The formation of the first cellphone company in South Africa in 1994 coincided with the advent of democracy in the country, opening up massive social networks for those who could afford to join them. Here was the opportunity to leap over some of the impenetrable walls of apartheid and connect people to information for health, education and employment. 

Cellphones quickly contributed to social integration, greater access to information and lower transaction costs for banking and other commercial services. Unfortunately, the mobile industry fast became a lucrative source of income for private and public shareholders — creaming off the super-profits of a super-concentrated market. 

We missed the opportunity to use this new technology to full effect so that more parents could read to their children, health workers could access in-service support and training, teachers could expand the worlds of learners in informal settlements and rural areas, and young people could connect to educational and job opportunities. 

Admittedly, there tends to be a breathless promotion of information and communication technology (ICT) as the leapfrog strategy for economic growth in Africa, and it is easy to suffer the same dyspnoea. But the actual elixir is more specific, best administered in people’s homes, not in their offices and factories. 

The Networked Readiness Index tracks key aspects of digital development in countries across the world. Using this index, Solomon and Klyton have shown that it is only the individual use of ICT (not business or government usage) that is significantly associated with economic growth across Africa. Each 1% increase in the growth of the individual-usage part of the Networked Readiness Index predicts an average increase in GDP growth of 0.25%. 

On the other hand, the associations between economic growth and business and government use of digital content are not statistically significant. The economic power of cellphones when in the hands of ordinary people may in part reflect the importance of the informal economy as a contributor to development in Africa. 

The prohibitive cost of data

In South Africa, the cost of data precludes most people from using their cellphones to grow the knowledge economy. For most, network data is priced for social chatter, not for social development. The 10% of people with WiFi at home derive the greatest benefit, surfing the internet and constantly expanding their horizons. A third can access the internet at work or educational institutions while 70% can access it on their mobile phones. Except that most can’t, because they have no data beyond a cheap WhatsApp bundle (if they have a smartphone) or USSD (if they have a basic feature phone). 

As I described in my little book on the incredible response of civil society to the Covid disaster, called Harnessing the Thunder, most children in informal settlements and rural areas have access to a feature phone. If they are lucky enough to have a “smart” feature phone, they can access the internet through a browser but can’t access any apps that are not preloaded onto the phone. 

If they have a “dumb phone” they have no internet access. But it is still possible to reach them by compressing information into tight bite-size chunks that can be transmitted together with questions or reading prompts, and then using an SMS or a chat function to talk with them. This work has been pioneered by initiatives such as the SmartStart early learning franchise, Nal’ibali’s reading-for-joy campaign, Thanda Creative Learning, FunDza reading for teenagers and Acorn Education. In fact, Acorn has shown that it is possible to educate children on 25 to 50 megabytes per child per day. 

These are examples of public benefit organisations (PBOs) that are officially recognised by the South African Revenue Services as undertaking non-profit services for the public good. 

There are more than 30,000 registered PBOs, but possibly only about 100 use digital content as their primary means of engagement with poor communities. 

Zero-rating of data

Since 2013, the DG Murray Trust (DGMT) has promoted the idea of a national social innovation registry to manage and monitor the zero-rating of digital content provided by PBOs. For clarity, zero-rating of data means that the mobile user can access free digital content, with the costs borne by the network operator or a third party. 

In this case, the costs to the network operators could be reimbursed from that tiny sliver of net profit after tax that they are already obliged to contribute to a universal service and access fund. This statutory obligation has been roundly squandered by the Universal Service and Access Agency, which holds the primary mandate for doing exactly that, except that it doesn’t. The agency is mired in allegations of corruption and billions of rands were spent on hardware and broadband in schools and clinics, with little to show for it. Reducing the costs of access to digital content on devices in people’s homes and hands makes a lot more sense. 

The idea of zero-rating of PBOs and dot.gov websites attracted the interest of the Competition Commission’s Data Services Market Inquiry. It was presented as a firm recommendation in the provisional report in mid-2019, noting that all network operators agreed with it. In the final report, the recommendation had been watered down somewhat, and by the time the horse-trading over the rest of the commission’s recommendations was completed in early 2020, the proposal had disappeared entirely. By February 2020, the idea of zero-rating appeared dead in the water. 

Then came the complete lockdown of Covid-19. Within days, universities, schools, preschools, reading circles, health clubs, antenatal classes, job skills and a wide variety of community support programmes just stopped. The pipeline of learning and teaching to millions of children was abruptly cut off and would not start flowing again for months. 

Suddenly, the penny dropped. The Department of Communications and Digital Technologies issued a directive in terms of the disaster regulations requiring network operators to zero-rate the local educational and Covid-related health content of websites. 

The sustained efforts of PBOs to build their digital offerings immediately paid off. They were ready for zero-rating and, at their request, DGMT submitted a list of 60 public benefit organisations for consideration for zero-rating. Of these, 39 of the MobiSite domains were included on the official list of websites approved but were then put on the backburner for activation by network operators battling to respond to the massive demands on them. 

The DGMT gritted its teeth and waited, but when wealthier schools were bumped up the waiting list ahead of public benefit organisations, it served legal papers on the most recalcitrant network operator, with the government as second respondent. They backed down within a week and all the other network operators followed suit.  

Over the next month, zero-rating resulted in user traffic to the digital content of most PBOs increasing by between 25% and 50%. The case for zero-rating had been made, but the question remained how to sustain it once the disaster regulations were lifted. Fortunately, this experience coincided with the auction of additional spectrum by the national communications regulator, which all five network operators needed to meet their 5G roll-out plans. 

In a meeting with the CEO of the Independent Communications Authority of South Africa (Icasa), DGMT successfully argued that zero-rating of PBOs (and of government services) should be included as a condition of licence. In April 2022, the five network operators all successfully bid for additional spectrum, obliging them to zero-rate the digital content of PBOs and dot gov websites. Clearly, this condition was not overly onerous as Icasa noted that the government had netted double the revenue it had expected from the auction. In other words, in anticipation of higher future revenues, this condition did little to deter the operators. 

Icasa is dragging its feet

A major bridge had been built across the digital divide. Unfortunately, a year later, the solution has yet to be implemented. Icasa has dragged its feet in deciding on the vetting and monitoring mechanism, despite an offer from DGMT to set it up and pay for it for the first three years. 

Some network operators have retained zero-rating for PBOs that were registered during the State of Disaster; others have stealthily started to deregister them. In any case, only health and educational websites were zero-rated and those dealing with pressing national priorities like child nutrition and job mediation for unemployed youth are still being tolled. 

In the complex intersections between commerce and public interest, this solution is extraordinarily elegant. Actuaries employed by the network operators had evidently priced in their expectations of profits forfeited through zero-rating, and the administrative burden on the companies and government is far less onerous than that imposed by previous obligations.  

However, there are still risks that must be monitored and minimised. They include the abuse of zero-rating sites through hackers tunnelling into zero-rated sites and even the possibility that PBOs might not use the concession for its intended purpose. These risks can be contained. After all, banks interact with network operators in a similar way — offering zero-rated services to their users while paying for them through a reverse-billing mechanism. 

South Africa is mired in an inequality trap and there are no quick fixes. But there are long-term solutions that require intervention now to put the country on a fundamentally different trajectory. Zero-rating of the digital content of PBOs is one of them and Icasa must act without further delay. DM/MC 

David Harrison is the CEO of the DG Murray Trust, a foundation committed to developing South Africa’s potential.