It is a little known fact that one of the world’s earliest implementations of a pre-paid mobile platform was in South Africa in the early 90’s. Its introduction spawned a mobile telecommunications growth that rivaled those currently being experienced in countries like India and China. Even today, 90% of the country’s mobile users are linked to pre-paid plans. With minimal broadband roll-out to the highest population areas the mobile device is becoming the window to the world of internet and email.
The same applies to the rest of Africa as well. By early 2007 90% of all phone users in Africa were actually mobile phone users. The difficulty of rolling out fixed line networks in difficult and vast terrains and the constant threat of loss to copper thieves accelerated the rollout of mobile networks across the continent. Sure, the technology is ideal but if it wasn’t for pre-paid the take up would have been negligible. I’m sure you’ll forgive an old billing hand stating that pre-paid billing is probably the single biggest contribution to the African communications industry and, in some cases, GNP! Telecommunications is now seen as a prerequisite for economic growth. The ITU has stated that: “Growth in Africa’s mobile sector has defied all predictions. Africa remains the region with the highest annual growth rate in mobile subscribers and added no less than 65 million new subscribers during 2007. At the beginning of 2008, there were over a quarter of a billion mobile subscribers on the continent. Mobile penetration has risen from just one in 50 people at the beginning of this century to almost one third of the population today.”
However, it is impossible to put the whole of Africa into one telecoms basket. Rapid growth of ADSL, wireless broadband and 3G services in some markets is definitely increasing data traffic but the continent is still one of the least connected in the world, both in intra and international terms. As regulatory controls ease and incumbents open up to more competition there will be a rise in voice traffic and subsequent pressure on tariffs. However, it is estimated that at east 10% of all international voice traffic is carried by unlicensed ‘grey’ operators mainly offering VOIP.
The African market is made of many disparate nations at differing levels of telecoms maturity. However, their late entry into this technology era may prove to be a boon as network performance per dollar and accelerated ROIs are becoming the norm and there is no shortage of vendors willing to take up the challenges that Africa has to offer as some other growth market such as Asia and South America begin to mature. An interesting off-shoot of this is the open predatory activities of some large Indian operators gleefully viewing the African market and making overtures to buy in.
Perhaps one relatively unique feature of the African market is the emergence of multinational mobile operators that have acquired licenses and established networks in multiple countries. This potentially allows for more cost effective infrastructures that can be centralised for some of the more basic functions, such as billing and service delivery, creating some interesting economies of scale but not without a fair share of issues, mainly regulatory.
Perhaps the most interesting activities riding the telecoms boom in Africa is the emergence of some unique banking, m-payments and funds transfer applications. MTN, one the continent’s mobile mega carriers actually acquired a bank to be able to offer online banking services to markets that had little or no access to physical banks. Safaricom’s M-PESA mobile payments service allows subscribers to transfer money home to their native rural villages, underscoring the importance of internal remittances in virtually all developing countries. M-PESA is competing successfully with more traditional means of remittances. Many users say the service is faster, safer-less chance of theft or “lost” money-and could be sent directly to their home village. I have heard this described as taking banking from the ‘mattress to the mobile’. The mobile operators are focusing much of their mobile payments initiatives on markets where a large majority of the population is unbanked, estimated to be 94% of the continents population. For people in the developing African countries, the arrival of mobile banking, or m-banking, is potentially revolutionary.