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An Improved Connectivity Infrastructure

Connectivity and access to new technologies has been a major barrier to growth in Africa the past. The connectivity landscape varies to a large degree over the entire continent. However, these are facts that are rapidly changing. There are major multi lateral, bi-lateral and private sector initiatives that improve connectivty to voice and data networks. The most significant growth is occuring in the mobile network arena. As demand increases, there are new entrants in several markets accross Africa. Most of these larger entrants are European based companies that have bought into or partnered with local companies.

Kenya’s Wireless Battles

Kenya, for example, has become an extremely competitive market with the entrance of the parastatal – Telcom into wireless products and services. Telcom joins the hot battle for subscribers that is currently being waged between African multi-national Zain(formerly known as Celtel) and Safaricom which is co-owned by a French Telecom –.

Cellphones offer all the features you’d find on a phone in Europe or North America and more. Email, Radio, TV,SMS, MMS, wireless internet and the list goes on.

The competition is so intense that it’s not unusual to see companies outbidding each other with new plans, bundles and incentives for consumers on a week to week basis.

One company, Celtel, recently relocated it’s entire Africa headquarters from The Netherlands to Kenya and rebranded itself with a new name — Zain. All this, after loosing market share to the new market leader, Safaricom.

On my recent trip to Kenya, I noticed that consumers had even found ways to save on wireless costs Most people I ran into had at least 2 cell phones for different companies to save money on network to network calls.

Social network applications like Facebook Mobile are also major part of the younger Kenyan generation’s daily lives. As we do business in Kenya on the social networks we typically get very fast responses to facebook messages as result of the facebook mobile application.

Perhaps the biggest winners in this competition for sticky consumers are the mobile phone manufacturers like Nokia, who have made major investments in Africa over the last few years. They have an R&D department in Africa that helps them produce phones for the African market, with the needs of everyday Africans in mind.

Connectivity for mobile operators has now moved from can to expand. One cellphone company for example recently expanded their local coverage area combining networks in three neighboring countries — Uganda, Tanzania and Kenya. Zain, which already had individual networks in these countries was its latest chess move in an effort to regain market share from the Kenyan Safaricom which is perhaps best known for its introduction on of mobile banking through its MPESA product. Something that helps people who move to urban areas for work, send money back to their families in rural Kenya.

Fibre Optic Networks offer new Opprotunites

Africa and particularly sub-Saharan still lags far behind the other continents (with the possible exception of Antarctica) in having a poorly developed fiber optic network. This applies to both inter-continental fiber access as well as intra- and inter-country fiber networks. The lack of a well developed fiber network is one of the major causes of high costs of bandwidth and poor access in many of Africa’s countries. In addition, there are very few cross-boarder fiber networks making it easier and cheaper for many African countries to communicate with Europe or North America than with their neighbours. Until 2002 when (SAT3/WASC/SAFE) was commissioned, almost all of the international and trans-border communication trafffic in sub-Saharan Africa was carried by satellite. Today, the situation is changing with many countries establishing connections to the existing international submarine fiber networks through their neighbours that have landing points.

Even then, the East African coast still does not have direct access to an international fiber submarine cable making this part of Africa one of the very few continental coasts in the world without direct access to a submarine fiber cable system. This “anomaly” is being addressed through a variety of initiatives: there are apparently at least 5 known projects:

  • NEPAD’s East African Submarine Cable System which was recently renamed the Nepad Broadband Infrastructure Network (NBIN). The NBIN has two parts to it: a submarine part called UHURUNET which “will encircle the entire continent of Africa, with connections to Europe, Brazil, India and the Middle East” and which, according to FiberforAfrica website seeks to connect “coastal countries in Eastern and Southern Africa to other global submarine cable systems: SAFE in the South Africa and SEA-ME-WE 4 (and potentially others) in the North” and a terrestrial part UMOJANET. Nepad recently signed an MoU with P-5 Holdings, a US company to construct UHURUNET. The cable is expected to cost about US$ 2 billion and be in place by 2010.
  • EASSy, which is backed by private telecom companies in the East and Southern Africa region claims it has raised all its funds and has also awarded a tender to Alcatel-Lucent with the cable expected to come online by the end of 2008 at a cost of over US$ 200 million. EASSy is also expected to benefit from an injection of up to US $32.5 million from IFC.
  • Kenya Data Network (KDN) and Flag Telecom’s fiber project from Mombasa to an undersea fiber junction off the coast of Yemen.
  • Kenyan Government’s The East African Marine System (TEAMs) that seeks to connect Mombasa to Fujairah in the UAE. The government has signed a contract with Alcatel-Lucent for the construction of the cable and it is expected to be in place by the end of 2008. Teams stands a high chance of succeeding because the Kenya government is positioning itself to act as the ICT Hub for the East African region and also because it is under pressure to provide connectivity for the budding and promising Business Process Outsourcing sector.
  • SEACOM- the seacom cable financed by the private equity will run from South Africa to Europe and India with landing points in Mozambique, Madagascar, Tanzania and Kenya. The cable is expected to be operational in 2009 in time for the World Cup in South Africa in 2010. This cable is the most advanced so far with mapping of the sea bed already underway. Neotel, South Africa’s second national operator has entered into a partnership with Seacom and “Neotel will own the cable landing station and all facilities within the South African territory.” It was also recently reported that the Aga Khan Fund for Economic Development has also purchased a 25% stake in Seacom.

Kenya’s network is scheduled to go live in 2009. The countries ICT board are making every effort to position Kenya as a top 10 ICT destination and a top Business Process Outsourcing destination

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