8 May 2017

Uganda: Cheap Smartphones Push Up Data Usage

Photo: Rachel Mabala /Daily Monitor
With increased use of mobile devices, Internet cafes have almost become irrelevant and are feeling the financial pinch.

Uganda's internet users have increased over the last five years as availability of cheap internet-enabled smartphones deepened penetration of data services, according to a report by Jumia, an online retail portal.

Titled, 'The White Paper,' the report pointed out that there were at least 16.8 million Ugandans who were using internet services.

The paper presents a detailed insight into the profile and behaviour of customers shopping online, the role of mobile brands and the impact of mobile phones on internet penetration, among others.

"As we move towards a more digital economy, we find that the Ugandan consumer is becoming more sophisticated, with 41 per cent of the population in Uganda being classified as internet users (16.8 million Ugandans)," the report reads.

The research has also been carried out in 14 other African countries where Jumia operates. The report indicates that the competitive landscape in the smartphone industry over the last five years has seen declining prices of handsets and, along with it, faster internet transmission speeds as one of the reasons for the increase in internet usage.

"This is largely accelerated by Chinese brands such as Tecno and Itel entering the Ugandan market... ," the report says.

Smartphones have a unique impact not only in Uganda but also across all other African countries that were surveyed, as they ease transactions. In East Africa, Kenya records the highest internet penetration rate at 88 per cent of its 45.6 million people.

The report says that with the combination of a rising middle-class and the reduction in average smartphone prices, Uganda will "continue to see an upward trend in smartphone sales."

According to Jumia, for example, over the last three years, the average price of a smartphone in Uganda has decreased by almost 45 per cent, from $178 (Shs 623,000) in 2014 to $99 (Shs 346,500), according to the report.

"Our most recent insights show that 80 per cent of Jumia Uganda visitors use their mobile to visit the site - and 69 per cent are not only browsing but also actually completing their purchase directly from their handset," the report reads.

The Uganda Communications Commission's latest market report of July and September 2016 indicates that the sector registered 8.6 per cent [representing 684,695 new subscribers] growth in mobile internet and 3.3 per cent [representing 4,650 new subscribers] growth in fixed internet subscription.

The UCC report shows that internet penetration increased from 42.5 per cent to 45.8 per cent in the period under review. Meanwhile, the aggressive "data wars" among telecommunications companies has relatively played a big role in increasing internet penetration levels.

Information from UCC also indicates that telecommunication revenues have surged as more companies are now focusing on investing more on data infrastructure than the voice segment. For example, the revenue collected from excise duty between July and September 2016 by government from the telecom companies increased from Shs 57.9bn to Shs 71.8bn, reflecting a 24 per cent increase, according to UCC.

The remaining 55 per cent of the population who are not yet internet users represent the country's huge potential for internet penetration growth and an attractive place for tech companies.

In 2015, Google, in partnership with Roke Telecom, launched 120 Wi-Fi hot spot networks in Kampala as part of a project to broaden the access to affordable high-speed internet.

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