Africa ICT Trends and Countries to Watch in 2010
It’s that time of the year when any expert worth their salt makes some predictions for the New Year. I too couldn’t resist a peek into my crystal ball and here I share what I believe will be the major ICT trends and some of the countries to watch this year. In general, 2010 promises to be an exciting and important year for ICTs in Africa despite the fact that the global financial situation is still uncertain.
First off, after hugely successful trials and implementations of m-banking in Kenya, Uganda, Tanzania, Ghana and South Africa in 2009, this year is set to witness m-banking implementations in almost every African country. As m-banking grows, we should expect to see m-commerce in general take off quite rapidly with buying and selling of goods and services on mobile platforms becoming quite wide spread. I suspect that this will impact the business and economic landscape quite dramatically in many countries creating new jobs, innovations and investments.
M-commerce will grow along with e-commerce fuelled in part by substantial deployments of 3G broadband services by mobile telephone operators. These 3G deployments coupled with significant terrestrial and submarine fibre deployments underway and/or planned for commissioning in 2010 all over the continent will see the number of broadband connections more than triple this year. African governments will meanwhile reap billions of dollars as they sell 3G licenses to existing and new entrants into the telecommunications sector. It’s also likely that we shall see some major mergers and acquisitions in the mobile and fixed telecoms industry as major global players in this field angle to take a slice of the growing African telecommunications market. The increased number of broadband connections and lower prices will also lead to increased sales of smart phones and computers. I suspect that the major computer manufacturers will release low priced computers targeted at the African market. These are likely to be a cross between netbook type PCs and smart phones.
As access to the internet improves and costs drop dramatically due to increased competition, the nascent Business Process Outsourcing (BPO) sector in countries like Kenya and Senegal is likely to take off. Governments are also trying to stimulate this sector with various policy and regulatory sweeteners and stimuli thus making it a sector to watch carefully in 2010.
As intra-country connectivity improves, there is going to be a greater demand for local content in local languages and locally designed applications that fit the context of the different countries. Expect to see a dramatic growth of the software industry in the big markets targeting mobile phone applications. Those who have lamented the lack of African content might be in for a pleasant surprise starting this year.
Competition among the mobile service providers in many countries is set to heat up considerably, driven by two major factors: an increase in the number of providers in many countries as governments move to issue more licenses and the adoption of number portability. A few studies conducted in countries like Uganda fairly recently suggest that users are locked into particular providers, despite poor service, because they would not like to change their phone number which is currently the case if they moved to another service provider. With number portability, these users will be able to migrate to rival or alternate service providers with their existing telephone numbers. The introduction of number portability is therefore likely to threaten the bigger players while benefiting smaller players and new entrants. But analysts who follow these things agree that the bigger players will take steps to retain their customers. Either way, consumers will be the winners as quality of service is likely to improve and costs will continue to fall.
This year is likely to see some governments move to gain tighter control of and regulate ICT services especially as it becomes clearer that ICTs empower citizens to access information almost instantly, increase demand for accountability, make it harder to hide or gloss over human rights abuses, promote freedom of speech and strengthen political organization. Most countries taking these steps to muzzle or regulate ICT services will do so in the name of national security or fighting terrorism. This desire to control ICT services will see a big push for Simcard registration (at the moment, one doesn’t need to identify themselves to purchase mobile phone Simcards in most African countries) which on its own has merits, enactment of “wire-tapping” and other laws restricting broadcast media and in some cases increased censorship of internet, mobile and traditional broadcast content. This is likely to be a year where democracy and human rights activities will join hands with ICT companies to push back against what they will see as government interference in the market. However, governments will be caught between a rock and a hard place: on the one hand, they would like to exercise control and on the other hand, the ICT sector is becoming a key sector of the economy accounting for a growing and significant portion of GDP and tax revenues as a result of deregulation, liberalization and reduced government control. This is therefore a year where governments will play a high-wire act to ensure that they don’t kill the goose that lays the golden egg while angling to gain more control.
Countries to watch
Kenya is my number one country to watch this year because of four important factors: its early and leading adoption of m-commerce, large investments in terrestrial and submarine fibre, the government’s strategy to grow the BPO sector and lastly the position of Nairobi as the “unofficial” business capital of the East African Community’s common market. These four factors are likely to lead to increased ICT investment flows into Kenya, decent growth in the ICT sector and a shakeup in the economy as m-commerce and e-commerce take root.
Rwanda is probably the only developing country that has staked its future on ICTs with an ICT-led economic development strategy. Rwanda remains among my top countries to watch on the ICT scene in Africa. The government has done a few things right such as promoting an investor-attractive environment, emphasizing and supporting ICT, Science and Technology education and investing in broadband infrastructure. Rwanda also has one of the most impressive ICT public awareness campaigns, and investment promotion regimes in place. While in the past, there was a difference between government rhetoric and reality on the ground mainly due to limited human capacity and cautious moves from investors still associating the country with the Genocide, expect that gap to narrow as all of the government policies and interventions in infrastructure, science and technology education, investment policy and regulatory reforms in the last 5-10 years begin to bear fruit. It is not far stretched to expect to see local, regional and international ICT companies set up shop in Rwanda as a base to exploit the East African Common Market and Kigali take on the Silicon Valley status of Africa.
Still in East Africa, Ethiopia is another country worth watching. Ethiopia still retains state control on the telecommunications sector with a monopoly state-owned telecommunications company. The government has always argued that it preferred to follow a slow and carefully thought out deregulation path instead of rushing to implement a free and open market. This may be the year when we see concrete moves to open up this space. If this happened, Ethiopia with its 80 million plus population would herald a gold rush for ICT and especially telecommunication companies into the country.
Nigeria, often touted to as the “power house” of Africa, has in the last few years shocked the continent with an aggressive drive by its movie, banking and insurance industry to expand to the rest of the continent. Already, Nigerian movies are by many accounts more popular than anything Hollywood could throw up in Africa and this is a trend that will continue to grow. Expect Nigerian ICT companies to begin to play a more prominent role in Africa with some of their top ICT companies already spreading their tentacles into the bigger markets in Africa. It is not too far stretched to imagine that 2010 may herald the emergence of an African ICT giant from Nigeria. On the national scene, there are at least two submarine cables expected to land off the coast of Nigeria this year and massive fibre deployments underway in the country by the major telecommunication companies. The increased connectivity and lower prices are likely to give a tremendous boost to the nascent but impressive e-commerce sector in Nigeria.
South Africa has made massive investments in ICT infrastructure in preparation for the World Cup which it hosts in June of this year. This investment will leave the country with one of the most developed ICT infrastructures among emerging economies in the world. This investment is likely to give the ICT sector a good boost. Recent news coming of South Africa where foreign investments in the telecommunications sector have been blocked because of a government policy on foreign ownership restrictions in the telecommunications sector is likely to pit South Africa against other countries like Nigeria whose companies are seeking to expand into the rest of the continent. This government policy is also likely to place South African telecommunication companies that command a significant share of the sector in many other countries in Africa in an awkward place especially if the other countries enact retaliatory policies.
Lastly, Senegal is a country that has made tremendous gains in the ICT industry in the last few years. Sonatel, the former state owned telecommunications companies now majority owned by France Telecom represents a rare breed of a former state-owned telecom company that has managed to transform itself into a viable and aggressive market player. Senegal has also positioned itself as the ICT Hub for West Africa with Sonatel building infrastructure into all its neighbours. This year, expect to see Senegal secure its position as the ICT Hub of French-speaking West Africa and a growth of the nascent BPO sector.