Looking to Africa's Mobile future

POSTED BY Global Administrator

While the African Continent might be considered a tricky market to tackle for just about any industry sector, particularly those with a "retail" element, the African mobile telecoms sector remains one of the few remaining growth markets in the mobile world.

Africa now has well over 350 million mobile subscriptions and a penetration rate of over 30% (compared to 5% seven years ago). It has been growing fast and looks as if it will continue to do so: mobile subscriber growth outstripped other regions in the five years to 2008, with a CAGR of 47%, over double the world average of 23%.

And the Continent is still expected to grow at 25% in 2009. This makes Africa one of the few regions where organic growth is still a major market driver in the vast majority of countries.

More importantly, perhaps, is that mobile services are developing in interesting ways to step into other areas of the economy where infrastructure is limited.

Remittances and mobile banking have become an important area where mobile operators are able to facilitate banking transactions to the “unbanked”. Another area where this may be the case is retail payments through Machine to Machine infrastructure and Point of Sales (POS) systems.

Clearly some countries in Africa are doing better than others. But it is not all down to income per Capita: the extent to which competition is present in a country is just as important.

Most countries where penetration rates are low do not have a competitive telecommunications sector: Liberia’s penetration rate is seven times that of Eritrea and Ethiopia, even though it is a war-torn nation with a more fragile economy than those countries, says the ITU. The reason for this is clear: Liberia has four mobile operators and competition has given a boost to the market.

Another example cited by the ITU is Equatorial Guinea, an oil-based economy with high income per capita relative to the rest of Africa. Since Equatorial Guinea has but one mobile operator its mobile penetration is much lower than that of South Africa, where there are four operators.

Looking beyond the affects of competition, what might the future hold for African Telecoms?

While Apps and Smartphones are likely to be out of the reach of many on the Continent, the mobile device is still revolutionising lives, perhaps more so, even, than telecom related developments on other Continents: About half of Safaricom Kenya's subscribers have signed up to the mobile remittance service M-Pesa, says one academic paper- that is quite an achievement and represents a real example of operators moving into, or even creating, another industry whilst offering a service for which there is a genuine need.

Elsewhere only Apple, with its App store has got close to doing that.