AfricaCom renews Africa’s focus on digital emancipation
ADEYEMI ADEPETUN who was in Cape Town, South Africa for the just concluded 14th yearly AfricaCom exhibition chronicles the event and efforts by operators on the continent to advance the course of technology development among others. Excerpts:
JUST like the recently held third West African Information and Communications Technology (WAFICT) Congress in Nigeria last month, which focused on advancing broadband penetration in Africa, the 2011 AfricaCom exhibition in South Africa towed almost the same path, but with a reflection on the need to advance new technology(s) for Africa’s global competitiveness.
Aside the exhibition coinciding with the release of a new survey, which positioned Africa has the second largest mobile markets in the world after Asia, it also demystify the myth beclouding the continent’s will power to expand Information and Communications Technology frontiers.
The event, which had over 500 participants, which cuts across Africa and the world’s Information Technology and Telecoms markets, had has its theme: “Advancing Innovation and Profitability for a Digital Africa.” It stressed the importance of an enabling ecosystem in the continent.
According to the representative of the Global System for Mobile telecommunications Association (GSMA), Peter Lyons, the mobile ecosystem in Africa currently generates $56 billion or 3.5 per cent of Africa’s Gross Domestic Product, with mobile operators alone contributing $49 billion.
Lyons, who is GSMA’s Director of Spectrum Policy, Africa and Middle East, said for Africa’s digital emancipation, the continent must take full advantage of the ecosystem, by both allocating more spectrum for the provision of mobile broadband services, as well as introduce tax cuts for the industry. He said this would increase consumption of mobile services, thereby boosting Africa’s economic and social development.
To him, African countries have currently allocated considerably less spectrums to mobile services than Europe, the Americas and Asia, which is inhibiting connectivity to large swathes of rural Africa. “Sufficient spectrum should be provided for Mobile Broadband services through 3G HSPA and LTE technologies, to enable the mobile industry to ‘connect the unconnected’ and continue to act as catalyst for growth.”
GSMA noted that, in developing countries, for every 10 per cent increase in mobile penetration, there is a 0.81 per cent point increase in a country’s GDP, adding that the mobile industry contributes $15 billion in government revenues and has become a significant contributor to employment in Africa.
According to the Association, in 2010 alone, approximately 5.4 million people were employed directly and indirectly in the mobile ecosystem.
Presenting a paper titled: “The Role of Mobile Broadband in Networking Africa”, Head and President of sub-Saharan Africa for Ericsson, Lars Linden said African government must facilitate the growth of ICT, stressing that, there has been a challenge in Africa, but that progress has been made in the last few decades.
Linden noted that for Africa to become part of the emerging economy, it is imperative that it must create new business through technology.
“Nothing would happen in Africa unless we innovate, bring in tailor made solutions through technology for our increasing challenges, scale up our priorities and above all, ensure that government brings its support. This is most critical in all these”, he stated.
Linden, who explained that price elasticity of demand means that a marginal change in price can increase demand significantly, posited that 10 per cent increase in broadband growth can boosts Gross Domestic Product by 1.4 per cent. According to him, the issue of taxation must also be examined critically, stressing that, operators in this part of the world pay an average of 29.4 per cent of their revenue as taxes at different levels yearly.
While acknowledging the need for taxes, the Ericsson sub-Saharan Head and President said it must not be allowed to erode operators’ revenue if the continent must expand. Using Kenya as an example, Linden said when the Kenyan government decided to reduce the Value Added Tax on mobile phones, its sales increased by 200 per cent, adding that the cut however boosted taxes by 33 per cent in the country. He posited that high taxes, levies and license fees impede economic growth.
“The more the African government decides to support the sector and the revolution going on in the continent, the quicker the transformation”, he added.
Linden, who said Africa needed a ‘Networked Society’ to achieve this feat, noted that proper broadband deployment policy, was critical to bridging Africa’s digital divide. He advised that African government must further open up the mobile market by creating a liberalised environment.
According to him, the impact of a networked society as been championed by Ericsson, would improve the lives of the people, societies and businesses, adding that advancing Africa’s digital emancipation requires also, human capacity development at all levels.
In addition, the Principal Analyst at Informa Telecoms and Media, Nick Jotischky, said when looking at e-government strategies in Africa, it is clear that there is no clear articulation of the potential role that mobile devices can play in the spread of e-government services, except when the right strategies are put in place.
“The African mobile market is growing at a rate of between 18 – 20 per cent each year and it now has more mobile subscribers than Western Europe. It also has the potential to overtake Europe in the technology stakes as well, with operators in the region already looking at deploying LTE networks, despite the majority of African nations remain without 3G infrastructure,” he said
Jotischky, who said African government must rise up to the challenges of ensuring more connectivity, noted that the mobile revolution has brought communications to hundreds of millions of people of Africa within a short period of time, stressing that the projection coming from them is that by the end of this year, there will be over 640 million subscriptions across the continent and SIM penetration will be close to 60 per cent.
