tag:blogger.com,1999:blog-11468524.post111161962324118073..comments2023-07-17T10:05:24.359+00:00Comments on UHURU NI HAKI: Running out of Excuses for PovertyUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-11468524.post-1111622776911449872005-03-24T00:06:00.000+00:002005-03-24T00:06:00.000+00:00Call it the Wild West of the global telecommunicat...Call it the Wild West of the global telecommunications industry if <BR/>you will, but Africa is fast becoming the last great undiscovered <BR/>frontier for big telecoms investments. With around 12% of the <BR/>world's population and less than 3% of the world's telephone lines, <BR/>opportunities are opening up for hardy local and foreign investors <BR/>prepared to brave the rough and tumble of a telecommunications <BR/>industry where the risks are almost as high as the rewards.<BR/><BR/>Reforms in the sector – and an insatiable hunger for connectivity - <BR/>have seen mobile networks mushrooming in Africa.<BR/><BR/>By the end of 2004, every country on the continent will have at <BR/>least one cellular network, and fully three out of every four <BR/>African telephone users will be mobile.<BR/><BR/>The number of mobile users is tripling every day. The total number <BR/>of users at the end of 2003 stood at 52 million. This is almost 70% <BR/>of all African telephone users. This figure is expected to reach <BR/>more than 200 million by 2010.<BR/><BR/>Most commentators agree that the lack of telecom infrastructure is <BR/>the most important economic challenge currently holding back <BR/>Africa's development. To some degree, mobile use is revolutionising <BR/>communication for many businesses and socio-economic activities <BR/>across the continent.<BR/><BR/>The appeal is easy to understand. Whether you're in a bustling <BR/>metropolis like Johannesburg or Lagos, or in a remote village in <BR/>central Africa, when you switch on a mobile phone, you can talk to <BR/>the world.<BR/><BR/>Fuelled by competition and the introduction of prepaid services, the <BR/>growth of cellular and other wireless technologies in the past few <BR/>years has been exponential. Since Uganda became the first African <BR/>country where mobiles outnumber fixed-line connections, more than 30 <BR/>other nations have followed suit. In countries like Morocco, Kenya <BR/>and Nigeria, mobile users outnumber fixed-line users at an <BR/>incredible ratio of 6:1. Algeria has more than three million mobile <BR/>phone users. The market has a potential to reach 15 million.<BR/><BR/>In Burkina Faso, less than 2% of households have a fixed telephone <BR/>line and rural areas are under-serviced, according to research from <BR/>market intelligence firm Global Information, Inc.<BR/><BR/>The figures are in contrast to the mobile market, where three <BR/>digital mobile networks are serving a subscriber base more than five <BR/>times larger than the fixed-line operator.<BR/><BR/>This excitement has been infectious, says Johannesburgbased <BR/>telecommunications analyst Andre Wills. Governments have raked in <BR/>billions of dollars in licence fees, and equipment manufacturers are <BR/>estimated to have earned in the region of US$5billion in contracts <BR/>in Africa since 2000. Entrepreneurs are playing a key role in the <BR/>spread of telecoms services across Africa through the provision of <BR/>telephone shops, telecentres, private payphones, fax and Internet <BR/>shops.<BR/><BR/>The operators themselves are not doing too badly, either. Last year <BR/>alone, MTN Nigeria made Naira 9 billion (ZAR3 billion), and profits <BR/>are expected to rise. Market forecasts suggest Africa will <BR/>experience strong revenue growth from US$8.9bn in 2002 to over <BR/>US$19.8bn in 2008.<BR/><BR/>Technology firms are lining up to share in the spoils. Nokia <BR/>recently launched a global campaign to extend its global business <BR/>from 1.4 billion users to 2 billion by 2007.<BR/><BR/>This growth is expected to be in developing nations. Governments are <BR/>also playing ball, liberalising their markets to attract investment <BR/>and growth in this market. Kenya, Guinea-Bissau, Ethiopia, Zimbabwe <BR/>and Liberia are some of the few countries that have relaxed policies <BR/>and regulations.