As Coronavirus keeps hitting new milestones, it continues to be apparent that connectivity tools and services are essential in combating the pandemic because people learn about the virus’s trends and keeping safe from interconnected handhelds.
However, it is still challenging to communicate directly, and the use of ICT in passing important information about COVID-19 by governments, experts, and the media has never been more critical.
How do people, in the current world, communicate and disseminate information? The smartphone.
The smartphone industry has grown massively ever since it started gaining popularity more than a decade ago.
The device, admittedly, has gone above and beyond in changing how people reach out to friends and family, receive important information, and use the devices as educational tools.
Experts report that the devices may become more crucial when the pandemic passes or brought under control.
Nevertheless, smartphones are not cheap, especially in emerging markets where customers do not have a robust purchasing power.
To this end, that cost is effectively a barrier to mobile internet adoption and use. Reportedly, the cost issue is not related to the pandemic.
In Kenya, for example, there are tons of low-cost smartphones that go as low as KES 3500 (US$ 35), but still, that asking price is still out of reach of people languishing in poverty. It is a double-edged problem because the devices can enable these people to escape the chains of poverty.
It has been established that extremely poor people, that is, those who earn under $2 in a day, would have to dedicate 16% of their yearly income just to buy an average-priced smartphone. Admittedly, the income is very low, and in such a case, would they buy a smartphone or a meal? Your answer is as good as ours.
These numbers were arrived at following research that was conducted in India and Tanzania.
The obvious question here is why aren’t phone makers selling their wares at a much lower price? Well, that is not possible because they have business costs to cover.
To this end, it is advised to develop business models that ensure that people in poverty can buy smartphones.
In line with what the world is going through right now, there is no better time to explore and implement such business models with the main goal of getting more Kenyans connected.
Are phones expensive in Kenya?
This is a melody we have sung before – smartphones are expensive in Kenya – more than other parts of Africa because they incur high taxes.
It has also been reported that import taxes and duties can go as high as 50% of the overall device cost in some African countries, or key markets such as India where smartphones cost markedly lower.
This has been attributed to the high cost of device transportation, especially to developing economies. Additional costs emerge from storage, warehousing, and inventory management. All these costs – not to mention marketing and brand management – are covered by the end customer.
So, you ask, why do devices attract high taxes here? The good answer is that they are classified as luxury items.
Would the taxes go down if they were classified otherwise? Definitely.
It has also been argued that smartphones have surpassed the definition of luxury items. They are crucial sources of information and connectivity – and not having one is, according to Huawei, a barrier to economic prosperity.
“If luxury tariffs were no longer due on smartphones, it would make it possible to slash smartphone prices considerably – making them more accessible to more African citizens,” says Huawei.
Basically, the development would be beneficial for the manufacture and distribution of Kenya-made smartphones below a certain value.
Huawei further says that taxes and duties placed on smartphones can be abolished, at least to below a certain value.
“This would result in citizens being able to purchase these cheap smartphones, while still boosting government revenue through airtime and data bundles, as well as income from other mobile income streams,” says Huawei.
Strategies for growth
Besides cutting excessive taxes and duties on smartphones, the government can consider getting taking part in the value chain, including marketing, distribution, and retail.
The strategy would ensure that costs directly incurred by smartphone manufacturers are reduced because the numbers of players in the supply chain are cut.
The government has also not done enough in terms of assisting subsidies or donations to NGOs, among other entities. If that were to happen, then the government would be subsiding the cost of smartphones for groups that need them the most.
The strategies, among many others, ought to be discussed by the government. The strategies should also play a role in facilitating a jump in Kenyans who have smartphones, and by extension, access to digital tools and services.
How have other governments helped in onboarding additional citizens into the digital economy?
Well, Argentina provided asset financing to 8 million citizens to switch from 2G feature devices to 4G smartphones.
Columbia allocated $90 million over a three-year period to a policy that includes subsidies for low-income citizens for data and smartphones.
Malaysia started a national program to encourage young people to buy 3G-powered smartphones with a rebate on certain devices. The move saw smartphone priced drop by 40%.
Lastly, Pakistan used funds to give smartphones to 30,000 low-income women.
Smartphone uptake cannot be overstated
According to ICT expert Charley Lewis to MyBroadband, ‘the drive for smartphone uptake in Africa is important for consumers as those who do not have these devices are deprived of access to much of the Internet and its benefits – such as highly useful apps.’
Smartphone growth and use cases will grow if entry-level devices are cheap, and priced into pay-as-you-go plans. The development will also be replenished with data prices that are projected to grow in the coming days.
“The benefits to universal access and service, and to the increased data revenues, are surely to the benefit of users and operators alike,” says Charley Lewis.
The pandemic, to this end, is a big opportunity to develop and implement long-term solutions to the digital divide and limited inclusion in Africa.
Governments are encouraged to ensure that their people can affordably access digital platforms using devices such as smartphones so that they are aware of what goes around them.
The big picture? Well, the move is a key part of solutions that must be explored to alleviate poverty and improve the lives of economically challenged people.