How expanding mobile broadband coverage is lifting millions out of poverty

Surfing the web or connecting to social media at home, in the office or at school has become a natural part of daily life for many in the world. It may seem unthinkable, then, that millions of people in developing countries still remain disconnected from the digital world. In Sub-Saharan Africa, for instance, a quarter of the population still live outside mobile broadband coverage, compared to 7 percent globally (GSMA).

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 every 100 people in the region, there were 34 active mobile broadband subscriptions in 2017, compared to just 0.4 for fixed broadband. The COVID-19 pandemic has stressed the importance of the mobile internet to support access to education, work, healthcare, social networks, goods and services, but has also shown that digital divides could exacerbate existing inequalities across countries and along demographic and socioeconomic groups.

Despite the recent push to close the digital divide in coverage of mobile broadband, we know remarkably little about how mobile broadband internet 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) in specific areas, such as agricultural markets, or for mobile money. And while such research has been useful to highlight some of the positive impacts of cellphones, it seldom investigates mobile internet (3G and 4G) and whether it has a causal impact on welfare and poverty reduction. There are several reasons behind this omission. Lack of high-quality, lengthy and sufficiently granular data is one of them. Another is that the effect can work in both directions: individuals that use mobile broadband may already have higher levels of welfare than those that don’t use it. And the operators in charge of deploying networks are likely to favor higher-income areas with higher expected returns. Disentangling the direction of effect can thus be complex.

To contribute to having a clearer picture of how mobile broadband impacts welfare, a joint team from the World Bank and the GSMA recently 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 percent (Map 1), and by the end of 2019 there were more than 170 million mobile connections - 60 percent of which used 3G or 4G technology. 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.

Map 1: Changes in 3G coverage area within Nigeria, 2010–2015

So what did we find? Not only did mobile broadband improve welfare but its effects were larger for those households that were exposed a longer period of time to areas with a broadband signal. Specifically, after a year or more of mobile broadband coverage, the total consumption of households studied increased by about 6 percent. After two years of coverage, this rate increases to 8 percent (Figure 1). The results are similar regarding poverty reduction. Extreme poverty for these households declined by about 4 percentage points after one year of gaining mobile broadband coverage; and about 7 percentage points after two or more years of coverage (at the $1.90 per day poverty line) (Figure 2). This corresponds to lifting approximately 2.5 million people out of extreme poverty in the country. The welfare effects were particularly pronounced for rural households. These results attest to the critical role that mobile broadband plays in poverty reduction in Nigeria, and potentially more broadly across Africa.

Figure 1: Impact of 3G/4G access on total consumption (point estimates)

Figure 2: Impact of 3G/4G access on poverty ($1.90) (point estimates)

Notes: Point estimates at 5% 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 international extreme poverty line of $1.90 per day (measured in purchasing power parity).

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:

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 underserved populations. The call to action is clear: promoting and enabling access to and use of mobile broadband internet offers a clear pathway for governments looking to increase equality and drive inclusive and sustainable development.

The findings presented in this blog are based on the joint GSMA and World Bank report: “The poverty reduction effects of mobile broadband in Africa: Evidence from Nigeria”

The original working paper with the full methodology and description of the analysis for Nigeria can be found here: The Welfare Effects of Mobile Broadband Internet: Evidence from Nigeria