In response to the increased attention and expectations for the digital sector in Tanzania, we initiated a study to evaluate the level to which Tanzania has been able to leverage digital technologies and digitised data in improving social, business, and public administration processes. A second core objective was to assess policy enablers or blockers, and structural challenges within the digital ecosystem, and highlight prospects or opportunities for engagement to support wider efforts by the government. This is the first in a four-part blog series highlighting findings from our project titled ‘Tanzania’s Digitalisation Journey: Opportunities for Value Creation’.
For emerging economies such as Tanzania, seeking to achieve increased digital adoption among its populace, it is important to adopt a balanced approach to digitalisation that guarantees shared prosperity and avoids potential risks of amplifying existing socio-economic inequalities. Some prerequisites for inclusive digitalisation include; access to fast and reliable network coverage for all, affordable connection and internet-enabled devices, adequate digital skills, relevant digital content and services, safe use of the internet and digital services, access to electricity and formal identification.
A supply-side only focus poses a risk to digital inclusion
In Tanzania, the national development plan prioritises digitalisation as a key component of the country’s future development plans. Significant investment has been made in improving digital infrastructure. Mobile broadband coverage is now estimated to be 81% of the population, thanks to a competitive mobile market. An increased supply of digital services, however, does not always translate into increased demand
Digital infrastructure in the country is underutilised, making it difficult for the Tanzanian Government and MNOs to recoup costs and generate revenue. For example, while the coverage gap for mobile broadband is shrinking, the usage gap is steadily rising and could potentially derail the efforts being made. This means the proportion of the population who have access to mobile broadband but are not connected to or using a mobile internet service, has doubled in the last five years. The implication is that potential users face critical barriers to digital adoption, which need to be addressed.
Figure 1: Widening usage gap in Tanzania
Source: Estimates based on data from GSMAi
Affordability and inadequate digital skills are stifling digital adoption
The major barriers to digital adoption in the country include the high costs of internet-enabled devices and low levels of digital literacy.
Figure 2: Key barriers to internet usage
Source: UNICEF’s U-report polls for Tanzania (2022)
While data plans in Tanzania are competitively priced and relatively low-cost when compared to other East African countries, they remain out of reach for the majority of Tanzanians when looking at the cost in relation to average earnings or income levels. Monthly wages can be as low as TZS 100,000 for some categories of workers making mobile devices especially costly.
Taxes and levies on mobile transactions and devices also push affordability further out of reach for poorer mobile users. Women are disproportionately impacted by these high costs because they are more likely to have lower incomes and often lack financial autonomy within the household.
Figure 3: Smartphone and data prices
Another major challenge to low internet adoption and usage is a lack of awareness of the benefits of digital solutions, not only for individuals but also for businesses and the government.
At the annual Tanzania Youth Digital Summit in 2020, 41% of attendees indicated that they lacked awareness of the benefits of the internet, and 99% indicated that they needed better digital skills to improve their business and career prospects. These findings are consistent with the Digital Skills Gap Index (2021) by Wiley. Tanzania was ranked 13th out of 26 African countries surveyed, with a score of 3.3 out of 10 for digital skills, indicating a low level of awareness and skills among the population.
Our analysis of Tanzania’s digitalisation journey has highlighted a number of actions that public and private sector actors must prioritise to support digital adoption:
Private sector-led initiatives:
- Implement market-driven initiatives such as providing greater availability of flexible financing schemes (e.g. device payments in instalments).
- Implement alternative credit assessment of creditworthiness for payment support, including analysis of mobile subscriber data, top-up patterns, breadth of social networks, and other relevant information.
- Enhance demand for mobile services, particularly in rural communities, through user awareness programmes and product promotions.
Public sector-led initiatives:
- Review excise tax and any other associated levies on electronic communication services, to improve affordability and drive costs down.
- Optimise policies and regulations that have a significant impact on the key costs of providing connectivity services, such as timely and affordable spectrum auctions, license terms and conditions that do not increase costs unnecessarily, etc.
- Consider direct assistance such as subsidies for target user groups or support phone financing guarantee schemes.
- Invest in improving digital literacy and skills by introducing digital skills in education curricula, enhancing teacher training in digital skills development, and increasing access to digital equipment in schools for practice sessions.
- Increase technical coordination and financial support for innovation hubs and accelerator programmes, and leverage the experience and expertise of private sector leaders (such as tech companies) and non-profit organisations working in the digital space.
We hope to share more findings from our project in the coming weeks. We are also happy to hear from those working in similar areas or just interested in knowing more about the project. If interested, you may reach out to the GSMA Central Insights Unit team by email here.
THIS INITIATIVE IS CURRENTLY FUNDED BY THE UK FOREIGN, COMMONWEALTH & DEVELOPMENT OFFICE (FCDO), AND SUPPORTED BY THE GSMA AND ITS MEMBERS.