High Data Cost is Throttling SMME Development in SADC

All across SADC today we hear how more Small Businesses (SMMEs) are necessary to drive the Economy into a growth trajectory.

However the costs and logistics of procuring data is stopping many SMMEs from fully participating in the increasingly Digital Economy.

The summary below includes the cost of data across selected SADC countries:

Cost of Data in SADC Countries (Per 1GB)

This massive variation in cost (from 12 USD cents to 52 USD) is absurd and at the limit a massive fraud perpetuated by the Data Providers against those who cannot afford to negotiate.

Smaller purchases of data tend to cost more and therefore most Small Business Owners are paying above the average cost, from our investigations in the SADC Region they are paying around USD 5 per GB and this high cost is throttling their adoption of Digital Tools.

Challenges for Small Businesses with Expensive Data and corresponding Financial Exclusion

High data costs and lack of banking services restrict small businesses from engaging in e-commerce, limiting market reach and growth potential.

The high cost of data and financial exclusion impede the adoption of digital tools and technologies that drive business efficiency and innovation.

Businesses in regions with lower data costs and better financial inclusion may have a competitive advantage, making it harder for those in high-cost areas to compete.

Expensive data and inability to transact online can limit the frequency and quality of online interactions with customers, affecting customer service and retention.

Continuous learning is vital for business growth, but costly data and financial exclusion can restrict access to online educational resources and training.

The ability to collect, analyze, and act on data is crucial for strategic decisions, but high data costs and lack of banking services can make these processes unaffordable.

As remote work becomes more common, expensive data and financial exclusion can be significant barriers for small businesses to offer flexible work arrangements.

These challenges highlight the importance of affordable data and financial inclusion for the growth and sustainability of small businesses, especially in the digital economy. Financial exclusion, which includes the lack of a bank account, the inability to transact online, and the inability to list on e-commerce sites, can severely limit an entrepreneur's ability to operate in the modern digital marketplace.

This can lead to missed opportunities for business expansion, reduced customer reach, and a lack of participation in the growing digital economy, which has been successfully achieved in countries like India.

Several initiatives are underway in the SADC region to reduce data costs and improve financial access:

Customs Strategy aims to harmonize ICT initiatives within the region, which includes enhancing the trading environment and reducing the cost and complexities of doing business.

The SADC Renewal Programme focuses on leveraging technological innovations to expand the availability of digital services to all sectors of society, benefiting the region and reducing risks to the payments ecosystem.

The SADC Strategy on Financial Inclusion and SMEs Access to Finance 2023-2028 aspires to create an inclusive, stable, and innovative financial system that empowers individuals and businesses to access and use quality financial services.

Support to Improving the Investment and Business Environment Programme, implemented by the SADC Secretariat and financed by the European Union, aims to track financial and economic inclusion through Finscope Consumer and MSME Surveys.

SADC Financial Inclusion Information Portal serves as a central repository for financial inclusion data in the region, enhancing financial integration and inclusion.????????

The Payment System Subcommittee under the Committee of Central Bank Governors in SADC is reviewing and upgrading the 2016 SADC Mobile Money Guidelines to support the reform of regulatory frameworks and embrace innovative offerings in the payment system.?????????????????????

These initiatives are designed to address the challenges of high data costs and financial exclusion, paving the way for increased digital transformation and inclusion in the SADC region but unfortunately they are not yet evident to SMMEs.

A more urgent and deliberate effort by stakeholders in the SADC Region is required including for example stipulating a harmonized data cost that does not penalize SMMEs amongst other initiatives that put the question of Affordable Data on top of the Agenda.

*this Article was assisted by Bing and sources are available on request