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Why Ethiopia’s Internet connectivity matters?

The Internet is an indispensable part of life in the developed world. Its impacts on all spheres of human life and work have been increasingly pervasive. African countries have lagged behind their Western and Eastern counterparts in relation to Internet connectivity. Many African countries are still struggling to create a robust Internet infrastructure. Across the African continent, the Internet is still more of luxury than a regular and accessible service. In Ethiopia, numerous barriers impede the advancement of Internet connectivity. Ethiopia loses millions of dollars in potential earnings and GDP due to Internet shutdowns, a non-transparent telecommunications market, and low Internet coverage. Better connectivity could foster the rapid growth of small and medium enterprises, facilitate secure financial transactions, improve employment opportunities for citizens, and speed up the development of stronger international and global economic ties.   

Internet connectivity remains one of the most popular subjects of economic discussion in Africa and around the globe. The Internet is believed to be a crucial factor of economic and social development across the world. According to James Manyika and Charles Roxburgh, the Internet has proved to be a potent driver of economic growth in the developing world. Countries enjoy the advantages of Internet trade and quality online services. With at least two billion people being regular Internet users, global e-commerce has already exceeded USD eight trillion, Manyika and Roxburgh, stated.

The Internet is a space for doing business, managing economic and business relations, and creating the platform for economic development and personal wealth creation. This is why Internet connectivity matters. Countries with the best Internet infrastructure reap the greatest benefits from their connectivity. The Internet can add up to 3.4 points to a country’s GDP. These figures justify the importance of Internet-related investments in Ethiopia. Unfortunately, Ethiopia is still at the bottom of Africa’s connectivity pyramid.

Ethiopia is one of the least developed countries of Sub-Saharan Africa in terms of Internet connectivity. According to Marta Guerriero, Ethiopia is the seventh from the bottom by the number of individuals who have regular access to the Internet. On average, only 10 percent of households in Africa have easy access to the Internet, as compared to more than 30 percent in the developing world, Guerriero stated. Although Ethiopia keeps moving along the Internet connectivity path, this movement is too slow to bring any tangible economic benefits in the nearest future.

Every day without the Internet is a loss, whether it is in Ethiopia or any other country. Poor Internet connectivity and government-directed Internet shutdowns have devastating impacts on countries’ economies. For a low-connectivity country, Internet disruptions may cost up to 0.4 percent of daily GDP (Global Network Initiative, 2017). In Ethiopia, these losses may reach an unprecedented USD 500,000 per day, according to Tefo Mohapi. These are not only the costs of financial and business disruptions. These are also the costs of lost opportunities that could have improved the economic position of Ethiopia, if it had been connected to the Internet.

As one of the rapidly developing Sub-Saharan economies, it is surprising that Ethiopia is still in the midst of an Internet connectivity crisis. The government is the sole owner of the country’s single Internet provider, Ethio Telecom. The effects of government policies on the availability of Internet services in different parts of the country have been particularly pervasive. Now that Ethiopia is launching a major privatization campaign, the situation may change. Private companies will be allowed to compete with state-owned Ethio Telecom. Ethiopia will greatly improve its economic status if it creates an effective and secure Internet infrastructure while promoting a policy of easy access to the Internet.

Internet connectivity matters for Ethiopia because the Internet is a source of unbelievable growth and development opportunities. High Internet penetration is typically associated with lower poverty and higher living standards. For the government, it is an instrument for establishing and managing effective ties with foreign investors. For enterprises, it is an opportunity to diversify their supply chains and enter new markets. Internet connectivity can benefit small and medium enterprises in Ethiopia, as they seek new market opportunities for their products and services. It can boost employment and earnings, increase personal and household income, by linking employees to employers and creating a market for distance or home-based work. According to Guerriero, the availability of broadband connection can increase household earnings by USD 800 annually. Thus, one of the primary tasks facing Ethiopia is creating a well-developed and secure Internet infrastructure that will keep Ethiopians connected and empower them to improve their economic status.

In conclusion, Internet connectivity is truly a major source of economic advantage for developing countries. Ethiopia can learn from other states as it seeks to promote connectivity and foster Internet penetration to its remotest locations. An effective Internet infrastructure can create a foundation for establishing strong business ties with other countries. It can link individuals, households, and businesses to unique inimitable resources that will greatly contribute to the country’s economic base.

Ed.’s Note: Samuel Alemu, Esq is a partner at the ILBSG, LLP. He is a graduate of Harvard Law School, University of Wisconsin-Madison Law School, and Addis Ababa University. Samuel has been admitted to the bar associations of New York State, United States Tax Court, and the United States Court of International Trade. He can be reached at [email protected]

Contributed by Samuel Alemu