By Amr Shady
As they wait anxiously for a text message informing them that their aid is ready for pickup, African men and women use mobile technology much differently than the rest of the world. Scores of Africans take refuge in mobile technology, transforming this nice-to-have technology into a must-have. A cheap mobile handset becomes the survival gear on a continent where people are deprived of their basic needs – water, food and electricity.
Mobile services are more affordable and available than any of the basic services in Africa. More than half the population of Nigeria, for example, is deprived of electricity services and around 38 million don’t have access to clean water. Yet, almost the entire population has potential access to mobile.
This explains why Africa’s mobile subscriber growth remains the fastest in the world, approaching 1 billion mobile subscriptions by 2015 according to the latest figures from Informa Telecoms and Media. The mobile market has the largest impact on African life and business. Frost & Sullivan reports that mobile penetration is at 94.6 percent, far above that of fixed telecommunications on the continent. There is clearly a real appetite for mobile communications in Africa, but where has this come from and what is the future of mobile telecommunications?
Africa’s love of mobile
Poor fixed landline infrastructure and providers’ lack of incentives to improve the service pushed Africans to resort to mobile devices in order to communicate and survive at the same time. Mobile penetration is expected to surge as the African middle class continues to rise, reaching approximately 100 million over the next decade. Demand for mobile phones is highest among this particular class which can afford the handset, perceives it as a status symbol, and has the most exposure to technological and communication developments.
Representing 90 percent of the world’s rural population along with Asia, Africa is clearly a continent ripe for investment. Whether Africa should be the world’s next investment hub is subject to debate. It primarily depends on the affordability and worthiness of the services. Future growth and investment in the telecom sector would undeniably be of great benefit to Africans.
Saturation Point or Untapped Opportunities?
This popularity in turn has led to a knock-on effect on the telecommunication businesses, both in negative and positive ways. Recently Frost & Sullivan questioned whether the market had reached saturation point in some countries. It would certainly be interesting to see how providers will meet this challenge as they search for new ways of making money from the market. But with around 75 percent of the population still unsubscribed to the service,
Africa is yet to reach its full mobile potential with plenty of room for growth. While it is true that Africa hasn’t reached its full mobile coverage, growth is subject to future investments by mobile operators to satisfy the appetite for 3G and mobile broadband. Mobile 3G and 4G data is growing due to the proliferation of cheap and affordable handsets.
GSMA reports that the Sub-Saharan African region for example is the fastest-growing in terms of annual unique mobile subscriptions which have increased by 18 percent over the past five years. The industry, as GSMA puts it “has already had a transformative effect on the social and economic development of Sub-Saharan Africa,” contributing with more than 6 percent to the region’s GDP, generating over 3 million jobs and USD 21 billion in tax revenue. This figure is relatively high compared to other regions of the world as the industry contributes to 1.4 percent of the GDP in the Asia-Pacific and 4 percent in Latin America.
Incentives, Restrictions and Global Mobile
Regulations and restrictions are likely to be an ongoing issue within the telecommunication industry, and this will certainly have a debilitating effect on growth. The recent news from Tanzania which requires mobile phone operators to list on its stock exchange by 2015 would normally be seen as a positive step and an endorsement of the fastest-expanding sector in the country. However, the fact that new telecom companies are required to list is an extreme measure. In reality, offering incentives to list would be a much better approach. Forcing companies to list could hamper the development and long-term competitiveness of the telecom sector in Tanzania.
We have already experienced a number of challenges in acquiring a license for TA Telecom to operate in the telecom services space in Tanzania. It comes as no surprise that other foreign Small and Medium Enterprises (SMEs) are also experiencing similar difficulties. Before making such regulatory restrictions, it is important to take into account the positive impact of foreign SMEs on the telecom sector in Africa. They can make significant contributions to the country’s economy, passing on knowledge and experience to the workforce. Countries like Tanzania should encourage foreign investments which can contribute a lot to the telecom industry in Africa and further the continent’s economic rise. According to GSMA, short-term thinking by governments seeking to maximize tax revenues may stifle the industry’s potential to drive social and economic development.
The telecom industry is expected to grow at unprecedented rates in Africa. Market saturation is unlikely in the near future with more investments flooding into the continent to fulfill its growing appetite to communicate via mobile. At TA Telecom, we are keeping Africa at the core of our activities. As an African company, we are proving bit by bit that we can compete on a global scale and encourage others to follow suit and be part of the African success story. The potential is there but it’s up to governments to attract investments into the telecom industry by creating more incentives and easing regulations. And it’s up to entrepreneurs and investors to realize the untapped full potential of the African mobile market.
Amr Shady is the founder and chairman of TA Telecom, an award-winning company that builds mobile content platforms and analytic tools. The company is now recognized as one of the fastest-growing companies in Europe, Middle East and Africa (EMEA). Amr is an active member of the esteemed global Endeavor network where he also serves on the Egypt board. He earned his Bachelor of Science degree in Electrical Engineering from Canada’s Dalhousie University. He is currently pursuing a master’s degree in Business Analytics.