Why Africa is starting to embrace eSIM infrastructure

What brings together more than 1.3 billion people who speak 2,000 languages and live in 54 countries? According to the African Union’s new Digital Transformation for Africa strategy, it is the creation of a digital economy, which it plans to build on the world’s second-most-populous continent by 2030. One of 17 objectives of this ambitious strategy is boosting internet coverage and connectivity by providing all Africans with access to 6 Mbps broadband on a smart device that costs no more than $100.¹

Mobile phones already act as the interface for a wide range of essential services, including banking, education, and healthcare, across Africa. Mobile money service M-Pesa, for example, launched in Kenya in 2007 and now has over 42 million customers across seven countries. Crucially, it has demonstrated that new digital products and services can bring a lot of value. This could also be the case with eSIMs – virtual SIM cards that can be embedded into a range of devices, from smart phones to smart meters. However, despite improved wireless coverage thanks to growing 4G LTE network infrastructure deployments, there are still barriers to overcome. Across Africa, the average cost of an entry-level smartphone exceeds 60% of average monthly income, according to the GSMA, making them inaccessible to many people.² In Sub-Saharan Africa, mobile technologies and services generated 9% of GDP (circa $155 billion) in 2019, but nearly 800 million people in that region are still not connected to the mobile internet.³

Helping to reduce the digital divide

The arrival of eSIMs gives the mobile ecosystem a new tool to help reduce Africa’s digital divide. They offer OEMs the potential to reduce costs by creating devices that do not require space for a physical SIM and, therefore, make it possible to cut the price of smartphones. They also enable consumers to store multiple numbers or contracts on a single device. And they give mobile network operators (MNOs) the opportunity to speed up onboarding, eliminate distribution costs, and create new sales channels.

Globally, 5% of smartphones will have eSIMs by the end of this year, according to a global forecast from Ovum, now Omdia, and this will increase to 20% by 2024.⁴ Apple, Huawei, and Samsung, which together represent more than half of the global smartphone market, have all launched smartphones that feature eSIM. Given that parts of Africa are in the unique position of having rising smartphone adoption and penetration rates with the potential to grow further ­– in Sub-Saharan Africa, for example, the adoption rate will hit 65% in 2025, at which point half the population will have a smartphone, up from 45% in 2019, according to the GSMA – the opportunity for OEMs and MNOs is huge.⁵ In particular, eSIM will gain traction as OEMs include the technology in the lower-cost and entry-level devices that are driving this growth.

Vodacom became the first MNO in Africa to support eSIMs when it launched an offer based around Samsung Galaxy^® LTE watches in 2019. In July 2020 it was joined by MTN Nigeria, which launched a 12-month eSIM trial for devices including the Google Pixel 3 and 4, and the Samsung S20 series. The company highlighted the ability to manage separate personal and business profiles on one device, and the benefits to frequent travelers and tourists who can opt for a local subscription when visiting Nigeria, as reasons for supporting the technology. “With the introduction of the eSIM, we will offer customers a seamless and distinctive digital experience with new levels of flexibility, simplicity, and convenience,” said Mazen Mroue, Chief Operating Officer, MTN Nigeria.

An eSIM pioneer

MTN is working with global technology leader G+D on its trial in Nigeria. G+D, which has been pioneering eSIM platforms and solutions since 2012, is the only company whose management software serves all existing eSIM use cases, from consumer to the internet of things (IoT). It is working hard to overcome the challenges faced by carriers and OEMs on the continent, including increasing the availability of low-cost eSIM devices and changing perceptions that the technology is prohibitively expensive.

The company passionately believes that eSIM technology and associated new use cases have the potential to change the lives of millions of Africans. “We are very excited to have implemented eSIM technology in Nigeria with our preferred partner G+D, and we look forward to the growth and expansion from adopting this technology in our business,” commented MTN Group’s Thato Sebesho.

Exciting new possibilities

Consumer use cases are expected to drive growth in the eSIM market in Africa in the short term. Beyond mobile-telephony-related solutions, eSIMs can be used in wearable devices to improve healthcare outcomes, or in a wide-range of smart home products and services, such as security offerings. Looking further ahead, as 5G networks begin to replace 4G networks and data speeds increase, there are a number of exciting possibilities that eSIMs can enable in the IoT field: connected vehicles that can be authenticated and secured with over-the-air updates; smart meters for energy companies; intelligent drones for monitoring buildings; and the tracking of assets, from containers to livestock.

While the eSIM market remains in its infancy, carriers who get on board now could benefit both themselves and their customers. Crucially, they could also play an important role in creating the digital economy that Africa is building over the coming decade.

Published: 14/01/2021