Wednesday, March 23, 2005

Running out of Excuses for Poverty

I grew up thinking we were too poor to afford a telephone, then one
day "By the Stroke of a Pen" the technology, capital, and skill
necessary to make it affordable for my family was allowed to enter Kenya,
when the law was changed to end the government Monopoly in

Good news for More Kenyans, and more is possible!Our Beef
producers and Fishermen now have better communication, but they
could potentially become Multinational operations if they only had Refrigeration
Facilities, if they only had Electricity, Running Water, Vehicles, Relevant
Machines... What excuse does our government have to prevent their access to the
same and keep them poor?

By Alari Alare
Mobile telephone service provider Celtel Kenya Limited has expanded its network coverage to 20 more towns across the country.
The towns are in far flung areas of Nyanza, Greater Nairobi, Rift Valley, Eastern Province and Maasai Mara. The expanded coverage follows completion of the first phase of network expansion programme by the mobile operator.
The introduction of new sites has now brought the total number of towns covered by Celtel Kenya network to 158. The network expansion covers Olkuruk in Masai Mara, Olenguruone, Maungu, Kakuma, Loitokitok and the border town of Lunga-Lunga.
The other towns are Mutomo in Kitui, Keumbu in Kisii, Sondu Miriu and Kosele. Also covered by Celtel network are Kusa, Bondo, Usenge Musoli, Ruai, Thogoto, Kinoo, Kianjogu, Wangige and Magongo in Mombasa.
Celtel Chief Executive Officer, Gerhard May, yesterday said that residents in these towns will now have an opportunity to join more than 1.3 million Celtel subscribers in the country.
"We are delighted to make mobile telephony a reality to thousands of Kenyans in these diverse areas in line with our commitment of making life better for our customers," said May.
"Our indelible footprint in Kenya not only brings with it mobile telephony, but opens a host of possibilities in terms of job creation and access to information," he said.
The company has in recent months unveiled a host of innovative products and services aimed at increasing the availability and affordability of mobile telephony to a wider cross section of Kenyans.

1 comment:

Akinyi J. Arunga said...

Call it the Wild West of the global telecommunications industry if
you will, but Africa is fast becoming the last great undiscovered
frontier for big telecoms investments. With around 12% of the
world's population and less than 3% of the world's telephone lines,
opportunities are opening up for hardy local and foreign investors
prepared to brave the rough and tumble of a telecommunications
industry where the risks are almost as high as the rewards.

Reforms in the sector – and an insatiable hunger for connectivity -
have seen mobile networks mushrooming in Africa.

By the end of 2004, every country on the continent will have at
least one cellular network, and fully three out of every four
African telephone users will be mobile.

The number of mobile users is tripling every day. The total number
of users at the end of 2003 stood at 52 million. This is almost 70%
of all African telephone users. This figure is expected to reach
more than 200 million by 2010.

Most commentators agree that the lack of telecom infrastructure is
the most important economic challenge currently holding back
Africa's development. To some degree, mobile use is revolutionising
communication for many businesses and socio-economic activities
across the continent.

The appeal is easy to understand. Whether you're in a bustling
metropolis like Johannesburg or Lagos, or in a remote village in
central Africa, when you switch on a mobile phone, you can talk to
the world.

Fuelled by competition and the introduction of prepaid services, the
growth of cellular and other wireless technologies in the past few
years has been exponential. Since Uganda became the first African
country where mobiles outnumber fixed-line connections, more than 30
other nations have followed suit. In countries like Morocco, Kenya
and Nigeria, mobile users outnumber fixed-line users at an
incredible ratio of 6:1. Algeria has more than three million mobile
phone users. The market has a potential to reach 15 million.

In Burkina Faso, less than 2% of households have a fixed telephone
line and rural areas are under-serviced, according to research from
market intelligence firm Global Information, Inc.

The figures are in contrast to the mobile market, where three
digital mobile networks are serving a subscriber base more than five
times larger than the fixed-line operator.

This excitement has been infectious, says Johannesburgbased
telecommunications analyst Andre Wills. Governments have raked in
billions of dollars in licence fees, and equipment manufacturers are
estimated to have earned in the region of US$5billion in contracts
in Africa since 2000. Entrepreneurs are playing a key role in the
spread of telecoms services across Africa through the provision of
telephone shops, telecentres, private payphones, fax and Internet

The operators themselves are not doing too badly, either. Last year
alone, MTN Nigeria made Naira 9 billion (ZAR3 billion), and profits
are expected to rise. Market forecasts suggest Africa will
experience strong revenue growth from US$8.9bn in 2002 to over
US$19.8bn in 2008.

Technology firms are lining up to share in the spoils. Nokia
recently launched a global campaign to extend its global business
from 1.4 billion users to 2 billion by 2007.

This growth is expected to be in developing nations. Governments are
also playing ball, liberalising their markets to attract investment
and growth in this market. Kenya, Guinea-Bissau, Ethiopia, Zimbabwe
and Liberia are some of the few countries that have relaxed policies
and regulations.

Michael Minges, head of ITU's Market, Economics and Finance unit
notes the emergence of major strategic investors such as Vodacom,
MTN, Orascom, Celtel, Econet amongst other networks.

South Africa's largest technology firm plans to enter the fray soon.
Recently, Dimension Data International signed the largest
empowerment deal to date in South Africa's hi-tech industry. It sold
a 25,01% stake in the company, valued at R380m to black investors –
but not just any black investor.