<BR/><BR/>Michael Minges, head of ITU's Market, Economics and Finance unit <BR/>notes the emergence of major strategic investors such as Vodacom, <BR/>MTN, Orascom, Celtel, Econet amongst other networks.<BR/><BR/>South Africa's largest technology firm plans to enter the fray soon. <BR/>Recently, Dimension Data International signed the largest <BR/>empowerment deal to date in South Africa's hi-tech industry. It sold <BR/>a 25,01% stake in the company, valued at R380m to black investors – <BR/>but not just any black investor.<BR/><BR/>The consortium is led by Andile Ngcaba, the former director-general <BR/>in the South African Department of Communications, considered a <BR/>kingpin of the empowerment telecoms market in South Africa. Ngcaba <BR/>is now chairman designate of Didata South Africa and will lead the <BR/>group into the African market. Already, Didata is looking to enter <BR/>the Nigerian market. But that's just the first step, says <BR/>Ngcaba. "The fact that we have seen such success in the mobile <BR/>business in the African continent, and even in the Internet space, <BR/>means there are opportunities in areas like billing, call-centres, <BR/>and the Internet."<BR/><BR/>Didata recently established itself in Ethiopia as Internet <BR/>infrastructure backbone provider. The firm is also lobbying to be <BR/>part of the East Coast cable, a submarine cable, which will connect <BR/>East African countries.<BR/><BR/>Ngcaba sees the growth of the ICT market in Africa as being on the <BR/>back of mobile technology and internet. Internet Solutions, one of <BR/>Didata's subsidiaries, is being strongly positioned to provide <BR/>services – like online banking, for example - to mobile companies <BR/>with its infrastructure. Didata is already building backbone <BR/>infrastructure for mobile phone companies in Uganda.<BR/><BR/>"Africa is the place to be. Africa is our place, our home, and we <BR/>will continue to work with our partners to grow our share in this <BR/>market," said a bullish Ngcaba. ""We are looking to work with <BR/>governments and small operators to grow our market. The issue is <BR/>partnerships, working with locals as catalysts for Africa's growth <BR/>and development."<BR/><BR/>By and large, Africa's state-owned telephone companies have realised <BR/>it is no use fighting the mobile revolution. Most are now actively <BR/>wooing potential investors to try and save their ailing telecom <BR/>companies.<BR/><BR/>You can hardly blame them. Along with countries like Kenya, the <BR/>state of Nigeria's fixed line telephony system is abysmal. Try <BR/>calling a landline on a sunny day, let alone the rainy season, in <BR/>Nairobi or Abuja, and one quickly sees that a cellphone is faster, <BR/>cheaper and more reliable.<BR/><BR/>A simple call to Angola, for instance, has to be re-directed to <BR/>Portugal before it is received in Luanda. International connectivity <BR/>is usually poor due to the transmission quality of undersea cable.<BR/><BR/>Uganda Post and Telecommunications has a record of consistently poor <BR/>performance, characterised by failure to expand its network. The <BR/>same fate has befallen Tanzania. Cameroon's fixed line subscribers <BR/>declined dramatically last year, while consumers in Somalia and <BR/>Ethiopia have also largely given up on fixed line networks. Nor has <BR/>Telkom Kenya been able to effectively compete with the mobile phone <BR/>service providers, who are enjoying a captive market of over two <BR/>million subscribers.<BR/><BR/>The fast growth of mobile use in Kenya overtook fixed-lines in less <BR/>than a year of the competitive environment - but policy did not <BR/>change fast enough to include cellular in universal service <BR/>obligations, notes Muriuki Mureithi, of Summit Strategies Ltd, <BR/>Nairobi.