According to him, the implementation of e-government initiatives can create a greater visibility to the government-citizen relationship and allow governments to become more efficient and effective in fulfilling their service-delivery functions.
“Governments and businesses are learning to accept that consumers expect an anywhere, anytime services. The emergence of wireless technologies and development of mobile applications in Africa means this anywhere, anytime expectation has become an African reality too”, he stated.
Meanwhile, to the Chief Executive Officer, Etisalat Nigeria, Steven Evans, achieving a digital emancipation in Africa requires operators taking the initiatives of reducing Capital and Operational expenditure (CAPEX and OPEX). He stated that such initiatives were to the benefit of the customer and could result in reductions of tariffs, increased coverage of networks as well as greater profitability for the operators.
Making a presentation titled ‘Operator Strategies to reduce CAPEX and OPEX in Africa’, at the AfricaCom conference, the telecoms chief said that the company has already undertaken a number of major CAPEX and OPEX reduction initiatives such as co-location and hybrid power and was actively considering others like transmission sharing and sales and leaseback of towers. In the Commercial arena, the company has also embarked on a number of operational efficiency initiatives such as optimizing retail outlet formats and migrating to over the air recharges for prepaid customers.
“At Etisalat, our aim is to develop ways of making more efficient use of available resources to achieve the best results. For instance, we have been propounding the philosophy of co-location in Nigeria and are happy to say that we have made significant progress with one of the other major operators in the country. That has given rise to an extensive co-location agreement and a good deal for both parties and the country in general. This has also led to a reduction of resources channeled to erecting new towers and the opportunity to cover more communities and areas”.
He highlighted tower sale and leaseback as an excellent way of releasing capital to invest in core activities such as customer acquisition, management and retention as well as increasing the number of significant tower deals by African tower companies.
Said Evans, “Operators in the telecommunications industry are not required to own their towers in order to have effective operations. Towers can be owned and managed by third party specialist tower companies. A major advantage of this is that capital is saved and re-invested in the growth of business, network expansion and improved services.”
Though, not many of the leading operators in Nigeria showed their presence at the two-day event, however, Nigeria’s privately funded submarine fibre cable operator, MainOne was awarded with the “Best Pan African Initiative” award.
In his own word, Managing Director, Liberia Telecommunications Corporation, Ben Wolo, it has become highly imperatives for operators in Africa to map out strategies of combating the hydra headed challenges besetting Africa’s growth in the ICT sector.
Wolo, who said Liberia had just landed its submarine cable, ACE on November 3, noted that, the African operators must continued to invest in automation to drive down cost of ICT services, if it must bridge the digital divide and liberate its people.
Speaking in the same vein, Chairman, UMTS Forum and Orange Group, Jean-Pierre Bienaime said the issue of ICT services, high cost of telecommunications products and services might continued to be on the rise, except obstacles aided by high level taxes; spectrum shortages; high licensing fees; high number of competitors and price war are adequately and urgently tackled.
Unlike other experts at the event, Head of Ericsson, South Africa, Magnus Mchunguzi, believes that for Africa to liberate itself, it must build the required infrastructure and maintain it thoroughly.
At a post event interview with The Guardian, Mchunguzi, while using Nigeria as a bench mark for other countries in the continent opined that, there was need to look at Nigeria’s mobile revolution, which according to him, was among the last entrant into the evolution in Africa and has become the largest within a decade, with more growths still being expected.
He said in Nigeria and Africa as a whole, there is the issue of building your own infrastructure, which includes getting your own power, building your own access road and securing your infrastructure from multiple taxations, area boys syndrome and others; “These are some of the factors that continue to challenge operators’ performance. Just imaging how much operators spend on diesel, this is about 40 per cent of CAPEX, which ordinarily should not have been their headaches. This is not limited to Nigeria alone; virtually all the major markets in Africa suffer this. If the money spent on setting up private power, security, link roads are diverted to building more base stations, improving network facilities among others, what do you expect?, won’t it have positive effects on services to be rendered ?, so these are the issues.”
Mchunguzi explained that to also improve both the IT and telecommunications services, human capacity development was critical. According to him, tertiary institutions in the continent should start to offer courses in basic IT services, telecommunications among others.
“I will also say that, telecommunications services may still remain poor because we are yet to develop the human capacity adequately. The questions we should ask ourselves is that are we adding more capacity? Are we training developers? Our tertiary institutions are yet to offer courses on IT, telecommunications among others. Until we resolve these issues, it may really be difficult to have a better ICT”, he stated.
By Adeyemi Adepetun, Nigeria