The consortium is led by Andile Ngcaba, the former director-general
in the South African Department of Communications, considered a
kingpin of the empowerment telecoms market in South Africa. Ngcaba
is now chairman designate of Didata South Africa and will lead the
group into the African market. Already, Didata is looking to enter
the Nigerian market. But that's just the first step, says
Ngcaba. "The fact that we have seen such success in the mobile
business in the African continent, and even in the Internet space,
means there are opportunities in areas like billing, call-centres,
and the Internet."

Didata recently established itself in Ethiopia as Internet
infrastructure backbone provider. The firm is also lobbying to be
part of the East Coast cable, a submarine cable, which will connect
East African countries.

Ngcaba sees the growth of the ICT market in Africa as being on the
back of mobile technology and internet. Internet Solutions, one of
Didata's subsidiaries, is being strongly positioned to provide
services – like online banking, for example - to mobile companies
with its infrastructure. Didata is already building backbone
infrastructure for mobile phone companies in Uganda.

"Africa is the place to be. Africa is our place, our home, and we
will continue to work with our partners to grow our share in this
market," said a bullish Ngcaba. ""We are looking to work with
governments and small operators to grow our market. The issue is
partnerships, working with locals as catalysts for Africa's growth
and development."

By and large, Africa's state-owned telephone companies have realised
it is no use fighting the mobile revolution. Most are now actively
wooing potential investors to try and save their ailing telecom

You can hardly blame them. Along with countries like Kenya, the
state of Nigeria's fixed line telephony system is abysmal. Try
calling a landline on a sunny day, let alone the rainy season, in
Nairobi or Abuja, and one quickly sees that a cellphone is faster,
cheaper and more reliable.

A simple call to Angola, for instance, has to be re-directed to
Portugal before it is received in Luanda. International connectivity
is usually poor due to the transmission quality of undersea cable.

Uganda Post and Telecommunications has a record of consistently poor
performance, characterised by failure to expand its network. The
same fate has befallen Tanzania. Cameroon's fixed line subscribers
declined dramatically last year, while consumers in Somalia and
Ethiopia have also largely given up on fixed line networks. Nor has
Telkom Kenya been able to effectively compete with the mobile phone
service providers, who are enjoying a captive market of over two
million subscribers.

The fast growth of mobile use in Kenya overtook fixed-lines in less
than a year of the competitive environment - but policy did not
change fast enough to include cellular in universal service
obligations, notes Muriuki Mureithi, of Summit Strategies Ltd,

Therein lies one of Africa's key challenges. The mobile boom has
been mostly confined to urban areas, creating a widening
communications gap between rural and urban communities. For many
Africans in rural areas, cellular networks remain out of reach and
unaffordable. Governments and GSM investors are being urged to take
advantage of the rapid growth of mobile on the continent to find new
ways to address the digital divide. Communication experts such as
Murali Shanmugavelan question the level of real commitment to
universal telephone access in Africa and ask fundamental questions
about the revolution: should it be left simply to market forces, or
should governments introduce new legislations to improve the
communications in rural Africa?

Apart from MTN Uganda, many countries have not yet developed
networks to reach the majority of the population in rural areas. MTN
villagePhone is a pilot project in Uganda which has enabled rural
communities to become more involved in the country's economy, and
represents a great step in the expansion of rural mobile telephone

Investors, like South Africa's Vodacom, which burnt its fingers in
Nigeria, should also realize that Africa is not without its
problems. Business in Africa reported in May that although Africa's
telecom market is growing, it still faces many problems because of
regulatory and fiscal landmines, devaluating currencies, economic
and political turmoil, social mayhem, poverty, large scale
unemployment, corruption, crime and fraud.

Another factor hindering the uptake of GSM in Africa is the
logistics involved in selling airtime to end-users. The traditional
vouchers system presents mobile operations with a number of
challenges including the physical distribution of the vouchers to
remote areas, fraud, vouchers shrinkage and the higher commissions
that need to be paid to the physical merchants who vend the
vouchers, notes Prism Holdings.

Where does this leave fixed line? Fixed line subscriptions have
fallen by more than 10% on the continent, although the total number
of fixed lines is estimated to reach 30 million by next year.

Africa lags far behind other continents regarding fixed line
subscribers, with an estimated 2.8% of Africans having "ordinary"
phone services.

The high costs of stringing up telephone wires is simply not
economically viable. Geographical constraints and poorly maintained
infrastructure have made the installation of fixed lines even more
difficult in several African countries.

Fixed wireless Access (FWA) networks offer advantages over mobile,
through being faster and cheaper to install. The Internet remains
out of reach to the vast majority of Africans and is still mostly
confined to the larger cities and towns.

By early 2004, overall Internet penetration in Africa was below
1.2%. However, Internet access has increased significantly over the
past decade, sometimes at rates four-to-five times higher than
earlier estimates due to unreported users using free Web services,
Internet cafes or prepaid cards.

Satellite will remain a niche market, says Wills. At least five
satellite operators are extending their footprint over Africa and
the WASC/SAT3/SAFE submarine cable link to Europe and Asia was
launched in May 2002, providing transmission capacity of 80Gb/s and
an ultimate design capacity of 120Gb/s. Despite the mobile boom,
though, there remains a huge unmet demand for telephone connections,
with wide disparities between regions, according to most reports.
For example, the five Maghreb countries and South Africa have more
telecoms infrastructure than all the 46 countries in sub-Sahara
Africa, say analysts.

When the dollar signs start to fade from the eyes of all of the role-
players, it is issues like these that they should start to address
if Africa is to develop a meaningful capacity to empower all of its
people to take part in the global economy.

With additional reporting by Benedicta Dube