Dalberg Report

Establishing conditions for success and catalyzing
inclusive growth in Ghana, Kenya, Senegal and Nigeria

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01

The Report

The Internet is a tremendous, undisputed force for economic growth and social change.

This report intends to help policymakers capture the potential of the Internet for social and economic development - to help them understand how their constituencies already use the Internet, where the opportunities lie, what future potential for social impact the Internet offers, and what their countries need to get there. Based on a survey of more than 1300 businesses, including nearly 1000 SMEs and extensive interviews with experts across Ghana, Kenya, Senegal and Nigeria this report arms policymakers with data on the social and economic benefits of broadband and Internet. It also uses extensive secondary research and qualitative and quantitative analysis to support policymakers in harnessing the Internet’s potential. Finally, it provides actionable recommendations across policy portfolios.

02

Conditions for Realizing the Impact of the Internet

Countries that wish to reap the Internet’s potential for social and economic gains must continue to invest in infrastructure and the broader ecosystem for innovation. Two key pillars provide the basis for a well-functioning Internet economy: “core infrastructure” and “conditions for usage.” Core infrastructure includes aspects of the enabling environment - both physical infrastructure and characteristics of the business environment, such as mobile and Internet coverage, electricity, availability of skills, education levels, and perceptions of corruption. Conditions for usage include those that influence access, awareness, availability and attractiveness. They include a range of drivers, from the cost of devices and price of packages to factors affecting citizen awareness, such as education levels, usage and relevance of services.

Our analysis, based on nearly 60 different indicators, shows that without a minimum investment in infrastructure, conditions of usage - including the number of Internet users - will not rise above a certain level. Countries in Sub-Saharan Africa, while on the right trajectory to build thriving ecosystems, must continue to invest in core infrastructure as well as usage conditions in order to maximise the Internet’s impact.

Conditions for Realizing the Impact of the Internet

03

Sectors

Brief profiles of the seven selected sectors

The current state of impact

This report provides detailed assessments of the current and potential impact of the Internet on socioeconomic growth across seven sectors: agriculture, education and labor, energy, financial inclusion, governance, health and small and medium enterprise (SME) growth.

It also examines the role that government, private sector and donors have played in building the ecosystem for Information and Communication Technology (ICT) innovation and driving this impact.

Health: Strengthening systems and striving for scale

Innovation surrounding Internet-enabled businesses in health is not lacking, however, most of them remain as pilots, with limited evidence of impact on health outcomes. However, a few examples that have transcended to a phase of growth suggest the potential for scale. And, while there is limited evidence of the impact of Internet-enabled solutions on health outcomes, governments are forging ahead to create enabling environments recognizing the impact on operational efficiencies and cost savings in service delivery. By developing eHealth policies and strategies, and committing to interoperability, the governments of Kenya and Ghana have helped spur the development of applications that can be integrated onto government platforms. Nigeria and Senegal’s eHealth sectors have several pilots in place, but they are yet to be scaled. Policymakers should ensure that there is an eHealth strategy in place, coordinate the various ICT developers that seek to build atop those systems and continue to bring health care administration costs down by encouraging health care providers to adopt networked technology.

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Education: Enabling the ecosystem

Nearly 60% of education organisations surveyed responded that access to the Internet is ‘essential’ for their work. Further, the rapid reduction in cost of devices, increasingly affordable bandwidth and development of local content are indications of a positive trend towards leveraging technology to support educational outcomes. But despite significant agreement that the Internet and Internet-enabled solutions could be powerful tools for learning, to date, evidence of scale and impact is limited because interventions d. Yet, noteable examples stand out. First, in tertiary education, virtual learning universities are exponentially expanding learning opportunities across the continent. Second, the rapid growth of mobile web and social networking has enabled a surge of access to information outside the classroom. What’s needed now are solutions that fully incorporate bandwidth, hardware, software, training - both student and teacher -, content and policies in order to deliver both impact and scale.

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Small medium enterprise development:

More than eight in 10 surveyed SMEs believe taking better advantage of the Internet would improve their businesses’ economic performance, and seven in 10 of those expect that doing so would create new jobs in their organisation. They have good reason. The Internet is enabling both top-line growth through marketing and sales, as well as bottomline growth through increased efficiency in information management. It is enabling entirely new classes of business to emerge, as entrepreneurs develop local content and applications, while helping existing businesses trim costs as information management becomes digitized and networked. Policymakers should boost their small business sectors by helping to smooth the transition from mMoney to eCommerce, continuing to lower bandwidth costs and improve connection quality, and improving business environments.

