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Part 2: Why are broadband prices so high in South Africa compared to Kenya?

If you have been following my blog and social media content in the last year, it is clear by now that I am smitten with Kenya due to its ground-breaking ICT sector developments that are spear-headed by mobile technology. I even have a Kenyan mobile number for good measure (•‿•). In this post I shall highlight, yet again, why my love for Kenya is not without sound reason for a self-proclaimed South African-based infopreneur who uses more than 20 gigs of data a month.

I am currently on holiday in Nairobi, the Kenyan capital. On landing at the Jomo Kenyata International Airport (JKIA) several days ago, I needed to load my Safaricom SIM with data, so I headed to the airport booth of Kenya’s largest mobile operator where I was handed a brochure to browse through for available data packages and associated standard prices.

Safaricom Data Brochure - December 2012
Figure 2: Safaricom Data Brochure – December 2012 (click to enlarge)

First thing that caught my attention in Figure 2 was how clear and simple the data bundles on offer are: no differential rates for pre-paid vs post-paid, nor for standard vs advanced bundles. This made information in the brochure easy to use for making a quick decision. I would fall in the HEAVY USER Category normally. However, most accommodation places in Nairobi – including the one I stay at – have complimentary Wi-Fi, and my stay in this beautiful cosmopolitan African city ends in the next few days. So, I opted to buy a 10MB daily Internet bundle.

Naturally, I was curious to see if there has been any change in data costs between Kenya and South Africa since I published the first post on this subject in October 2011.

RELATED POST: Part 1: Why are broadband prices so high in South Africa compared to Kenya?

In order to compare apples with apples while keeping the exercise simple, I chose Vodacom again as a South African proxy. The rationale for my choice in both Part 1 and Part 2 is that both mobile operators are leaders in their respective home bases by market share size, and Vodafone owns substantial stakes in both of them. A detailed spreadsheet analysis of Part 1 can be found on this link.

First, let’s level the ZAR/KSHS currency exchange playing field:

ZA Rand/Kenyan Shilling Exchange Rate - 31 Dec 2012
Figure 4: ZA Rand/Kenyan Shilling Exchange Rate – 31 Dec 2012

Note that Kenyan Shilling’s value was weaker (at ZAR1 =  KSHS12,38) when I published Part 1 14 months ago.

 

ANALYSIS AND FINDINGS

 

Kenya’s smallest data bundle, the 5MB in Figure 2, costs 1 Kenyan Shilling per MB. According to Vodacom’s official site, the smallest data bundle on offer in South Africa is 10MB and it costs R9, or ZAR0,90/MB.

Vodacom smallest data package - 31 December 2012
Figure 5: Vodacom smallest data package – 31 December 2012

The trend in both countries – and probably many others – has been that smallest data bundles are the most expensive on a per MB basis. However, comparison of the two countries, using ZAR as a base, indicates that 1 MB costs roughly 10 cents in Kenya (Figure 2) and 90 cents in South Africa (Figure 5). Put differently, South Africa’s lowest data bundle is 9 folds more expensive than Kenya’s!

A look at cheaper data packages for both countries reveals a similar picture. Kenya’s 25GB data bundle (Figure 2) costs 11,499 Shillings (or 4.5 cents/MB in South African currency); while South Africas’s 20GB Standard bundle costs up to ZAR3,199 (or 16 cents/MB in South African currency).

Clearly, it is cheaper to buy the largest data bundle in both countries (for those who can afford it), but the cents/MB is still up to 3 times more expensive in South Africa! The graph in Figure 7 visualizes the cost/MB disparities more clearly.

Data Bundle Cost Comparisons – South Africa vs Kenya | October 2011

In essence, those who cannot afford to buy large data bundles pay more per MB. Even worse, South Africans buying small data bundles pay a SUPER PREMIUM compared to their fellow Kenyans.

 

QUOTABLE QUOTE

 

A quote from the Africa Business Magazine of August 2012, found in Kenya’s The Standard newspaper of Sunday the 30th of December 2012, explains why the ICT sector – which includes mobile technology – is important to Kenya’s economy and standing:

Quote from African Business Magazine - July 2012
FIGURE 8: Quote from Africa Business Magazine – July 2012
 

As The Standard puts it, increased availability of mobile bandwidth to Kenya from undersea cables made the difference:

 

$1 MILLION QUESTION

 

South Africa has been among the front-runners on the continent in getting access to the undersea bandwidth cables. And, as per the most updated undersea cable map of Africa, the country measures well against Kenya in the number of cables accessed.

Question that continues to linger on in my mind is: why are Mzansi‘s netizens paying so much more for data?

 
   

RELATED BLOGSITES

  • Nuffdotty – where thoughts on the subject of education, mostly relating to South Africa, are shared
  • Diski4Life – a blog about development of South African soccer post World Cup 2010

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