, but maintaining quality so that the internet can reach a great number of Ghanaians.

To achieve the lofty goals of making Ghana an information and knowledge driven society and economy is a possibility, only and only when the government exhibits the political will to do what it ought to, to make the goals a reality, or else the very basis of national development in today’s world, which is ICT, would elude us.

Because, as the fact still remains in Ghana - while the internet is a good thing, most people cannot afford it.


eokyere said...


A pretty long post; certainly offers a lot of points.

I sort of agree with you on costs; in fact I was just discussing this over IM with another friend, and cost is sort of the easy conclusion to come to.

What, though, do you think piles up the price? Is it simply the cost of getting connected? ie. 30cedis a month for broadband access is too expensive; it should be 10cedis? ... Is it hardware costs, and so prevents people from actually acquiring computers in the first place? Is it training?

Cost is one thing; but the more I think about it, the more I doubt it is actually what is turning out the low-usage rate.

It is still substantially cheaper to send an email (to anywhere) than to make a cellphone call. You don't think so? Buy 5 cedis of internet cafe credits, my money is on being able to communicate more information with those credits than it is paying for 5 cedis of MTN cellphone credits. And yet, almost everybody you see has a cellphone; maybe 2. And they actively use them. And it costs substantially more to use a cellphone.

"high cost" is subjective, I think. I will probably pay 1000cedis for a gold watch, but I won't pay that for a piece of yam. Because I perceive the "value" of a piece of yam to be so much less (and it so indeed). But if I was very hungry, I would probably exchange that gold watch for a piece of yam ... lol. ok, that was just by the way ;)

I think low internet penetration in Ghana stems from a whole range of things, but cost rates a bit lower on the rungs.

There is the issue of the value of the network ... which increases as you add more people to it (with diminishing returns at some point, as always) ... so we have to find some catalyst that pushes more people onto the network, so it in turn pushes us over some hump that allows more people to find value in the network to use it more ...

We should make it convenient and more easily accessible for people to use...

I guess we could list unending points here ... but make it easy for people to try it, then show them there is value in there ... cost? well, if you have volume on the network, you can play around with the numbers even more easily.


Emmanuel K. Dogbevi said...

Thanks Okyere.

That's also a pretty long comment though.

Let's keep the debate on, who knows? It may lead us somewhere, hopefully where we want to go.