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Energy and Transport: Extending access off-grid

Based on survey data and interviews with experts, Internet solutions have generated little within the energy and transport sectors in our focus countries, but two types of solutions offer potential. Citywide traffic monitoring can help governments allocate traffic police. By easing installment payments, mMoney can ease asset financing for solar equipment in unelectrified rural areas. The former requires significant government involvement, while private sector could drive the latter, once the government has sufficient legal protection for mMoney.

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Governance: Accountability, transparency, efficiency

Each of the focus countries has begun to recognise the Internet’s potential to reduce the cost of governance and improve transparency, accountability and citizen engagement. eGovernment initiatives have been funded by both governments and external donors, and have seen particular success in Kenya, through the leadership of the Permanent Secretary of the Ministry of Information and Communications and the Kenya ICT Board. Outsourcing eGovernment services to the private sector has been limited but also shows significant potential. eGovernment initiatives are most effective when a mandate to initiate, coordinate and develop eGovernment services is clearly issued to an agency with executive authority.

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Finance: Deepening and extending inclusion

Mobile and electronic financial solutions have begun to expand beyond transfers and payments to provide a suite of financial services that are driving financial inclusion across SSA. Although mobile money (mMoney) is expanding slowly, it has already created significant opportunities for eCommerce and other online transactions. Examples in Ghana and Kenya highlight the potential of the Internet to drive access to a full range of financial services, including insurance, credit and savings for individuals and businesses. Meanwhile, the growth of solutions such as Pagatech and Pesapal illustrate the opportunities for mMoney to drive eCommerce for a broader base of the population. To realize the full potential of Internet-enabled solutions that will drive financial inclusion, policymakers must ensure that eCommerce and mMoney policies converge and create enough space to allow for innovation while protecting consumers.

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Agriculture: Strengthening value chains

Internet-enabled businesses within agriculture have grown to the stage where they can achieve scale and impact. Esoko, from Ghana, launched out of a public-private partnership to address market price transparency and evolved its services beyond that. Virtual City, meanwhile, received growth capital from Nokia and Acumen Fund after its proof of concept in order to scale. Within agriculture, information management, marketing and supply chain management solutions show the greatest potential for impact from Internet-enabled solutions. Such successes suggest that the sector is ripe for for-profit business models to flourish, particularly in the presence of investors looking to shift pilot projects into scalable businesses. Policymakers can improve the conditions for Internet-enabled agriculture businesses by investing in literacy and eLiteracy, eliminating customs duties on Internet-enabled devices and, in some countries, coordinating interventions involving multiple stakeholders.

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04

Core Countries

In order to sample a diversity of social, economic and demographic characteristics as well as a varied approach to Internet governance across Sub-Saharan Africa, the study focused on the current and potential impact of the Internet in four countries: Ghana, Kenya, Nigeria and Senegal.

Ghana

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Kenya

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Senegal

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Nigeria

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05

Methodology

The analysis contained in this report was derived through a combination of sources and approaches

These approaches included:

  1. desk research and analysis
  2. interviews with over 75 key stakeholders (including academics, policy makers, practitioners and media)
  3. a broadbased survey of over 1300 businesses across Ghana, Kenya, Nigeria and Senegal
  4. an integrated heatmap of where Internet enabled solutions are likely to have the greatest impact on development

The Internet’s impact on socioeconomic development can be described or measured at multiple levels. For the purposes of this report, we categorized the impact of the Internet within each of the seven different sectors required looking at four levels:

  1. the opportunity for impact by sector in Sub-Saharan Africa
  2. the opportunity by focus country
  3. the landscape of Internet-enabled business models and solutions by country
  4. the perceived attainment of impact across seven dimensions including information management, communications and marketing, supply chain management and procurement, service delivery, research and development, financing and sector governance.

These dimensions included:

  1. information management
  2. communications, awareness, marketing
  3. service delivery
  4. Research and Development
  5. supply chain management
  6. training and workforce development
  7. financing
  8. leadership and governance

06

Credits

Dalberg would like to thank Google and the individuals and organisations that have generously offered their time and contributions to this report. Without their active support, this report would not have been possible. In particular, we would like to thank Ory Okolloh, Betsy Masiello and Brittany Smith from Google.

Produced with the support of  Google