Sitting at home, in the office or at school surfing the web or connecting to social media, has become part of daily life for many in the world. It may seem unthinkable that millions of people in developing countries still remain disconnected from the digital world. Fortunately, the number ofpeople living outside mobile broadband coverage around the world has been reduced to 4% of the population in 2023, although it is still at 13% in Sub-Saharan Africa. Expansion of mobile broadband plays a particularly important role in Africa where it constitutes the primary—and often sole—method of digital access for many individuals. For example, there were48 active mobile broadband subscriptions vs. 0.8 fixed broadband subscriptions per 100 people in the region in 2023. The Covid-19 pandemic highlighted the importance of the internet to support access to education, work, healthcare, social networks, goods and services, but also showed that digital divides could exacerbate existing inequalities across countries and along demographic and socioeconomic groups.
Limited research on the impacts of mobile broadband internet
Despite the recent push to close the digital divide in coverage of mobile broadband, we know remarkably little about how mobile broadbandinternet helps people in terms of improving their welfare and lifting them out of poverty. Most rigorous studies that exist today focus on the impact of cellphones (2G technology), such as onagricultural markets (Aker 2010), andmobile money (Suri 2017). And while such research has been useful to prove some of the positive impacts of cellphones, it seldom investigates mobile internet and whether it has a causal impact on welfare and poverty reduction. There are several reasons behind this omission. Firstly, research is constrained due to a lack of high-quality and granular data that covers a sufficiently long time period. Secondly, the relationship between mobile internet and welfare can work in both directions. For example, individuals that use mobile broadband may have higher levels of welfare than those that don’t use it. Or operators in charge of deploying networks may be more likely to favour higher-income areas with higher expected returns. Disentangling the direction of effect can thus be complex.
The impact of mobile broadband on poverty reduction
To have a clearer picture of how mobile broadband impacts welfare, a joint team from the World Bank and GSMA developed an innovative study looking at the impact of mobile broadband on poverty reduction in Nigeria—the largest mobile market and economy in Africa. Between 2010 and 2015, mobile broadband coverage in the country increased from 21 to 51% (Figure 1). We combined three rounds of longitudinal household data for 2010-2016 (Nigeria’s General Household Survey 2010/11, 2012/13 and 2015/16), which tracks the same households over time, with data from high-resolution coverage maps of mobile broadband networks, provided by mobile operators based on the (almost) exact locations of households. Using this unique dataset, we compared over time the consumption and poverty status of households that gained coverage of mobile broadband with those that had not yet gained coverage.
In order to isolate the causal impact of mobile broadband on consumption and poverty, we also carried out a quasi-random experiment where the analysis was limited to households within the vicinity of the towers hosting the antennas (6-16km). This strategy is based on mobile coverage being heavily influenced by the distance of a household to the nearest mobile site. It therefore allowed us to exploit a group of households that gained coverage “by accident”, in that they were not specifically targeted by operators to receive coverage but did so due to exogenous geographical features, such as terrain.
Figure 1: Changes in 3G coverage area within Nigeria, 2010–2015
A) 2010 B) 2015
Notes: Coloured blue are areas covered by 3G. Source: GSMA Mobile Coverage Maps (https://www.mobilecoveragemaps.com/)
The results of the study provide clear evidence that mobile broadband improves welfare. Specifically, the total consumption of households studied increased by about 10% after receiving mobile broadband coverage, with similar impacts for food and non-food consumption (see Figure 2). Extreme poverty for these households declined by about 8 percentage points (Figure 3). This corresponds to lifting more than three million people out of extreme poverty in the country. The welfare effects were particularly pronounced for rural households.
The study also investigated the mechanisms through which mobile broadband drives these effects and found that labour force participation explains a big part of it. Households in areas covered by mobile broadband internet witnessed an increase in labour force participation of close to three percentage points and a two-percentage-point increase in wage/salaried employment. It has been established in previous studies that the internet can improve labour market outcomes both directly, by giving workers access to more job opportunities and giving firms access to a wider talent pool, and indirectly by increasing trade and enterprise growth (Viollaz and Winkler 2020, Chun and Tang 2018, Fernandes et al. 2019). These results attest to the critical role that mobile broadband plays in poverty reduction in Nigeria and Africa more broadly.
Figure 2: Impact of 3G/4G access on consumption (point estimates)
Figure 3: Impact of 3G/4G access on poverty (point estimates)
Notes: Graphs show point estimates and 95% confidence interval. Difference-in-difference estimators across total consumption and poverty. Standard errors are clustered by LGAs. Additional controls include access to electricity, ownership of dwelling, household size and a wealth index, although the coefficients for these variables are not reported to save space. Poverty measure is equal to 1 if the household per-capita consumption is less than the relevant poverty line per day (measured in purchasing power parity). Source: Bahia et al. 2020.
Policy implications for rolling out mobile broadband internet
To enable all households in low and middle-income countries to benefit from the digital revolution that has swept across the world over the past two decades, our study recommends the following policies:
Putting in place a policy framework that supports the expansion of broadband networks, especially in rural and remote areas.
Addressing the demand-side barriers for the adoption and use of mobile internet including affordability and digital skills, with a special focus on vulnerable groups (for example women and people with disabilities).
Promoting complementary policies to maximise the benefits of digital connectivity - such as high-quality public goods and services.
Beyond the known benefits that improved access to broadband has at macroeconomic level, our work demonstrates the tangible microeconomic benefits of digital inclusion by reducing poverty and increasing welfare for vulnerable populations. The call to action is clear: promoting access to and use of broadband internet offers a clear pathway for governments looking to increase equality and drive inclusive and sustainable economic development.
References
Aker, J C (2010), “Information from markets near and far: Mobile phones and agricultural markets in Niger,” American Economic Journal: Applied Economics, 2(3): 46–59.
Bahia, K, P Castells, G Cruz, T Masaki, X Pedrós, T Pfutze, C Rodríguez-Castelán, and H Winkler (2024), “The welfare effects of mobile broadband internet: Evidence from Nigeria,” Journal of Development Economics, 170: 103314. https://doi.org/10.1016/j.jdeveco.2024.103314.
Chun, N, and H Tang (2018), “Do information and communication technologies empower female workers? Firm-level evidence from Viet Nam,” ADBI Working Paper 545.
Fernandes, A M, A Mattoo, H Nguyen, and M Schiffbauer (2019), “The internet and Chinese exports in the pre-Ali Baba era,” Journal of Development Economics, 138: 57–76.
Suri, T (2017), “Mobile money,” Annual Review of Economics, 9: 497–520. https://doi.org/10.1146/annurev-economics-063016-103638.
Viollaz, M, and H Winkler (2020), “Does the internet reduce gender gaps?: The case of Jordan,” World Bank Policy Research Working Paper 9183. Available at: https://doi.org/10.1596/1813-9450-9183.