<BR/><BR/>Therein lies one of Africa's key challenges. The mobile boom has <BR/>been mostly confined to urban areas, creating a widening <BR/>communications gap between rural and urban communities. For many <BR/>Africans in rural areas, cellular networks remain out of reach and <BR/>unaffordable. Governments and GSM investors are being urged to take <BR/>advantage of the rapid growth of mobile on the continent to find new <BR/>ways to address the digital divide. Communication experts such as <BR/>Murali Shanmugavelan question the level of real commitment to <BR/>universal telephone access in Africa and ask fundamental questions <BR/>about the revolution: should it be left simply to market forces, or <BR/>should governments introduce new legislations to improve the <BR/>communications in rural Africa?<BR/><BR/>Apart from MTN Uganda, many countries have not yet developed <BR/>networks to reach the majority of the population in rural areas. MTN <BR/>villagePhone is a pilot project in Uganda which has enabled rural <BR/>communities to become more involved in the country's economy, and <BR/>represents a great step in the expansion of rural mobile telephone <BR/>use.<BR/><BR/>Investors, like South Africa's Vodacom, which burnt its fingers in <BR/>Nigeria, should also realize that Africa is not without its <BR/>problems. Business in Africa reported in May that although Africa's <BR/>telecom market is growing, it still faces many problems because of <BR/>regulatory and fiscal landmines, devaluating currencies, economic <BR/>and political turmoil, social mayhem, poverty, large scale <BR/>unemployment, corruption, crime and fraud.<BR/><BR/>Another factor hindering the uptake of GSM in Africa is the <BR/>logistics involved in selling airtime to end-users. The traditional <BR/>vouchers system presents mobile operations with a number of <BR/>challenges including the physical distribution of the vouchers to <BR/>remote areas, fraud, vouchers shrinkage and the higher commissions <BR/>that need to be paid to the physical merchants who vend the <BR/>vouchers, notes Prism Holdings.<BR/><BR/>Where does this leave fixed line? Fixed line subscriptions have <BR/>fallen by more than 10% on the continent, although the total number <BR/>of fixed lines is estimated to reach 30 million by next year.<BR/><BR/>Africa lags far behind other continents regarding fixed line <BR/>subscribers, with an estimated 2.8% of Africans having "ordinary" <BR/>phone services.<BR/><BR/>The high costs of stringing up telephone wires is simply not <BR/>economically viable. Geographical constraints and poorly maintained <BR/>infrastructure have made the installation of fixed lines even more <BR/>difficult in several African countries.<BR/><BR/>Fixed wireless Access (FWA) networks offer advantages over mobile, <BR/>through being faster and cheaper to install. The Internet remains <BR/>out of reach to the vast majority of Africans and is still mostly <BR/>confined to the larger cities and towns.<BR/><BR/>By early 2004, overall Internet penetration in Africa was below <BR/>1.2%. However, Internet access has increased significantly over the <BR/>past decade, sometimes at rates four-to-five times higher than <BR/>earlier estimates due to unreported users using free Web services, <BR/>Internet cafes or prepaid cards.<BR/><BR/>Satellite will remain a niche market, says Wills. At least five <BR/>satellite operators are extending their footprint over Africa and <BR/>the WASC/SAT3/SAFE submarine cable link to Europe and Asia was <BR/>launched in May 2002, providing transmission capacity of 80Gb/s and <BR/>an ultimate design capacity of 120Gb/s. Despite the mobile boom, <BR/>though, there remains a huge unmet demand for telephone connections, <BR/>with wide disparities between regions, according to most reports. <BR/>For example, the five Maghreb countries and South Africa have more <BR/>telecoms infrastructure than all the 46 countries in sub-Sahara <BR/>Africa, say analysts.<BR/><BR/>When the dollar signs start to fade from the eyes of all of the role-<BR/>players, it is issues like these that they should start to address <BR/>if Africa is to develop a meaningful capacity to empower all of its <BR/>people to take part in the global economy.<BR/><BR/>With additional reporting by Benedicta Dube<BR/><BR/>http://www.businessinafrica.net/technology/349759.htmNeemahttps://www.blogger.com/profile/09666436365572817914noreply@blogger.com